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

Provisional text

OPINION OF ADVOCATE GENERAL

CAMPOS SÁNCHEZ-BORDONA

delivered on 15 November 2017 (1)

Joined Cases C‑523/16 and C‑536/16

MA.T.I. SUD S.p.A.

v

Società Centostazioni S.p.A. (C‑523/16),

interveners:

China Taiping Insurance Co. Ltd

and

Duemme SGR S.p.A.

v

Associazione Cassa Nazionale di Previdenza e Assistenza in favore dei Ragionieri e Periti Commerciali (CNPR) (C‑536/16)

(Requests for a preliminary ruling from the Tribunale Amministrativo Regionale per il Lazio (Regional Administrative Court, Lazio, Italy))

(Questions referred for a preliminary ruling — Public procurement — Tenderer who has submitted incomplete documentation — National legislation making the possibility of supplementing it subject to payment of a fine — Proportionality)

1.        Italian law transposed Article 51 of Directive 2004/18/EC (2) in a manner which enabled tenderers for public contracts to remedy any irregularities in their tenders but at the same time imposed on them a financial penalty proportional to the value of the contract.

2.        The referring court asks the Court, in essence, whether the power to impose a penalty and the rules for fixing the amount of the fine, within the framework of the mechanism for ‘remedying procedural shortcomings in return for payment’, are compatible with the provisions of EU law.

I.      Legal framework

1.      EU law: Directive 2004/18

3.        According to Article 2:

‘Contracting authorities shall treat economic operators equally and non-discriminatorily and shall act in a transparent way’.

4.        Article 51 provides:

‘The contracting authority may invite economic operators to supplement or clarify the certificates and documents submitted pursuant to Articles 45 to 50’.

2.      Italian law

(1)    Legislative Decree No 163 of 2006 adopting the Code on public works contracts, public service contracts and public supply contracts and transposing Directives 2004/17/EC and 2004/18/EC (3) (‘the Code’)

5.        Article 38(2a) provides:

‘Any absence, incompleteness or any other substantial irregularity in the information and replacement declarations referred to in paragraph 2 shall require payment, to the contracting authority, by the tenderer responsible therefor of the financial penalty specified in the contract notice, the amount of which cannot be less than 0.1% or more than 1% of the value of the contract and must not exceed EUR 50 000, the payment of which shall be guaranteed by the provisional security.

In such cases, the contracting authority shall grant the tenderer a period of not more than ten days in which to submit, supplement or rectify the declarations required and shall state their content and the persons obliged to make them.

In the case of non-substantial irregularities, that is, any non-essential absence or incompleteness of declarations, the contracting authority shall not require the remedying thereof or impose any penalty.

If the period granted is exceeded, the tenderer shall be excluded from the tendering procedure.’

6.        Article 46 provides that, within the limits laid down in Articles 38 to 45, the contracting authorities, should they deem it necessary, are to ask tenderers to supplement or clarify the certificates, documents or declarations submitted.

7.        Article 230(1), concerning public works, public service and public supply contracts in special sectors, provides that Article 38 of the Code is to be applicable to them.

(2)    Legislative Decree No 50/2016 of 18 April, amending the Public Contracts Code (4)

8.        The reformed Code, which has been in force since 2016, relaxed, in Article 83(9) thereof, the conditions for requiring the fine (imposing it only if rectification is required) and reduced its maximum ceiling (from EUR 50 000 to EUR 5 000). (5)

II.    Facts of the disputes and question referred for a preliminary ruling

1.      Case C‑523/16.

9.        In January 2016, Società Centostazioni S.p.A., which forms part of the Ferrovie dello Stato Italiane S.p.A. group, launched an open procedure for the award of contracts for the carrying on of routine and non-routine maintenance activities and for the provision of energy services at the premises of its railway station buildings, with an estimated value of EUR 170 864 780.81.

10.      The contract notice referred to Articles 38(2a) and 46(1c) of the Code, as regards remedying substantial irregularities in the tenderers’ bids. A tenderer intending to remedy an irregularity would be obliged to pay to the contracting authority the amount of EUR 35 000 for each lot by way of a financial penalty.

11.      Società Centostazioni, as the contracting authority, established that the documentation submitted by the temporary joint venture constituted by Ma.t.i. Sud S.p.A. and Graded S.p.A. (‘Ma.t.i. Sud’), contained some essential irregularities. (6) It urged the tenderer to remedy the shortcomings by 23 March 2016 and imposed on it a penalty of EUR 35 000.

12.      Ma.t.i. Sud, when remedying the defect, indicated its disagreement with that measure and sought to have that penalty annulled. The contracting authority rejected its claim and demanded payment from the tenderer, warning that it would otherwise enforce the provisional security submitted.

13.      Ma.t.i. Sud lodged an appeal against that decision before the referring court.

2.      Case C‑536/16

14.      In October 2014, the Associazione Cassa Nazionale di Previdenza e Assistenza in favore dei Ragionieri e Periti Commerciali (CNPR) launched an open procedure for the conclusion of a framework agreement on the appointment of five managers of its securities portfolio.

