The unravelling of EU law compliance on the run up to Brexit [Public Procurement Edition]

A few months ago I tweeted that we were on the cups of watching the rule of EU law disappearing before our eyes here in the UK as Brexit approaches. If we consider the CJEU's enforcement of EU law to be the ultimate deterrent for non-compliance, such effect is progressively reduced as time goes on and the exit certainty increases. And as with dam bursts, what starts as a trickle ends up as a flood.

For agents in the field making decisions about how to behave, this reduced influence of EU law will certainly permeate into their decision making thinking. If the risk of being caught and punished is low (and getting lower all the time) why comply with the law in the first place?

This takes me to two stories about public procurement compliance, one from the 90s/00s the other from today. As for the first, I remember when doing my Ph.D on the use of competitive dialogue seeing someone of reputation who shall remain nameless arguing that technically the UK use of the negotiated procedures for PPPs/PFIs in the 90s was non-compliant with EU law, but the fact that the competitive dialogue had been introduced in 2004 showed the country was right. In consequence, it should not be punished for any illegality committed in the meanwhile. And it was not: the proceedings were opened by the Commission but nothing came out of them.

Then this morning Albert tweeted about the Department for International Trade assessing the "cultural fit" of bids. Yes, "cultural fit". This includes "[b]e committed to the best possible outcome for the United Kingdom following its departure from the European Union." We can unpack this criterion in a few different ways and perspectives:

1. It's nothing else other than asking for professional ethic

The least ominous option is that this is simply a new version of the more traditional "ensuring that the contract will be performed professionally and to a high standard." If that is the case, the language could have been different and certainly be included as a contract performance clause and not as an award criterion. But I do not think this option sticks.

2. It's a sign of what it is about to come

The more logical explanation is that the key decision makers are already discounting the compliance of EU law in their decision-making process (even if it violates the Public Contracts Regulations 2015 which are national law) and doing whatever they please. If this interpretation is correct, every decision like this that goes unchecked and is complied with by public servants and the market will increase the likelihood other disregards of EU law will spawn between now and the exit date.

It can be argued that the contract value is below the EU thresholds and as such not subject to the full might of EU regulation in procurement. Even if true, it may be subject to Treaty principles, including equal treatment and non-discrimination. But even if it is a simply purely national contract...

3. It is illegal under Regulation 111 of the Public Contracts Regulation 2015 (PCR2015)

Albert has already highlighted that Regulation 111 of the PCR2015 would be applicable and that the proposed contract breaches it. I agree, and our commentary to that particular Regulation is available here. Regulation 111 is a purely national provision covering contracts that would not be subject to EU law due to their low value. There are grounds to challenge this award criteria and they should be used by any aggrieved bidder (or potential bidder).

4. It is illegal under EU law

If the contract is valued above the EU financial thresholds, then the award criteria would also be illegal as it mixes what could be a selection criterion with the award of the contract and both need to be kept separate. Article 58 of Directive 2014/24/EU was transposed into England and Wales by Regulation 58 of the PCR2015 and our commentary on it is here. Long story short: information about bidders is by definition irrelevant (i.e., illegal) when assessing the bid.*

Furthermore, award criteria need to be relevant to the proposed contract (Regulation 67 PCR2015) and proportionate (Regulation 18 PCR2015) to the aims being pursued. This award criteria is neither. So yes, the Government should be left with its ears burning for this proposed award criteria. 

Let's conclude with an analogy: how would we react if instead of a "cultural fit" criterion the contract included a "political fit"? The latter would probably generate uproar but for the purposes of EU law both are questionable (i.e., illegal) for the exact same reasons.

The bottom line for me is that we may finally seeing in this instance the start of a progressive disregard for EU law rules and the deterrent compliance role of the CJEU as an enforcer of EU legality. As an EU citizen, I hope to be proved wrong.  

*I could drill down on the legal minutiae of the provisions but this is probably enough to pass the message 

Links I Liked [Public Procurement]

1. Evaluation of tenders after the expiry of their validity does not annul tender for EU public contracts (T-553/13). Albert comments on case T-553/13.

2. UK Government spent 27.1% of procurement spend with SMEs. Full dataset here. It is all on the way how you count it: only 10.9% was spent directly with SMEs, the rest came via supply chain arrangements. It makes as much sense as the claims by multinationals that their employees pay a lot of tax on the countries where they operate.

3. UnitingCare, NHS Provider Consortium, Folds and Walks Away from Cambridge Contract. Ohm dear.

4. Court of Appeal overturns conviction of former Portuguese Education Minister in procurement case (Portuguese only). Long story short, Maria de Lurdes Rodrigues awarded €220k worth of services (including legal) to the brother of another Minister. The Audit Court considered the contract illegal and she was found guilty in first instance. However, the Court of Appeal repealed the decision, interpreting the then existing law (Decree-Law 197/99) with a law yet to come into force at the time (Public Contracts Code). This is a great example of why legal services should be subject to the same procurement rules as all other services.

