Decision of the Supreme Administrative Court (1st Section), 22.09.2022 (CASE 0339/21.1BECBR)
Article(s) in Directive 2014/24/EU: art. 18(1) and (2), Art. 56(3), Art.69
Topic: Exclusion grounds (regarding offers); abnormally low tenders; breach of Labour Law provisions by a bid; clarification of tenders
Member State: Portugal
Court/rev. board: Supreme Administrative Court
1. IMPLEMENTATION / RELEVANT NATIONAL LEGISLATION
Art. 18(2) of the Directive can be said to have a national equivalent (even with a slightly different wording) in Art. 1-A(2) of the Portuguese Public Contracts Code (PCC, adopted by Decree Law 18/2008, of 29 January, with amendments, the current version resulting from Decree Law 78/2022, of 7 November).
Art. 70(2)(f) of the PCC then provides that if the acceptance of any bid would imply the breach of mandatory provisions in laws or by-laws (which is considered to include Art. 1-A(2) of the Code), the bid must be excluded.
As for Art. 69 of Directive 2014/24/EU (regime on abnormally low tenders), it is transposed into Portuguese Law by Arts. 71 and 70(2)(e) of the PCC.
Art. 72(3) and (4) of the Portuguese Public Contracts Code (PCC, adopted by Decree Law 18/2008, of 29 January, with amendments, the current version resulting from Decree Law 78/2022, of 7 November), which are considered to transpose article 56(3) of Directive 2014/24/EU.
This decision covers, partially, the same topic as the one from 09.06.2022, mentioned above, although taking a somewhat different view (which is common, since the group of judges deciding is different, except in so-called “jurisprudence uniformization” rulings, which was not the case).
A bidder, in a tender for surveillance services contract, allegedly presented an offer which was insufficient to cover the mandatory costs of Labour (salaries). There were, in fact, two problems, which ultimately led to the exclusion of the offer. On the one hand, the company did not present the necessary information, required in the tender documents by the contracting authority, which was meant to allow the contracting authority to scrutinize the compliance of the offer prices (and costs) with Labour Law: a “memorandum concerning monthly prices per facility, which includes, at least: number of hours/month per typology (daily, nocturnal, business days, Saturdays, Sundays and holidays) and unit cost per worker/hour per typology (daily, nocturnal, business days, Saturdays, Sundays and holidays)”. The tenderer did not discriminate information between working days and weekends (so, he breached a formal requirement). On the other hand, the contracting authority considered that the price was abnormally low, because it was not enough to cover Labour costs (therefore, a substantial appreciation).
The failure to comply with the formal requirement set by the tender documents was upheld by the Supreme Court as an autonomous reason for exclusion. Applying the standards of Art. 72(3) of the PCC (which transposes Art. 56(3) of the Directive), the Court considered that, supplementing the offer, would, in this case, substantially change the offer. Some doubt, however, remains, since the formal requirements in question are supposed to allow the contracting authority to control whether the offer is abnormally low. Therefore, as per established case law of the ECJ, there should always be a request to offer explanations before an exclusion occurs. There is doubt as to whether this understanding of the Court complies with this requirement.
In addition, the Court also considered that the offer was, indeed, abnormally low. The Court held that, under EU law, the contracting authority is obliged to control compliance with Labour Law, and in the case at hand, the calculations present in the documents pointed to a breach of the rules on mandatory cost of salaries.
A point worth mentioning is that the bidder whose offer was affected argued that he would compete for public support to employ young workers. Addressing the issue, the Court excluded the relevance of the argument, because the tender documents specified that the contractor had to take on the existing workers currently carrying out the surveillance duties through another (previous) contract; and, therefore, the contractor could not take on new employees. The Court added another reason, more controversially, against previously established case law of the Administrative Courts, including its own case law, when it considered that the bidder would only be able to rely on the possibility of obtaining public benefits/aid if the benefit had already been granted at the time of the bid (which, in this case, had not happened). Besides going against previous case law (namely the 09.06.2022 ruling mentioned above), we point out that this is somewhat hard to reconcile with the wording of the Directive. Art. 69(2)(f) of the Directive only mentions the possibility of the tenderer obtaining State aid. The Portuguese corresponding rule has a different wording (adding a segment referring to the lawfulness of the State aid), but this, obviously, cannot allow a solution in which national law could be construed as being stricter than the Directive.
Link to the original judgement (PT) here.