15.      The contract notice referred to Articles 38(2a) of the Code, as regards remedying substantial irregularities in the tenderers’ bids. In the case of any absence, incompleteness or other essential irregularity in the information or declarations submitted, the tenderer would be penalised by a fine of EUR 50 000 and would be given a period of ten days to remedy the shortcoming.

16.      The contracting authority noted that there was a substantial irregularity in the documentation of Duemme SGR S.p.A, (7) the remedying of which also required the imposition on it of a fine of EUR 50 000.

17.      As Duemme SGR refused to pay the penalty, the contracting authority ordered it to do so, warning that the amount would otherwise be deducted from its provisional security.

18.      On 9 January 2015, Duemme SGR lodged an appeal before the referring court against the decision imposing the penalty.

3.      Questions referred

19.      The Tribunale Amministrativo Regionale per il Lazio (Regional Administrative Court, Lazio, Italy) has referred, in both cases, the following questions for a preliminary ruling:

‘1.      Although the Member States have the ability to require payment for soccorso istruttorio, a procedure whereby the tenderer is given an opportunity to remedy shortcomings in its tendering documentation, which has the effect of remedying any irregularity, is Article 38(2a) of Legislative Decree No 163 of 2006, in the version in force at the time of the tendering procedure in question ..., which makes provision for the payment of a “pecuniary penalty”, in so far as that penalty must be fixed by the contracting authority (“not less than 0.1% and not more than 1% of the value of the contract and in any event not more than EUR 50 000, the payment of which shall be guaranteed by the provisional security”), contrary to EU law in view of the excessively high amount and the predetermined nature of that penalty, which cannot be adjusted according to the specific situation to be regulated or the seriousness of the irregularity to be remedied?

2.      Is Article 38(2a) of Legislative Decree No 163 of 2006 (in the version in force at the time indicated above) contrary to EU law, in that that requirement to pay for soccorso istruttorio may be regarded as contrary to the principle of opening up the market to competition as widely as possible, an aim which the soccorso istruttorio mechanism is intended to achieve, the facility which the contracting authority is required to offer in that regard therefore being a logical consequence of the duties imposed on that authority by law in the light of the public interest in achieving that aim?’

III. Summary of the parties’ observations

20.      Duemme SGR considers that, in general, Directive 2004/18 precludes the remedying of procedural shortcomings in return for payment as laid down in Article 38(2a) of the Code.

21.      It claims that that mechanism is contrary to the principle of opening up contracts to competition as widely as possible, as it restricts the participation of undertakings, especially small and medium-sized undertakings. (8) Small and medium-sized undertakings have a more limited economic capacity than large undertakings, so that difficulties in paying the penalty caused by their liquidity may constitute an obstacle to free competition.

22.      It adds that, although Articles 49 TFEU and 56 TFEU permit the existence of restrictive national measures, those measures must not be discriminatory, must be justified by overriding reasons relating to the general interest and must be appropriate and proportionate to the objective pursued. In its view, the remedying of procedural shortcomings in return for payment is an unjustified obstacle to free competition.

23.      Duemme SGR asks whether the fine of EUR 50 000 and the scope for adjustment provided for in Article 38(2a) of the Code are compatible with the principle of proportionality, since they do not allow for any variation in the light of the specific circumstances of the infringement committed.

24.      Finally, even if the Italian State is authorised to require payment for the remedying of procedural shortcomings, Article 38(2a) goes beyond what is required by the aims and objectives of Article 51 of Directive 2004/18 (which, it should be remembered, has been repealed).

25.      The CNPR considers that the legislation at issue aims to open up administrative contracting procedures to more competition. In contrast to the previous rules (under which substantial irregularities necessarily and automatically resulted in the exclusion of the tenderer concerned), such shortcomings may be remedied since the reform introduced by Decree-Law No 90 of 2014. Thus, the substantive conditions for participation in that type of procedure take precedence over formal aspects relating to the submission of any required documents.

26.      The financial penalty imposed on any persons who fail to fulfil their documentation obligations constitutes the quid pro quo for that opening up to competition. That penalty, which appears in the tender specifications, is intended to compensate for the additional work involved for the contracting authority because of the tenderer’s negligent conduct.

27.      The CNPR considers that determination of the amount of the fine in the tender specifications ensures that full information is given and complies with the principles of equal treatment and transparency. Both the procedural and substantive requirements for participation in the procurement process must be made public in advance and in a clear manner, so that tenderers are aware of their obligations, including the obligation to submit essential documentation, and of the consequences of failing to fulfil them.

28.      In the CNPR’s view, establishing the penalty according to the value of the contract and on the basis of the seriousness of the irregularity ensures the proportionality of that penalty. Establishing a minimum and maximum percentage (with a ceiling of EUR 50 000) enables the contracting authority to take account of the aspects of the specific case, and it should not be forgotten that the penalty may be imposed only for substantial irregularities.

29.      Finally, the CNPR points out that, even accepting that Article 38(2a) of the Code goes beyond the limits of Article 51 of Directive 2004/18, the Court recognises that the Member States have a certain discretion for the purpose of adopting measures to ensure observance of the principles of transparency and equal treatment. (9)

30.      The Italian Government, after stating that the legislation at issue has been amended, focuses on its compatibility with EU law. In its view, the doubts of the referring court are based on the argument that Article 51 of Directive 2004/18 does not provide for any penalty, and on the possibility that the risk of being penalised hinders participation in procurement procedures.

