ON APPEAL FROM THE HIGH COURT OF JUSTICE
(QUEEN'S BENCH DIVISION) (ADMINISTRATIVE COURT)
Strand, London, WC2A 2LL
B e f o r e :
LADY JUSTICE ARDEN
LORD JUSTICE TOULSON
| THE QUEEN
(ON THE APPLICATION OF GILLIAN CHANDLER)
|- and -
|SECRETARY OF STATE FOR CHILDREN, SCHOOLS AND FAMILIES
|- and -
|(1) UNIVERSITY COLLEGE LONDON
(2) LONDON BOROUGH OF CAMDEN
Mr Michael Beloff QC, Mr Gerard Clarke & Mr Sam Grodzinski (instructed by Treasury Solicitors) for the Respondent. The interested parties were not represented.
Hearing dates : 30 June-1 July 2009
Crown Copyright ©
Lady Justice Arden :
THE PUBLIC PROCUREMENT REGIME
(A) Principles in the Treaty
Within the framework of the provisions set out below, restrictions on freedom to provide services within the Union shall be prohibited in respect of nationals of member States who are established in a Member State other than that of the person for whom the services are intended.
The Council may, acting by a qualified majority on a proposal from the Commission, extend the provisions of the Chapter to nationals of a third country who provide services and who are established within the Union.
Services shall be considered to be 'services' within the meaning of the Treaties where they are normally provided for remuneration, in so far as they are not governed by the provisions relating to freedom of movement for goods, capital and persons …"
(B) The Directives
"[In this regard,] according to settled case-law, the purpose of coordinating at Community level the procedures for the award of public contracts is to eliminate barriers to the freedom to provide services and goods and therefore to protect the interests of traders established in a Member State who wish to offer goods or services to contracting authorities established in another Member State (see, inter alia, Case C-380/98 University of Cambridge  ECR I-8035, paragraph 16; Case C-19/00 SIAC Construction  ECR I-7725, paragraph 32; and HI, paragraph 43)."
(a) 'Public contracts' are contracts for pecuniary interest concluded in writing between one or more economic operators and one or more contracting authorities and having as their object the execution of works, the supply of products or the provision of services within the meaning of this Directive.
(d) 'Public service contracts' are public contracts other than public works or supply contracts having as their object the provision of services referred to in Annex II …
The terms 'contractor', 'supplier' and 'service provider' mean any natural or legal person or public entity or group of such persons and/or bodies which offers on the market, respectively, the execution of works and/or a work, products or services.
The term 'economic operator' shall cover equally the concepts of contractor, supplier and service provider. It is used merely in the interest of simplification." (underlining added)
(C) Public Contracts Regulations 2006
"public services contract" means a contract, in writing, for consideration (whatever the nature of the consideration) under which a contracting authority engages a person to provide services but does not include—
(a) a public works contract; or
(b) a public supply contract;
but a contract for both goods and services shall be considered to be a public services contract if the value of the consideration attributable to those services exceeds that of the goods covered by the contract and a contract for services which includes activities specified in Schedule 2 that are only incidental to the principal object of the contract shall be considered to be a public services contract;
"services provider" means a person who offers on the market services and—
(a) who sought, who seeks, or who would have wished—
(i) to be the person to whom a public services contract is awarded; or
(ii) to participate in a design contest; and
(b) who is a national of and established in a relevant State;…" (underlining added)
(D) The jurisprudence of the Court of Justice on cross-border interest in procurement contracts outside the regulations
"29 It follows that the advertising arrangement, introduced by the Community legislature for contracts relating to services coming within the ambit of Annex I B, cannot be interpreted as precluding application of the principles resulting from Articles 43 EC and 49 EC, in the event that such contracts nevertheless are of certain cross-border interest.
30 Also, in so far as a contract relating to services falling under Annex I B is of such interest, the award, in the absence of any transparency, of that contract to an undertaking located in the same Member State as the contracting authority amounts to a difference in treatment to the detriment of undertakings which might be interested in that contract but which are located in other Member States (see, to that effect, Telaustria and Telefonadress, paragraphs 60 and 61, and Case C-231/03 Coname  ECR I-7287, paragraph 17).
31 Unless it is justified by objective circumstances, such a difference in treatment, which, by excluding all undertakings located in another Member State, operates mainly to the detriment of the latter undertakings, amounts to indirect discrimination on the basis of nationality, prohibited under Articles 43 EC and 49 EC (Coname, paragraph 19 and case-law cited).
32. In those circumstances, it is for the Commission to establish that, notwithstanding the fact that the contract in question relates to services coming within the scope of Annex I B to Directive 92/50, that contract was of certain interest to an undertaking located in a different Member State to that of the relevant contracting authority, and that that undertaking was unable to express its interest in that contract because it did not have access to adequate information before the contract was awarded.
33 According to settled case-law, it is the Commisssion's responsibility to provide the Court with the evidence necessary to enable it to establish that an obligation has not been fulfilled and, in so doing, the Commission may not rely on any presumption (see, to that effect, inter alia, Case C-434/01 Commission v United Kingdom  ECR I-13239, paragraph 21; Case C-117/02 Commission v Portugal  ECR I-5517, paragraph 80; and Case C-135/05 Commission v Italy  ECR I-0000, paragraph 26), in this case a presumption that a contract relating to services coming within the scope of Annex I B to Directive 92/50 and subject to the rules described in paragraph 24 of this judgment necessarily is of certain cross-border interest.."
THE ISSUES ON THIS APPEAL AND THE JUDGMENT OF FORBES J
Issue (1): Does the public procurement regime apply to the expression of interest by UCL?
