Court of Justice of the European Communities (including Court of First Instance Decisions)

JUDGMENT OF THE COURT (Second Chamber)
7 October 2004 (1)

v

THE COURT (Second Chamber),

after hearing the Opinion of the Advocate General at the sitting on 1 July 2004,

gives the following

Judgment

1. The reference for a preliminary ruling concerns the interpretation of Article 30(1) of Council Directive 93/37/EEC of 14 June 1993 concerning the coordination of procedures for the award of public works contracts (OJ 1993 L 199, p. 54; -˜the Directive-™).
2. The reference was made in proceedings between Sintesi SpA (-˜Sintesi-™) and the Autorità per la Vigilanza sui Lavori Pubblici (Public Works Supervisory Authority; -˜the supervisory authority-™) concerning the award of a public works contract under the restricted tendering procedure.

Legal framework
Community rules
3. According to the second recital in the preamble to the Directive, -˜-¦ the simultaneous attainment of freedom of establishment and freedom to provide services in respect of public works contracts awarded in Member States on behalf of the State, or regional or local authorities or other bodies governed by public law entails not only the abolition of restrictions but also the coordination of national procedures for the award of public works contracts-™.
4. Article 30(1) of the Directive provides:
-˜1. The criteria on which the contracting authorities shall base the award of contracts shall be:
(a) either the lowest price only;
(b) or, when the award is made to the most economically advantageous tender, various criteria according to the contract: e.g. price, period for completion, running costs, profitability, technical merit.-™
National legislation
5. Article 30(1) of the Directive was transposed into Italian law by Article 21 of Law No 109 of 11 February 1994 (GURI No 41 of 19 February 1994, p. 5; -˜Law No 109/1994-™), which is the framework law on public works in Italy.
6. Article 21(1) and (2) of Law No 109/1994, in the version in force at the material time, is worded as follows:
-˜Criteria for the award of contracts - Contracting authorities
1. The award of contracts by open or restricted tender shall be based on the criterion of lowest price, below the base price in the tender notice, and shall be determined as follows:
-¦
2. The award of contracts by call for competitive tenders and also the allocation of concessions by restricted calls for tender shall be made on the basis of the criterion of the most economically advantageous tender, taking into account the following factors which vary according to the work to be carried out:
-¦-™

Main proceedings and questions referred to the Court
7. In February 1991, the City of Brescia (Italy) awarded Sintesi a concession contract for the construction and management of an underground car park.
8. Under the contract concluded between the City of Brescia and Sintesi in December 1999, Sintesi was required to submit the completion of the works to a restricted call for tenders, at European level, in accordance with the Community rules on public works.
9. By a notice published in the Official Journal of the European Communities on 22 April 1999, Sintesi made a restricted call for tenders based on the criterion of the most economically advantageous tender. This tender was to be assessed on the basis of price, technical merit and time necessary for completion of the works.
10. Following the preselection stage, Sintesi sent the selected undertakings a letter of invitation to tender and the file of tender documents. Ingg. Provera e Carrassi SpA (-˜Provera-™), one of the companies invited to submit a tender, sought and was granted an extension of the period for submitting its tender. However, it subsequently informed Sintesi that it would not take part in the tendering procedure, on the ground that it was unlawful.
11. On 29 May 2000, Sintesi awarded the contract, accepting the most economically advantageous tender.
12. Following a fresh complaint by Provera, the contracting authority, by letter of 26 July 2000, informed Sintesi that it regarded the tendering procedure in question as contrary to Law No 109/1994, and on 7 December 2000 it adopted Decision No 53/2000, which is worded as follows:
-˜1. in the system governed by Framework Law No 109/1994 on public works, a contract can be awarded only on the basis of the criterion of the lowest price; the criterion of the most economically advantageous tender can be employed only in the hypotheses of competition for and the concession of the construction and management of public works;
2. the above rules are applicable to all works contracts, whatever the amount involved, including where that amount is above the Community threshold, and the system in question cannot be regarded as contrary to Article 30(1) of Directive 93/37/EEC -¦;
3. where, in cases where the law so allows, and therefore not in the case referred to us, assessment of the technical merit is provided for in the framework of the actual application of the criterion of the most economically advantageous tender, it is necessary, in order to allow such an assessment, that the project be capable of being altered by the candidates.-™
13. Sintesi challenged that decision before the national court, claiming, in particular, that there had been a breach of Article 30(1) of the Directive.
14. It claimed that it follows from that provision that the two criteria for the award of public works contracts, namely the -˜lowest price-™ criterion and the -˜most economically advantageous-™ criterion, are placed on an equal footing. By excluding, on the basis of Law No 109/1994, the criterion of the most economically advantageous tender in the case of a public works contract concluded according to the restricted tendering procedure, the supervisory authority was, in Sintesi-™s submission, in breach of Article 30(1) of the Directive.
15. The national court observes that Article 21(1) of Law No 109/1994 seeks to ensure transparency in the procedures for awarding public contracts, but is uncertain as to whether that provision is capable of ensuring free competition, since price does not on its own appear to constitute a factor capable of ensuring that the best tender will be accepted.
16. The national court also makes the point that the car park in question will be situated in the historical centre of the City of Brescia. Consequently, the works to be carried out would be very complex and would require an assessment of technical elements, which should be provided by the tenderers, so that the contract can be awarded to the undertaking most capable of carrying out the work.
17. In those circumstances, the Tribunale amministrativo regionale per la Lombardia decided to stay proceedings and refer the following two questions to the Court for a preliminary ruling:
-˜1. Does Article 30(1) of [the Directive], in so far as it allows individual contracting authorities to choose either the lowest price or the most economically advantageous tender as the criterion for the award of a contract, constitute a logically consistent application of the principle of free competition which is already enshrined in Article 85 of the EC Treaty (now Article 81 EC) and requires that all tenders submitted as part of a procedure for the award of a contract announced within the single market be assessed in such a way as not to prevent, restrict or distort comparison between them?
2. Does Article 30 of [the Directive], as a strictly logical consequence, preclude Article 21 of Law No 109 of 11 February 1994 from excluding, for the award of public works contracts under open and restricted procedures, the choice by the contracting authority of the criterion of the most economical tender, and prescribing, as a general rule, that of the lowest price only?-™

