Decision of the Supreme Court, March 5, 2024, (Roj: STS 1786/2024 – ECLI:ES:TS:2024:1786), Spain
Article(s) in Directive 2014/24/EU: Art. 67 (Contract award criteria)
Topic: The possibility of using “satisficing or saturation thresholds” in public procurement
Member State: ES
Court/rev. board: Supreme Court
1. IMPLEMENTATION / RELEVANT NATIONAL LEGISLATION
Transposition of the rules of Art. 67. of Directive 2014/24/EU is in Law 9/2017, of November 8, on Public Sector Contracts.
2. FACTS
The origin of this case is a concession for municipal public water services, tendered by a city council (Quintanar del Rey) in the Autonomous Community of Castilla-La Mancha. The tender documents included a saturation threshold among the award criteria.
So-called “saturation thresholds” are evaluation criteria in public procurement that set limits above which a lower (or higher, as the case may be) price does not result in a higher score for bidders.
The following award criterion was included in the tender specifications:
- A) Automatically quantifiable criteria (maximum 65 points).
Valuation of the initial fixed canon: Up to 35 points[1].
35 points will be assigned to the proposal that offers the highest fee and 0 points for the minimum fee, with a directly proportional score being assigned to each bid that has been included in the interval. Maximum fee is 200,000, minimum 120,000.
One of the bidding companies challenged this clause on the grounds that the saturation thresholds were contrary to the contractual rules as they had the effect of creating predictability in the scoring of the evaluable criteria. This leads to a) the same evaluation of different bids and the consequent violation of the principle of equality and b) a disincentive to submit economically better bids.
[1] In Spain, concession contracts may include a so-called “canon”. This is an amount of money set out in the procurement documents that the concessionaire is obliged to pay to the contracting authority.
3. JUDGMENT
The Supreme Court ruled on the appeal in cassation that the “saturation thresholds” do not violate the public procurement rules. The reasons for this decision are as follows.
Firstly, the public procurement rules do not explicitly prohibit the setting of limits on tenders and do not impose an exclusively proportional method for the evaluation of financial tenders.
Secondly, the Supreme Court highlights the provisions of Directive 2014/24 as the best supporting argument. The Court states that “it is clear that the criterion relating to price does not necessarily correspond to the lowest price, since it includes, in addition to cost-based evaluation criteria, other criteria which make it possible to evaluate the quality of the services in search of the best value for money”. The Supreme Court recalls that Recital 92 of the Directive states:
“In assessing the best value for money, contracting authorities should define the economic and qualitative criteria relating to the subject-matter of the contract. Contracting authorities should define the economic and qualitative criteria relating to the subject-matter of the contract which they will use for this purpose. These criteria make it possible to compare the quality of the tenders with regard to the subject-matter of the contract as defined by the contracting authority in the technical specifications. In the context of best value for money this Directive contains a non-exhaustive list of possible award criteria, including social and environmental aspects. Contracting authorities should be encouraged to choose award criteria which enable them to obtain the best value for money quality works, supplies and services which best meet their needs
[…]
In order to determine which tender is the most economically advantageous, the award decision should not be based solely on non-cost criteria. The qualitative criteria must therefore be accompanied by a cost-related criterion which, at the choice of the contracting authority, may be price or a cost-effectiveness approach, such as life-cycle costing…”.
Furthermore, the Court notes that the Directive considers that the profitability of services and supplies may be assessed on the basis of criteria other than price or remuneration, as is clear from recital 93. Lastly, recital 96 allows contracting authorities to determine the most economically advantageous tender and the lowest cost tender, except where the award is solely based on price. The most economically advantageous tender and the lowest cost may be determined on the basis of a life-cycle costing approach which includes all costs over the life-cycle of the works, supplies or services.
The Court points out that Article 67(1) and (2) of Directive 2014/24/EU provides, as a general rule, that public contracts are to be awarded on the basis of the criterion of the most economically advantageous tender, specifying that the most economically advantageous tender is to be determined on the basis of price or cost, taking into account cost-effectiveness, such as life-cycle costing, and may include best value for money, assessed on the basis of criteria including qualitative and/or social aspects linked to the subject-matter of the public contract concerned.
Article 67(5) of the Directive also provides for the possibility, for the contracting authority, to fix a range of values with an appropriate maximum range for the weighting of the various award criteria.
The Court analyzes the transposition of these provisions of the Directive into national law and concludes that it is possible to set thresholds of satisfaction when assessing economic offers. This is the case, the Court adds, especially if we consider that Article 67(2) of Directive 2014/24/EU expressly allows the cost factor to take the form of a fixed price or cost on the basis of which economic operators compete solely on the basis of quality criteria.
Link to the original decision: https://www.poderjudicial.es/search/AN/openDocument/cb274e6623441ecda0a8778d75e36f0d/20240415.