31.      It claims that the first argument must be rejected, since the Member States might not provide for a rectification mechanism or may provide for one which has a narrower or broader scope. It also does not agree with the second argument, for various reasons:

–        Because the fine is not a deterrent which affects tenderers in all cases but is only a possibility which depends on their free will, since they can easily avoid it by scrupulously fulfilling their obligations.

–        Because that mechanism promotes competition and reinforces respect for the rules of participation in the tendering process by preventing the rectification of irregular tenders free of charge from becoming an instrument of discrimination against diligent undertakings. That objective is achieved by reasonable means, as the penalty is imposed only on tenderers committing substantial irregularities. Accordingly, it also encourages undertakings to be responsible, since it encourages them to submit full and correct tenders. Finally, the contracting authority is compensated for the additional work involved in administering irregular tenders.

–        Because Article 38(2a) does not establish the penalty as a fixed amount and that penalty cannot be considered excessive. On the contrary, it allows the contracting authority discretion in determining the amount of the fine between a maximum and a minimum in relation to the value of the contract, which enables it to adjust the penalty according to the circumstances of the specific case and in accordance with the principle of proportionality.

–        Because the fact that the penalty must be provided for in the contract notice does not imply that it should be expressed as a single amount. However, even assuming that this were so, proportionality is guaranteed not only by establishing the amount of the penalty according to the value of the contract, but also by excluding non-substantial irregularities. The amount is not excessive in so far as, although it is a deterrent, it is tailored to the individual concerned.

–        Because the amount of the penalty is calculated according to the value of the contract, within the stated range, and is subject to judicial review. Italian law authorises the courts to exercise their powers of unlimited jurisdiction, so that a court may directly determine the amount of the penalty and reduce a penalty regarded as excessive.

32.      The Commission, first, points out that, although the procurement procedure in Case C‑523/16 falls within the scope of Directive 2004/17, (10) the request for a preliminary ruling is relevant because, according to Article 230 of the Code, Article 51 of Directive 2004/18 must be applied to the special sectors of Directive 2004/17/EC. (11)

33.      It also observes that the remedying of procedural shortcomings in return for payment is consistent with Article 51 of Directive 2004, an article which the Member States have the option of applying. Since the national legislature decided to transpose that provision, it must be examined whether the penalty regime established by it ensures the correct application of that option.

34.      The Commission agrees with the referring court’s approach where it maintains that the Italian legislation must be considered in the light of the principle of proportionality and of opening up the market to competition. It doubts, however, whether the principles of equal treatment and non-discrimination are relevant since, from the time when penalty is determined in the contract notice, it applies without distinction to all candidates. Moreover, that manner of establishing the amount of the penalty is aimed, precisely, at preventing arbitrariness and discrimination.

35.      From that perspective, the Commission considers that the raison d’être of Article 51 of Directive 2004/18 is to accord the contracting authorities a margin of discretion in assessing merely formal irregularities in order not to exclude suitable tenderers. To that extent, it is instrumental in achieving the objectives of EU law on public procurement, which are intended to ensure the widest opening-up of tendering procedures to competition.

36.      The Commission points out that the Court has stated that that possibility is intended to correct or supplement minor irregularities relating to particulars or information which can be objectively shown to pre-date the deadline for submitting tenders, which are authorised by the contract notice and which potentially apply to all tenderers. (12) In its view, this applies in both the present cases.

37.      In the Commission’s view, a Member State making use of the option afforded by Article 51 of Directive 2004/18 is obliged to guarantee its practical effectiveness (‘effectiveness’) by ensuring that tenderers can fully exercise the rights conferred on them by the directive. The penalty mechanism provided for in Article 38(2a) of the Code may be regarded as lawful only if it serves a legitimate purpose, does not constitute an obstacle to the attainment of the objectives of Article 51 of the directive or to the exercise of the rights provided for therein and respects the principles of establishment, freedom to provide services and proportionality.

38.      The Commission considers that a financial penalty imposable on tenderers, whose participation in the process is subject to the condition of supplementing or rectifying the declarations or documents submitted, may hinder or make less attractive the exercise of the freedoms guaranteed by Articles 49 TFEU and 56 TFEU, thereby discouraging the widest possible participation of tenderers. As the referring court itself points out, the contrast between paying a fine for a minor irregularity and the uncertainty of being awarded a contract may cause tenderers, especially small and medium-sized undertakings, not to participate in tenders or, where applicable, to withdraw their participation after the tenders have been submitted.

39.      However, that restriction may be justified, provided that it pursues a legitimate objective of general interest. Such objectives may include both the aim of making undertakings behave responsibly (encouraging them to act seriously and promptly when supplying the documentation for their tenders) and that of financially compensating the contracting authority for the work involved in the more complicated and extended procedure of remedying procedural shortcomings.

40.      Nonetheless, the Commission does not consider that Article 38(2a) of the Code is an appropriate instrument for attaining the objective pursued for two reasons. The first concerns the establishment of the maximum ceiling of the penalty and the second concerns the contracting authority’s discretion in setting the amount of the fine.

