Article(s) in Directive 2014/24/EU: 32
Topic: Negotiated procedure without prior publication
Member State: GER
Court/rev. board: OLG Düsseldorf
1. IMPLEMENTATION / RELEVANT NATIONAL LEGISLATION
Art. 32 of Directive 2014/24/EU has been implemented through § 14(4) of the Vergabeverordnung (VgV) almost word by word. The national legislator only deviated slightly from the wording of the directive for the purpose of editorial adjustments but without any material differences.
The respondent operates a large facility for the treatment of heart, circulatory and diabetes diseases. Following a voluntary ex-ante transparency announcement on 30 July 2016, it concluded a framework agreement with a company on 10 September 2016 on the supply of systems for liver support therapy by way of a negotiated procedure without prior publication.
The applicant is the previous supplier; it had already submitted an offer to continue the supply relationship on 5 January 2016. In its complaint, it argued that the conclusion of the contract with the new supplier was an inadmissible direct award.
The respondent argues that the contract could not have been carried out by any company other than the new supplier because competition was absent for technical reasons. Only the system of the new supplier fulfilled the requirements (which included inter alia that the product had to be certified through a conformity assessment procedure and compatible with other components used by the respondent).
The court held that refraining from a competitive tendering procedure was not justified in this case. The respondent relied on the exemption that competition is absent for technical reasons (§ 14(4) No. 2 lit. a VgV or Art. 32(2)(b)(ii) of the Directive). However, any exemption from conducting an open or restricted procedure had to be interpreted strictly. The burden of proof for the existence of the exception lies with the contracting authority. In this context, valid evidence must be provided from which the existence of the prerequisites can be inferred.
If the contracting authority refers to ‘technical reasons’, these should be precisely described and demonstrated on a case-by-case basis. As such, it could be argued, for example, that it is technically almost impossible for an economic operator to provide the required service, or that it is necessary to use specific knowledge or tools available only to one economic operator. Technical reasons may also stem from specific interoperability requirements which must be met in order to ensure the functioning of the works, supplies or services to be procured (recital 50 to Art. 32 of Dir 24).
The question whether a contract can only be carried out by a particular company for technical reasons depends crucially on the definition of the subject-matter of the contract and its technical specifications. If the contracting authority defines the technical specifications in a way resulting in the absence of competition, a negotiated procedure without prior publication may be (according to § 14(6) GWB) only conducted if there is no reasonable alternative and if competition is not artificially narrowed. Consequently, the limits for determination of characteristics of the subject-matter is narrower than in competitive procedures. In particular – and this seems to be very remarkable about this decision – technical specifications which, in the case of Art. 32 of Dir 24, lead to a complete exclusion of competition, require a more profound justification than a provision which, while maintaining competition in the awarding of contracts, results (only) in a product-specific or process-specific procurement within the meaning of Art. 42(4) of Dir 24. This means that the justification tests applicable under Art. 32 and Art. 42(4) of Dir 24 diverge considerably from each other. The court explicitly emphasized this difference and hence seemed to suggest that the contracting authority had better issued a competitive procedure specifying in the technical specifications the possibility of submitting the desired solution “or equivalent”. Against this background, the negotiated procedure without prior publication appears to be the “ultima ratio” in cases of product-specific or process-specific procurement.