As for the fact the Court of Appeal decided to base its decision on a non-existent law at the time, well maybe they did not even notice the existence of Directive 2004/18 and that Directives generate indirect effect.

5. Corruption And 'Tenderpreneurs' Bring Kenya's Economy To Its Knees. Great writeup by Forbes on corruption in Kenya. Speaking of corruption and transparency.

Links I Liked [Public Procurement]

1. Legal Aid contract(s) go pear shaped with dozens (hundreds?) of challenges. Whistleblower claims process was a shambles. Apparently, the tender document imposed 17 questions (sub)-divided into 3/4 parts each. Do you really need 50 different questions to identify the best bid (not bidder!) for the contract(s)? On the other hand, legal services are reaping what they sowed: if instead of lobbying for special treatment for ages (Part B Services anyone?), they had accepted to be a service like any other, both the MoJ and the bidders themselves would be used by now to the practice (and pitfalls) of procurement.

2. CJEU rattles the social considerations cage in RegioPost case. Albert cannot resist commenting on it at length and is preparing an event on the topic.

3. Programmer who bid $1 on 18F's open source contract experiment, speaks up. Again, I do not see anything wrong with his attitude and he garnered incredible levels of (free) publicity for his skills. Would this free publicity constitute a case of indirect State Aid in the EU? Nah...

4. Washington DC ponders more transparency to tackle corruption in public procurement. Open Contracting Partnership weighs in. On this side of the pond, claims that contract transparency is now stalled.

5. Cabinet Office considering Crown Marketplace, built around the Digital Marketplace platform. Would local government take it up?

Links I Liked [Public Procurement]

1. What public procurement documents need to be published upfront? Myself and Albert have dabbed on this in the past, but the problem should have been solved directly in the Public Contracts Regulations 2015. But hey, as usual "it's the Directive's fault for not being clear so let's publish some guidance."

2. Oppex.com raises boatload of cash ($2.3M) for its tender search engine. I welcome any and every startup working in public procurement but on this case I struggle to see what is the winning proposition of Oppex so far. Yes, they aggregate data that is already publicly available, but that is pretty much it as far as I can tell. There is some value on it for potential customers, but not much. Oppex can provide a lot more value to however if it moves from simply aggregating contract notice data and building instead some sort of intelligence/analytics about existing contracts into their platform like SpendNetwork does.

3. Negotiation skills matter in public procurement. They do, but unfortunately the system is not geared up (yet) to foster those skills in procurement officers. Brownie points for the picture with my former boss.

4. CJEU confirms its jurisdiction to review procurement decisions linked to EU's external action (C‑439/13 P). Albert never allows a public procurement judgment to go uncommented.

5. EU Commission puts out some public procurement guidance to help practitioners involved in projects funded by European Structural and Investment Funds. Helpful, but now imagine how life would be if only all EU funding programmes used the same rules and approach to public procurement and audit reporting...

 

Justice delayed is justice denied: the backlog of procurement cases in the CJEU keeps rising

Albert looked into the CJEU's data report for 2014 and compiled a nice graph on the evolution of public procurement litigation at EU level over the last 8 years:

Data compiled by Albert Sanchez-Graells

Data compiled by Albert Sanchez-Graells

This graph tells us an important story: the number of public procurement cases brought before the CJEU (General Court and the CJEU itself) is growing, albeit from a small base and very slowly. We are now up to 40 new cases a year which is not a significant amount bearing in mind that the CJEU needs to deal with preliminary rulings and appeals coming from 28 national jurisdictions. But why is are the numbers growing?

The worrying sign however is the increasing backlog of unresolved cases. On average, each new case brought before the Court takes longer to decide than the previous one. As we know, justice delayed, is justice denied. I do not know the average duration of a case (would have to check those manually) but with new Directives coming in roughly every ten years, I would say that there is a risk that an ever growing number of decisions is taken after a new set of rules comes into force. This does not affect the validity of the judgment in itself, but clearly limits the usefulness of case law as a source of law and an aide for interpreting the Directives.

As a background, a few months ago I discussed the issue of the timescales when the CJEU gets involved and an official (who shall remain nameless) told me that the Court has tried over the years to increase the number of judges and Advocate-Generals precisely to reduce the workload and speed up judgments. The problem has been, according to said person, the difficulty in convincing Member States not to have an even number of judges in either Court or finding the budget to double all the numbers.

Any tips or views on this would be most appreciated.