41.      Thus, the first reason starts from the basis that the irregularities to be remedied in the context of Article 38(2a) of the Code are normally limited to cases which do not give rise to particular difficulties and are to be amended within the short period of ten days. However, the Italian legislature does not state how the establishment of an absolute maximum limit of EUR 50 000 will assist the smooth running of the tendering process. On the contrary, that amount, owing to its deterrent nature, may undermine the effectiveness of the option provided for in Article 51 of Directive 2004/18. The Commission remarks that a maximum ceiling of EUR 5 000, such as that adopted by the new Public Contracts Code, is more reasonable. In any event, it is for the national court to assess the proportionality of the EUR 50 000 limit in relation to the additional burden on the contracting authority and whether it is justified.

42.      As to the second reason, the Commission considers that Article 38(2a) of the Code does not refer either to the principle of proportionality or to any obligation on the contracting authority to state reasons in the tender specifications for the amount of the penalty imposed in line with the number and type of irregularities to be remedied. In particular, it considers that the amounts of EUR 50 000 and EUR 35 000, imposed in the main proceedings, were calculated in a random and disproportionate manner.

43.      The Commission therefore concludes that the establishment of those amounts is not attributable either to the wording of Article 38(2a) of the Code or to its specific application by the contracting authority. It will be for the referring court to decide whether that article can be interpreted and applied in accordance with the principle of proportionality and in a manner guaranteeing the effectiveness of Article 51 of Directive 2004/18.

IV.    Procedure before the Court

44.      The orders for reference were received at the Registry of the Court on 12 and 24 October 2016.

45.      On 15 November 2016, Cases C‑523/16 and C‑536/16 were joined.

46.      Duemme SGR, the CNPR, the Italian Government and the European Commission have submitted written observations. It was not considered necessary to hold an oral hearing.

V.      Assessment

47.      By means of the mechanism for ‘remedying procedural shortcomings in return for payment’, which is the subject matter of these references for a preliminary ruling, Italian law allowed tenderers for public contracts to amend specific shortcomings in their tenders. Where those irregularities were substantial, the contracting authority imposed a fine on the tenderer in question.

48.      The initial draft of the Code did not allow substantial irregularities to be remedied. (13) The rule was amended in 2014 precisely in order to allow for that possibility, albeit on condition that the tenderer responsible for them would be penalised by a fine with the following characteristics: (i) its amount would range from 0.1 to 1 per cent of the value of the contract and could not exceed the maximum ceiling of EUR 50 000; (ii) that amount would be established in advance in the contract notice, in an equal amount for all tenderers; and (iii) recovery of the penalty would be guaranteed, as the contracting authority could deduct its amount from the provisional security provided for participation in the procedure.

49.      It must now be examined whether that mechanism, as contained in the national law, complies with the provision (Article 51) of Directive 2004/18, under which the contracting authority may invite tenderers to ‘supplement or clarify the certificates and documents’ submitted with their tenders.

1.      Preliminary remarks

50.      The referring court mentions Directive 2014/24/EU, (14) because, although it had not yet been transposed into Italian law, it was in force when Article 38(2a) of the Code was adopted. I believe, however, that that directive is not applicable to either of the two disputes.

51.      The Court has held that ‘the applicable directive is, as a rule, the one in force when the contracting authority chooses the type of procedure to be followed and decides definitively whether it is necessary for a prior call for competition to be issued for the award of a public contract. Conversely, a directive is not applicable if the period prescribed for its transposition expired after that point in time’. (15)

52.      As the contract notices which are the subject matter of the dispute were published in October 2014 and January 2016, before Directive 2014/24 was incorporated into Italian law (which occurred on 18 April 2016, the day on which the transposition deadline expired), the application of that case-law requires that Directive 2004/18 must be taken into account in both cases.

53.      The Commission does not question the applicability to Case C‑536/16 of Directive 2004/18, (16) but argues, as stated above, that the call for tenders in Case C‑523/16 falls within the scope of Directive 2004/17 (concerning special sectors). However, it adds that, as the Code extends the application of Article 38 thereof to the aforementioned special sectors, the problem is resolved by reversion to the general rule which in Italy has transposed Article 51 of Directive 2004/18.

54.      In neither situation do I see any problem as regards the admissibility of the two references for a preliminary ruling, and I consider it appropriate to resolve them by providing the national court with the guidance it requests on the interpretation of Directive 2004/18.

55.      Lastly, I consider it more logical to reverse the order of the answers to the questions referred, as the first question (on the conditions determining the amount of the fine) presupposes that the second question (on the Member State’s power to impose that penalty) is answered in the affirmative.

2.      The Member State’s power to establish a mechanism for ‘remedying procedural shortcomings in return for payment’

56.      Without prejudice to what I shall forthwith point out concerning the limits to the possibility of remedying certain shortcomings in tenders, according to the case-law of the Court on Directive 2004/18, I can find nothing in that case-law which might preclude the Member States from providing for contracting authorities to charge a certain amount (in this case, as a penalty) (17) to tenderers who have placed themselves in that situation.

