The Commission's procurement mechanism for large infrastructure projects

As per yesterday's post, myself and Albert will be commenting on the Commission's initiative to improve public procurement. Albert volleyed first with an analysis on the Commission's proposed procurement mechanism for large infrastructure projects, known as "voluntary ex-ante assessment of large infrastructure projects."

The name put forward by the Commission is terrible - latin, really? - and overcooks what is a very simple idea behind it. Effectively, the Commission is offering a free consultancy service for projects meeting specific criteria. As always, the defining criteria is price, with a set of services available depending on the contract value. The services included are:

  • a helpdesk (for contracts above €250 million)
  • a notification mechanism (for contracts above €500 million)
  • an information exchange mechanism (i.e., a repository of information, part of it widely accessible)

For the first two, it is possible for Member States to refer contracts below those values if it considers the project to be of high importance to itself or the EU as a whole. This referral may be rejected by the Commission.

The Helpdesk

The purpose of the helpdesk is to present the Commission questions related with the project's compatibility with EU public procurement rules before launching it with an official notice on the OJEU. It appears that this intervention is to happen very early in the process, certainly before even detailed plans, tender documents or specifications have been drawn up and the contracting authority might have specific questions. However, it is possible for the helpdesk to continue to help throughout the project, including amendments to contracts (which can also be done via the notification mechanism).

An answer to the queries is expected (but not guaranteed) within one month and it is anticipated this helpdesk will help the risk of delays and cost overruns with large infrastructure projects - one of the issues the Commission claims to want to achieve.

The consultancy nature of this service is evident on the language used in the name and, more importantly, on footnote 10 which reads: "[t]he views expressed by the Commission services in their assessment are not legally binding on those using the mechanism or on the Commission, and are without prejudice to the interpretation of the relevant rules by the Court of Justice of the European Union." Right, so whatever advice is provided by the Commission is non-binding for the receiver and itself. 

Therefore, my first question is: what legal certainty does this service provide? I could see a scenario whereby a contracting authority would refer a project so that it could later say to economic operators the design/rules/whatever had been pre-validated by the Commission. A sort of guarantee or 'seal of approval' for the tender documentation. Contracting authorities can still try to play this card but it is easy to call their bluff by referring to footnote 10. 

Albert correctly points out that especially in situations involving EU funding (areas where the Union already analyses and checks expenditure, but not necessarily ex ante) that this lack of responsibility can lead to litigations based on the principle of legitimate expectations or administrative estoppel (see, Judgment of 13 September 2017, Pappalardo and Others v Commission,  EU:C:2017:672, para 39).

I can only imagine the reputation risk the Commission is taking on-board nonetheless: if and when a case come before the Court of Justice it will have to justify any opinion/view expressed in the process. It might as well have made it binding to ensure that everyone really has the proverbial 'neck on the line.' Seems like that the Commission has no issues with binding opinions (and decisions) in the field of competition law for example but is terrified of doing the same in public procurement. To be honest, this would imply as well an expansion of the concept of Decisions by the Commission potentially making it unwieldy on a quick turn around basis as anticipated.

By itself, providing non-binding opinions or views within a single procedure would be bad enough, but this mechanism has a potential cascading effect since the replies will be anonymised and made available on the  ex-ante mechanism website. It won't take many instances of publications until either a clear view is formed about key issues (assuming those are common in large infrastructure projects) or competing views about what appear to be the same issue start cropping up in the database. 

Interpreting judgments from the CJEU these days seems like reading runes or listening to the oracle of Delphi, so having yet another 'legal' source of difficult to interpret or to translate to a different reality appears to be a gift we could do without. 

Albert also raises confidentiality as another important point on this topic. The Commissiom may try to guarantee confidentiality of the communications and their content, but yet another footnote (23) states the obvious: all documents produced by the Commission (or in its possession) are subject to Regulation (EC) No 1049/2001 regarding public access of documents. It is true that Article 4(2) of the Regulation provides a modicum of protection in the form of exceptions if the disclosure would undermine the protection of commercial interests of a natural or legal person, including intellectual property, unless there is an overriding public interest in disclosure. As we are talking about procurement there may well be scenarios where there may be a significant public interest in full disclosure of the documents related to this ex ante voluntary mechanism.

The notification mechanism

This mechanism is aimed at larger projects (€500 million) and is to be used once the initial tender materials have already been produced by the contracting authority. Within this process, the Commission services will review the plans produced and provide an assessment on those. Once more it is done 'without prejudice to any future legal interpretation or assessment', in case someone forgot to read footnote 10.

In addition to procurement plans, the Commission anticipates this mechanism can be used as well for contract modifications since these can be particularly complex. What is unclear is if a contracting authority can activate the mechanism for a contract amendment if it did not do so for the procurement plans or did not use the help desk either. I would say that bearing in mind the intentions of the Commission it appears that the answer would be positive - although questions remain on how the 500 million 'threshold' would be analysed (i.e., total contract value or specific modification value). I would guess that the answer to this one will depend on the level of demand for the service.

While the use of the notification mechanism before launching a tender seems reasonable (bearing in mind the reservations above for the helpdesk which are applicable here as well) the idea of providing this service for contract modifications is puzzling. Since the Commission anticipates to answer the query in 3 months, how is that compatible with contract modifications? Would the answer come before the negotiations are started or after they are concluded? I find it unlikely that this will have significant take up - especially due to the lack of any legal binding effect.

The same issues raised for the helpdesk apply to this mechanism as well: lack of legal certainty, potential failures on confidentiality (even worse as more detail will be held by the Commission) and an uncertainty on the value from the information/advice given.

Just like a consultancy then.

The information exchange mechanism

The final leg of the stool is provided by the information exchange mechanism. Out of the three parts of the mechanism this is the least interesting to analyse but potentially the most relevant on the long run. Its purpose is to create a reference database or repository of information related with large infrastructure projects which include tender documents, organisational documents, contracts, guidelines and key decisions from the Court of Justice. The information exchange mechanism will have two components: one the freely accessible database, the other a platform for stakeholders to exchange information.

As far as I can tell this seems a reasonable setup for what is effectively a knowledge  sharing tool. To be honest, better for it to be done centrally at EU level than mushrooming at national level.

However, as always the devil is in the details. 

First, who will populate the database and check the information provided? It appears it will be the Commission, so will it be responsible for the veracity and reliability of the information available on the database? 

Second, how will confidentiality be dealt with? Some Member States (as pointed out by Albert) have stricter views on confidentiality than the European standard. It seems that Member States (who on the Member State exactly?) have to purge all the confidential information, but is that in accordance with the national standard or the European one? 

Third, what 'guidelines' are those mentioned in the Communication? Who will produce them and in what context?

Fourth, what about language and translations? What languages will the materials be available on?

Final note

One final note for terminology. I think this is the first time I am really disappointed with a Commission Communication with the lack of care when dealing with terminology. Using latin should be a no-no (it's not an official language of the Union) and the choice of words is questionable at best.

Here's a few that puzzled me: Mechanism? Notification mechanism? Promoter (instead of contracting authority)? Notifying authority? 

PS: As highlighted by Albert, let's see if this is not the start as soft law for something which will harden up more quickly than anticipated.