Admissibility of the reference for a preliminary ruling
18. The Italian Government has doubts as to the admissibility of the reference, on the ground that the questions are purely theoretical.
19. The Commission of the European Communities questions the very applicability of Article 30 of the Directive to the main proceedings, in so far as the award procedure was undertaken by a works concessionaire.
20. It states that under Article 3(3) and (4) of the Directive, only a public works concessionaire which is itself one of the contracting authorities referred to in Article 1(b) of the Directive is required, in respect of the work to be carried out by third parties, to comply with all the provisions of the Directive. Public works concessionaires other than contracting authorities, on the other hand, are only required to observe the rules on advertising set out in Article 11(4), (6), (7) and (9) to (13) and Article 16 of the Directive.
21. In that regard, it is settled case-law that the procedure provided for by Article 234 EC is an instrument of cooperation between the Court of Justice and national courts (see, inter alia, Case C-343/90 Lourenço Dias [1992] ECR I-4673, paragraph 14, and Case C-314/01 Siemens and ARGE Telekom [2004] ECR I-'0000, paragraph 33, and the case-law cited there).
22. In the context of that cooperation, it is for the national court or tribunal seised of the dispute, which alone has direct knowledge of the facts giving rise to the dispute and must assume responsibility for the subsequent judicial decision, to determine in the light of the particular circumstances of the case both the need for a preliminary ruling in order to enable it to deliver judgment and the relevance of the questions which it submits to the Court (see, inter alia, Lourenço Dias, cited above, paragraph 15; Case C-390/99 Canal Satélite Digital [2002] ECR I-607, paragraph 18; and Siemens and ARGE Telekom, cited above, paragraph 34).
23. In the present case, it is by no means clear that the interpretation of Article 30 will be of no assistance in the resolution of the main dispute since, as stated in the decision for reference, under the contract concluded between the City of Brescia and Sintesi, the latter, in its capacity as concessionaire, was required, for the purpose of the works at issue in the main proceedings, to launch a restricted tender procedure, at European level, in accordance with the Community rules on public works.
24. The reference for a preliminary ruling must therefore be held to be admissible.