57.      Article 51 of Directive 2004/18 provides that contracting authorities ‘may invite economic operators’ to supplement or clarify certain certificates or documents. (18) It says nothing about the means by which such provision should be made, leaving it to the discretion of the Member States. In my view, the Member States enjoy significant freedom to choose the means, in accordance with their own legislative options, (19) provided that the legislation which they adopt does not conflict with that provision or with the rest of EU law.

58.      Within that freedom, the national legislation may, in my view, authorise the remedying of formal shortcomings in the tenders, while imposing on the tenderers a certain economic burden in order to encourage them to submit their tenders correctly and to pass on to them the additional cost (if any) arising from the procedure for remedying shortcomings. However, national legislation of that kind, which, owing to the magnitude of that burden, constitutes a not easily surmountable obstacle to the participation of undertakings (in particular, small and medium-sized ones) in public procurement procedures, would run counter to Directive 2014/18 and to the principles underlying it; (20) moreover, this would also undermine the competition to be desired in respect of those procedures. (21)

59.      I do not consider, therefore, that objections of principle can be raised to a mechanism which makes the correction of shortcomings in the submission of a tender subject to a payment by the person responsible for those shortcomings and required to remedy them. I shall return to that question when examining the characteristics of the onus imposed by the Italian legislation.

60.      However, Article 38(2a) of the Code refers to ‘substantial irregularities’ as shortcomings which may be remedied. That provision might cause difficulties if it paved the way for the continued participation in the tendering procedure of tenderers who should have been excluded because they did not comply with the obligation to submit the documents required in the contract notice at the proper time and in due form. Those difficulties are compounded when the Court’s case-law on that point is considered.

61.      This is a controversial (and delicate) subject concerning which the Court has held that, as a rule, Article 51 of Directive 2004/18 ‘cannot be interpreted as permitting that authority to accept any rectification of omissions which, as expressly provided for in the contract documentation, must result in the exclusion of the [tenderer]’. (22)

62.      The judgment of 4 May 2017, Esaprojekt, (23) has recently helped to determine the scope for remedying irregularities. The following extracts are worthy of special mention:

–        ‘First, the principles of equal treatment and non-discrimination require tenderers to be afforded equality of opportunity when formulating their bids, which therefore implies that the bids of all tenderers must be subject to the same conditions. Second, the principle of transparency is essentially intended to preclude any risk of favouritism or arbitrariness on the part of the contracting authority’.(24)

–        Furthermore, those principles ‘preclude any negotiation between the contracting authority and a tenderer during a public procurement procedure, which means that, as a general rule, a tender cannot be amended after it has been submitted, whether at the request of the contracting authority or at the request of the tenderer concerned. It follows that, where the contracting authority regards a tender as imprecise or as failing to meet the technical requirements of the tender specifications, it cannot require the tenderer to provide clarification’. (25)

–        ‘However, the Court has explained that Article 2 of Directive 2004/18 does not preclude the correction or amplification of details of a tender, on a limited and specific basis, particularly when it is clear that they require mere clarification, or to correct obvious material errors’. (26)

63.      A ‘clarification made on a limited or specified basis or a correction of obvious material errors’ is therefore accepted, but not a ‘substantive and significant amendment of the initial bid, which is more akin to the submission of a new tender’. The provision of ‘documents which are not included in the initial bid’ is also ruled out where their subsequent submission would, in reality, amount to the making of a new bid. (27)

64.      Nor would it be possible to remedy irregularities ‘if the contract documents required provision of the missing particulars or information, on pain of exclusion[, since] it falls to the contracting authority to comply strictly with the criteria which it has itself laid down’. (28)

65.      The referring court will therefore have to assess, in accordance with that guidance on the interpretation of Article 51 of Directive 2014/18 and in the circumstances of these two cases, (a) whether the required rectification of the documents is concerned with purely formal irregularities, so that it does not amount to the submission of a new bid or give the tenderer an additional advantage over competitors, (29) and (b) whether or not it is contrary to what was clearly stated in the tender specifications as being a reason for exclusion.

3.      The amount of the penalty and the principle of proportionality

66.      The view that a mechanism for ‘remedying procedural shortcomings in return for payment’ is, in principle, compatible with Article 51 of Directive 2004/18 must immediately be accompanied by a specific analysis of the particular characteristics of the penalty provided for in Article 38(2a) of the Code, in the version prior to the reform of 2016, as applied in national practice and illustrated by the two cases which are the subject of the two disputes.

67.      Before undertaking that analysis, I consider it appropriate to refer to a legislative point from which the referring court might, in theory, infer consequences going beyond those expressed by it (in its view, ‘the new Code is not applicable to the call for tenders in question, which was announced before its entry into force’). I am referring, specifically, to the reform of Article 38(2a) of the Code promulgated in 2016. (30)

68.      The national court might, if appropriate, apply the principle of retroactivity in melius to proceedings which are still pending, and governed by the legislation most unfavourable to the penalised party, in the event of fulfilment of the twofold condition that, (a) in its domestic system, that principle is applied to administrative penal law, and (b) the penalty imposed by that article of the Code really is of a punitive nature.

69.      If such retroactive application is not possible (quite apart from the fact that the disappearance of the national provision applied in these two cases means that the judgment to be delivered by the Court will have very limited general scope), (31) it will be necessary to examine whether the characteristics of the penalty, as applied in these two cases, actually fulfil the objectives justifying it, in terms which conform to the principle of proportionality.

70.      In the observations of the CNPR, the Italian Government and the Commission, it is pointed out that the establishment of the penalty for substantial irregularities aims, first, to make the tenderer responsible for acting diligently when producing the documentation which will accompany his tender and, second, to compensate the contracting authority for the additional work involved in administering a procurement procedure which allows for the possibility of remedying those irregularities.

71.      The two criticisms of that instrument, as established in the Code, are, on the one hand, that the amount of the penalty is determined a priori, in the contract notice itself, without attempting to assess the magnitude of the irregularities committed or the infringing tenderer’s economic circumstances, and, on the other hand, that the resulting amounts (up to a maximum of EUR 50 000) do not comply with the principle of proportionality. Moreover, the exorbitant amount of the penalty is such as to deter participation in the tendering process, especially by small and medium-sized undertakings, thereby restricting competition.

72.      I consider that the objectives which might justify the imposition of the penalties are not consistent with the minimum and maximum amounts of those penalties, as provided for in the Code before its reform of 2016. Perhaps that reform, by significantly reducing the absolute maximum ceiling to EUR 5 000, was a response to the national legislature’s belief that that ceiling had been excessive, as the referring court implies.

73.      Of course, the argument of higher administrative costs does not justify such substantial amounts: it should be borne in mind that even the minimum of 0.1 per cent (and a fortiori 1 per cent), in contracts subject to Community directives, is in itself high, given the lower thresholds for the application of those directives. That argument is also not consistent with a single amount which is established a priori and consists in a percentage of the amount of the contract, since it would be logical, following that line of thought, to tailor to each individual case to the resulting higher costs.

74.      The disproportionate nature of the penalties is evident in the present two cases, which merely arise from the practical application of the legal provision: an executive’s forgetting to sign and the failure to provide a sworn statement regarding a criminal record result in fines of EUR 35 000 and EUR 50 000 respectively. I find it difficult to accept that the higher cost to the contracting authorities, merely for detecting those two anomalies and for inviting the tenderers to remedy them, (32) corresponds to those amounts, which seem rather to be designed to increase their revenue. (33) I agree with the referring court (which is ultimately responsible for making the assessment concerning proportionality) that such amounts may be described as ‘objectively exorbitant in relation to the [contracting authority’s] additional activity’.

75.      Nor does the aim of ensuring the seriousness of tenders justify such large fines. In the first place, because such fines are imposed (as stated in the tender specifications) regardless of the number of irregularities, that is, regardless of the type of information or document which is missing or must be supplemented and of its greater or lesser significance. The provision treats the offences in a uniform manner and allows their level of complexity to be disregarded. (34)

76.      In the second place, that aim must be weighed against that of promoting the widest possible participation of tenderers, resulting in greater competition and, in general, the best service to public interests. (35) An excessive penalty will probably deter (36) undertakings with smaller financial resources from participating in calls for tenders for high-value contracts, given the percentage limits stated above. They might also be deterred from participating in future calls for tenders which include the same penalty provision.

77.      Moreover, such a burden will be even more of a deterrent to ‘tenderers established in other Member States, inasmuch as their level of knowledge of national law and the interpretation thereof and of the practice of the national authorities cannot be compared to that of national tenderers’. (37)

78.      In short, a provision the purpose of which was, precisely, to help to remedy formal errors made by tenderers (by amending the previous national rule) and, thereby, to increase their chances of successfully participating in public procurement procedures ultimately deters such participation by imposing financial burdens which are disproportionate to its objective.

79.      On the basis of the above arguments, I am inclined to consider that, in that respect, the application of the national provision, which is no longer in force, fails to comply with the principle of proportionality.

VI.    Conclusion

80.      In the light of the foregoing, I propose that the Court provide the following answer to the Tribunale Amministrativo Regionale per il Lazio (Regional Administrative Court, Lazio, Italy):

‘(1)      Article 51 of Directive 2004/18/EC of the European Parliament and of the Council of 31 March 2004 on the coordination of procedures for the award of public works contracts, public supply contracts and public service contracts does not preclude a national provision making the remedying of certain formal irregularities committed by the tenderer when formulating his proposal subject to the payment of an amount, provided that it ensures compliance with the principles of transparency and equal treatment, that the remedying of those irregularities does not make possible the submission of what, in reality, would be a new tender and that the burden is proportionate to the objectives justifying it.

(2)      In circumstances such as those in the present proceedings, Article 51 of Directive 2004/18, interpreted in accordance with the principles of EU law underlying the provisions applicable to public contracts, does not allow for the imposition on tenderers of financial penalties the amount of which cannot be less than 0.1% or more than 1% of the value of the contract, with a maximum ceiling of EUR 50 000.’

1      Original language: Spanish.

2      Directive of the European Parliament and of the Council of 31 March 2004 on the coordination of procedures for the award of public works contracts, public supply contracts and public service contracts (OJ 2004 L 134, p. 114).