The questions for the Court
25. By its questions, which should be examined together, the national court is asking essentially whether Article 30(1) of the Directive is to be interpreted as meaning that it precludes national rules under which, when awarding public works contracts, following open or restricted tendering procedures, the contracting authorities are required to employ only the lowest-price criterion. In particular, it asks whether the objective pursued by that provision, which seeks to ensure effective competition in the field of public contracts, necessarily implies that the question must be answered in the affirmative.
Observations submitted to the Court
26. According to Sintesi, Article 30(1) of the Directive, in so far as it leaves to the contracting authority the free choice between lowest price and most advantageous tender as the criterion for awarding public works contracts, implements the principle of free competition. Reducing that authority-™s discretion to a mere analysis of the prices submitted by the tenderers, as required by Article 21(1) of Law No 109/1994, constitutes an obstacle to the selection of the best possible tender and is therefore contrary to Article 81 EC.
27. Provera and the Italian Government claim that in adopting Law No 109/1994 the national legislature was seeking, in particular, to combat corruption in the public works contracts sector by eliminating the administration-™s discretion in awarding contracts and by adopting transparent procedures apt to ensure free competition.
28. In their submission, it follows from the very wording of Article 30(1) that the Directive does not ensure that the contracting authority is free to choose one criterion rather than another, nor does it require that one or other criterion be used in certain specific circumstances. Article 30(1) merely sets out the two criteria applicable to the award of contracts and does not specify the cases in which they are to be used.
29. Nor does the national legislature-™s choice of the -˜lowest price-™ criterion in restricted or open tendering procedures adversely affect tenderers-™ rights, since the same, pre-determined criterion is applied to each of them.
30. The Greek and Austrian Governments agree with that interpretation.
31. In particular, according to the Austrian Government, there is no indication in Article 30 of the Directive as to which of the two criteria, which are placed on an equal footing, the contracting authority must choose. The Directive thus leaves it to that authority to determine precisely what criterion it will use to obtain the best quality/price ratio in the light of its needs. However, Article 30 does not preclude the national legislature from itself directly making that choice, depending on the nature of the contracts in question, by authorising either both criteria, or only one of them, as the Directive does not confer on the contracting authority any subjective right to exercise such a choice.
32. The Commission also submits that the Directive does not express any preference for one or other of the two criteria set out in Article 30(1) of the Directive. That provision seeks only to ensure that contracting authorities do not adopt criteria for the award of public works contracts other than the two criteria which it sets out; it does not impose any choice between them. In order to preclude arbitrary conduct on the part of those authorities and to ensure healthy competition between undertakings, it is in principle immaterial whether the contract is concluded on the basis of the lowest price or the most economically advantageous tender. It is also essential that the award criteria be clearly stated in the contract notice and applied objectively and without discrimination.
33. The choice of the appropriate criterion is for the contracting authority, which examines each particular case when awarding a specific contract, or for the national legislature, which is entitled to adopt legislation applicable either to all public works contracts or only to certain types of contracts.
34. The Commission observes that, in the present case, Article 21(1) of Law No 109/1994 requires that the lowest-price criterion be used in order to ensure the greatest transparency of procedures relating to public works contracts, which is consistent with the objective pursued by the Directive, namely to ensure the development of effective competition. Such a provision is therefore not contrary to Article 30(1) of the Directive.
The Court-™s answer
35. According to the 10th recital thereto, the purpose of the Directive is to develop effective competition in the field of public contracts (see Case C-27/98 Fracasso and Leitschutz [1999] ECR I-5697, paragraph 26; Joined Cases C-285/99 and C-'286/99 Lombardini and Mantovani [2001] ECR I-9233, paragraph 34; and Case C-470/99 Universale-Bau and Others [2002] ECR I-11617, paragraph 89).
36. That objective, moreover, is expressly stated in the second subparagraph of Article 22(2) of the Directive, which provides that where the contracting authorities award a contract by restricted procedure, the number of candidates invited to tender is in any event to be sufficient to ensure genuine competition.
37. In order to meet the objective of developing effective competition, the Directive seeks to organise the award of contracts in such a way that the contracting authority is able to compare the different tenders and to accept the most advantageous on the basis of objective criteria (Fracasso and Leitschutz, cited above, paragraph 31).
38. Thus Article 30(1) of the Directive sets out the criteria on which the contracting authority relies when awarding contracts, namely either the lowest price only or, when the award is made to the most economically advantageous tender, various criteria according to the contract, such as price, period for completion, running costs, profitability, technical merit.
39. A national provision, such as that at issue in the main proceedings, which restricts the contracting authorities-™ freedom of choice, in the context of open or restricted tendering procedures, by requiring that the lowest price be used as the sole criterion for the award of the contract, does not prevent those authorities from comparing the different tenders and from accepting the best one on the basis of an objective criterion fixed in advance and specifically included among those set out in Article 30(1) of the Directive.
40. However, the abstract and general fixing by the national legislature of a single criterion for the award of public works contracts deprives the contracting authorities of the possibility of taking into consideration the nature and specific characteristics of such contracts, taken in isolation, by choosing for each of them the criterion most likely to ensure free competition and thus to ensure that the best tender will be accepted.
41. In the main proceedings, the national court has specifically highlighted the technical complexity of the work to be carried out and, accordingly, the contracting authority could profitably have taken that complexity into account when choosing objective criteria for the award of the contract, such as those set out, by way of example, in Article 30(1)(b) of the Directive.
42. It follows from the foregoing considerations that the answer to the questions referred to the Court must be that Article 30(1) of the Directive is to be interpreted as meaning that it precludes national rules which, for the purpose of the award of public works contracts following open or restricted tendering procedures, impose a general and abstract requirement that the contracting authorities use only the criterion of the lowest price.

Costs
43. Since these proceedings are, for the parties to the main proceedings, a step in the action pending before the national court, the decision on costs is a matter for that court. Costs incurred in submitting observations to the Court, other than the costs of those parties, are not recoverable.




On those grounds, the Court (Second Chamber) rules as follows:
Article 30(1) of Council Directive 93/37/EEC of 14 June 1993 concerning the coordination of procedures for the award of public works contracts is to be interpreted as meaning that it precludes national rules which, for the purpose of awarding public works contracts following open or restricted tendering procedures, impose a general and abstract requirement that the contracting authorities use only the criterion of the lowest price.

Signatures.

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1 - Language of the case: Italian.