3      In the version arising from Decree-Law No 90 of 2014 (Decreto-legge 24 giugno 2014, n. 90, misure urgenti per la semplificazione e la trasparenza amministrativa e per l'efficienza degli uffici giudiziari (14G00103) (GU No 144 of 24 June 2014), endorsed by Law No 114/2014 (Legge 11 agosto 2014, n. 114, conversione in legge, con modificazioni, del decreto-legge 24 giugno 2014, n. 90) (GU No 190 of 18 August 2014)).

4      Legislative Decree No 50 of 18 April 2016, Codice dei contratti pubblici (GU No 91 of 19 April 2016).

5      Although it can have no bearing on the consideration of the questions referred, since, given the date of its publication (later than the closure of the written procedure before the Court), it did not form the subject matter of the inter partes proceedings, in contrast to what happened with the reform of 2016, it should be noted that a further, more radical amendment of the Code in that respect occurred in 2017. In fact, Legislative Decree No 56/2017 of 19 April issued a new draft of Article 89(3) which definitively removed the requirement to pay for the remedying of shortcomings upon its entry into force (20 May 2017). Since then, economic operators have been able to rectify the absence of any formal element from their proposals (except those relating to the economic and technical aspects of the tender) without incurring any kind of penalty or other similar charge.

6      Specifically, it pointed out that the declaration containing the undertaking to grant a special collective power of representation to the principal undertaking of the group (Ma.t.i. Sud) had not been signed by the legal representative of that undertaking.

7      Specifically, it had not incorporated the sworn statements that its vice-president and director general had no criminal record, as requested in the tender specifications.

8      It relies on the ‘Green Paper on the modernisation of EU public procurement policy’ (COM/2011/15.final), stating that the provision in the Code runs counter to the objective of ‘reducing administrative burdens in the selection phase’, which aims to improve access by small and medium-sized undertakings to selection processes.

9      It relies on the judgment of 22 October 2015, Impresa Edilux and SICEF (C‑425/14, EU:C:2015:721, paragraphs 26 and 28).

10      Directive of the European Parliament and of the Council of 31 March 2004 coordinating the procurement procedures of entities operating in the water, energy, transport and postal services sectors (OJ 2004 L 134, p. 1).

11      In the Commission’s view (footnote 5 of its written observations), in Case C‑536/16, ‘the contracting authority appears to be among those listed in Annex IV to Directive 2004/17, and the subject matter of that invitation to tender appears to fall within the scope of Articles 3(1) and 20(1) of that directive’.

12      It cites the judgment of 10 October 2013, Manova (C‑336/12, EU:C:2013:647).

13      Only ‘simple’ irregularities could be remedied under Article 46(1) of the preceding version of the Code.

14      Directive of the European Parliament and of the Council of 26 February 2014 on public procurement and repealing Directive 2004/18/EC (OJ 2014 L 94, p. 65).

15      Judgment of 7 April 2016, Partner Apelski Dariusz (C‑324/14, EU:C:2016:214, paragraph 83).

16      That statement might need to be qualified in the light of the subjective characteristics (the organising body was a social welfare and assistance association representing accountants and chartered accountants, with legal personality governed by private law) and the objective features of the call for tenders (it was published in order to select five securities managers for that association). However, the application to that case of Directive 2004/18 is not questioned in the observations of any party, perhaps because the CNPR undertook in the tender specifications ‘to act, for these purposes, as a body governed by public law’ and because the call for tenders consistently referred to the legal rules governing public procurement in Italy, the decisions of that body having been contested before the national administrative courts.

17      In the observations of Duemme SGR, an account is given of the discussion among the Italian authorities themselves as to the true nature of that charge: for some, it clearly constitutes an administrative penalty, as its name suggests; for others, (in particular, the National Anti-Corruption Authority, according to its agreement of 8 January 2015), it is merely a compensatory instrument. The referring court also echoes ‘some commentators’ and the judgment of another administrative court, according to which the penalty might rather be ‘redefined’ as compensation.

18      Article 56(3) of the (subsequent) Directive 2014/24 is more precise on this matter: ‘Where information or documentation to be submitted by economic operators is or appears to be incomplete or erroneous or where specific documents are missing, contracting authorities may, unless otherwise provided by the national law implementing this Directive, request the economic operators concerned to submit, supplement, clarify or complete the relevant information or documentation within an appropriate time limit, provided that such requests are made in full compliance with the principles of equal treatment and transparency’.

19      A number of options have found favour in Italy; as is attested by Opinion No 855/2016 of 1 April 2016, which was delivered before the adoption of Legislative Decree No 50 of 2016, in which the Consiglio di Stato (Council of State, Italy) proposed that the Government remove the requirement to pay for the remedying of procedural shortcomings. That recommendation was not adopted in its entirety at that time (although the penalties were reduced), in contrast to what would subsequently occur, in 2017, when the above-mentioned Decree Law No 56/1017 was adopted.

20      In particular, ‘the principles of freedom of establishment and freedom to provide services as well as … those deriving therefrom’, as referred to in the judgment of 10 November 2016, Ciclat (C‑199/15, EU:C:2016:853, paragraph 25). Moreover, under Article 2 of Directive 2004/18, contracting authorities must treat economic operators equally and non-discriminatorily and act in a transparent way. Those principles are emphasised in recitals 2 and 46 of that directive.

21      The Court has held in the judgment of 23 December 2009, CoNISMa (C‑305/08, EU:C:2009:807, paragraph 37), that ‘one of the primary objectives of Community rules on public procurement is to attain the widest possible opening-up to competition (see, inter alia, to that effect[, judgment of 13 December 2007,] Bayerischer Rundfunk and Others, [C‑337/06, EU:C:2007786,] paragraph 39) and that it is the concern of Community law to ensure the widest possible participation by tenderers in a call for tenders ([judgment of 19 May 2009,] Assitur,[C‑538/07 [EU:C:2009:317], paragraph 26). It should be added that the widest possible opening-up to competition is contemplated not only from the point of view of the Community interest in the free movement of goods and services but also the interest of the contracting authority concerned itself, which will thus have greater choice as to the most advantageous tender which is most suitable for the needs of the public authority in question.’

22      That form of words is repeated in the judgments of 6 November 2014, Cartiera dell’Adda (C‑42/13, EU:C:2014:2345, paragraph 46), and of 10 November 2016, Ciclat (C‑199/15, EU:C:2016:853, paragraph 30). The judgments of 29 March 2012, SAG ELV Slovensko and Others (C‑599/10, EU:C:2012:191); of 10 October 2013, Manova (C‑336/12, EU:C:2013:647), and of 7 April 2016, Partner Apelski Dariusz (C‑324/14, EU:C:2016:214), inter alia, have also considered the problems raised by the application of Article 51 of Directive 2004/18.

23      Case C‑387/14, EU:C:2017:338.

24      Ibid., paragraph 36.

25      Ibid., paragraph 37.

26      Ibid., paragraph 38.

27      In my opinion, paragraph 45 of the judgment of 4 May 2017, Esaprojekt (C‑387/14, EU:C:2017:338), must be interpreted in that manner, because, in that case, the omission affected precisely the documentation accrediting experience, in accordance with the requirements of the tender specifications, which was remedied in terms which had little to do with the initial bid. On other occasions (judgment of 10 October 2013, Manova, C‑336/12, EU:C:2013:647, paragraphs 39 and 40), the Court accepted that the contracting authority could request new documents, such as a published balance sheet, containing the ‘correction or amplification of details of such an application, on a limited and specific basis, so long as that request relates to particulars or information … which can be objectively shown to pre-date the deadline for applying to take part in the tendering procedure concerned’.

28      Judgment of 10 October 2013, Manova (C‑336/12, EU:C:2013:647, paragraph 40). In similar terms, the judgment of 6 November 2014, Cartiera dell’Adda (C‑42/13, EU:C:2014:2345) held that the tenderer’s exclusion was valid as it was required by the terms of the tender specifications. In that judgment, the Court examined the possibility of rectifying omissions under Articles 2 and 51 of Directive 2004/18 in connection with Article 38 of the Code in the version prior to its reform of 2014. It considered that Article 2 of Directive 2004/18 did not preclude exclusion because it was stated in the tender specifications: ‘in particular, in so far as the contracting authority takes the view that that omission is not a purely formal irregularity, it cannot allow the tenderer subsequently to remedy the omission in any way after the expiry of the deadline for submitting bids’ (paragraph 45).

29      The absence of the signature of the tendering undertaking’s legal representative in Case C‑523/16 may have that characteristic. As regards Case C‑536/16, the lack of a sworn statement that the person concerned does not have a criminal record might be akin to the shortcoming (declared irremediable) which was the subject matter of the judgment of 6 November 2014, Cartiera dell’Adda (C‑42/13, EU:C:2014:2345). However, as was pointed out in the previous footnote, the legal framework at that time was different and, in particular, the irremediable nature of the irregularity arose from the tender specifications themselves, in contrast with the situation in this case.

30      As I have already observed, the amendment consisted, as far as is relevant here, in reducing the absolute maximum limit to EUR 5 000 and in providing that the fine would be imposed only in the event of rectification. The provision that the fine is covered by the tenderer’s provisional security is also removed.

31      The Court must, of course, provide an answer to the referring court. However, that answer concerns, in reality, the compliance of national legislation and a national practice which are no longer in force with a directive (Directive 2004/18) which has also been repealed.

32      The contracting authority must, in any event, examine the documents submitted and the tender’s conformity with the tender specifications. Where an irregularity is detected, if the tenderer is invited to remedy it, he is given ten days to do so. The additional work involved cannot, therefore, be deemed to be excessive.

33      The order for reference goes so far as to state that the measure adopted would seem to ‘encourage contracting authorities to play “spot the mistake”’.

34      The referring court also points out that the ‘blame’ for the error attributed to the candidate may sometimes be related to the ‘degree of descriptive clarity’ with which the requirements laid down by the contracting authority are set out.

35      See, to that effect, point 58 and the case-law cited in footnote 21.

36      In its Opinion No 855/2016, the Consiglio di Stato (Council of State) referred to the ‘undoubtedly deterrent’ effect of the mechanism.

37      Judgment of 2 June 2016, Pizzo (C-27/15, EU:C:2016:404, paragraph 46).

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