"52. Since the existence of a 'public works contract' is a condition for application of the Directive, Article 1(a) must be interpreted in such a way as to ensure that the Directive is given full effect. It is clear from the preamble to the Directive and from the second and tenth recitals, in particular, that the Directive aims to abolish restrictions on the freedom of establishment and on the freedom to provide services in respect of public works contracts in order to open up such contracts to genuine competition. As the tenth recital states, the development of such competition entails the publication at Community level of contract notices."
"94. Economic operators are motivated by the prospect of obtaining some economic benefit from contracts. Discrimination in awarding contracts is unacceptable because awards of contracts entail payment to the contractors who are selected. It would be difficult, where no finance was provided for a contract by the contracting authority, to imagine any kind of favouritism which could benefit the operator chosen. If anything done free of charge or financed by the party carrying out the work offends against the principle of competition, that is because it is damaging to that party's interests and not because it gives him any advantage over his competitors.
Under those circumstances, where there is discrimination in awarding to a contractor a contract for the performance of which he is not paid, there is no justification for following the procedures laid down by the Directive. It is sufficient, if it is assumed that circumstances might arise in which relations are of a contractual rather than a legal nature, for the economic operator to refuse to award the contract in order to eliminate the competitive disadvantage. "
"34. The first question to be addressed is whether that framework agreement exhibits the characteristics of a public [service] contract within the meaning of Article 1(a) of Directive 92/50, namely whether it is a contract for pecuniary interest concluded in writing between a service provider and a contracting authority.
35. The fact that the 2004 framework agreement is a written agreement is not disputed, nor is the fact that the region of Tuscany and the authorities are contracting authorities.
36. First, the Italian Republic disputes the claim that the said framework agreement constitutes a public service contract within the meaning of Article 1(a) of the said Directive, on the ground that the organisations concerned are not commercial operators and do not pursue their activity within the market and the sphere of competition. This argument is based on the fact that the organisations are non-profit-making bodies and the people who work for them are motivated by considerations of social solidarity.
37. While not denying the social importance of voluntary activities, the fact is that this argument cannot be accepted. The fact that they are non-profit-making bodies does not preclude the possibility that such organisations may pursue an economic activity and that they may constitute undertakings within the meaning of the competition rules of the Treaty (see, to that effect, Case C-244/94 Fédération française des societies d'assurance and Others  ECR I-4013, paragraph 21, Joined Cases C-180/98 to C-184/98 Pavlov and Others  ECR I-6451, paragraph 117, and Joined Cases C-264/01, C-306/01, C-354/01 and C-355/01 AOK Bundersverband and Others  ECR I-2493, paragraph 49).
38. It should be noted that, according to the case-law of the Court, entities such as health care organisations providing emergency transport services and patient transport services must be treated as undertakings within the meaning of the competition rules laid down by the Treaty (Case C-475/99 Ambulanz Glöckner  ECR I-8089, paragraphs 21 and 22).
39. It follows that the organisations concerned may pursue an economic activity in competition with other operators.
40. The fact that, because the people who work for them do so on a voluntary basis, such organisations are able to submit tenders at prices appreciably lower than those of other tenderers does not preclude them from taking part in procedures for the award of public procurement contracts within the meaning of Directive 92/50 (see, to that effect, Case C-94/99 ARGE  ECR I-11037, paragraphs 32 and 38).
41. It follows that the 2004 framework agreement is not excluded from the concept of 'public service contracts' defined in Article 1(a) of Directive 92/50 on the ground that the organisations concerned are non-profit-making bodies…."
"46. Lastly, the Italian Government disputes the claim that that framework agreement was concluded for pecuniary interest, on the ground that the health care transport operations in question are carried out by voluntary organisations which merely receive reimbursement of their expenses.
47. This argument too cannot be accepted. It must be pointed out that the pecuniary nature of a contract relates to the consideration due from the public authority concerned in return for the performance of the services which are the object of the contract and from which the public authority will benefit (see, to that effect, in connection with Directive 93/37, Case C-399/98 Ordine degli Architetti and Others  ECR I-5409, paragraph 77).
48. In the present case, while it is true that the people employed in the health care transport in question are not paid for the work, it is nevertheless clear from the information submitted to the Court that the payments provided for by the public authorities concerned cover more than mere reimbursement of the expenses incurred in supplying the health care transport services at issue. The amounts are fixed in advance at a standard rate on the basis of tables contained in an annex to the 2004 framework agreement. The system described in these tables provides for payment of a fixed sum for making a vehicle available (on 'stand-by') for operations, sums calculated on the basis of stopped time recorded during transport activities, a fixed sum for transport to a distance of less than 25 km and additional amounts for each additional kilometre.
49. The Italian Government confirmed at the hearing that this method of payment and the sums provided for in the annex to the 2004 framework agreement allow the national authorities to subsidise the organisations providing the health care transport services in question.
50. In the specific circumstances of the present case, the method of payment provided for in the 2004 framework agreement therefore covers more than mere reimbursement of the expenses incurred. To that extent, it must be considered that the framework agreement provides for consideration in return for the health care transport services referred to in the agreement.
51. Consequently, the 2004 framework agreement is to be regarded as having been concluded for pecuniary interest within the meaning of Article 1(a) of Directive 92/50.
52. It follows from the foregoing considerations that the said framework agreement constitutes a public service contract within the meaning of that provision."
Alternative argument based on jurisprudence of the Court of Justice on cross-border interest in procurement contracts outside the regulations
Issue (2): Does Ms Chandler have standing to contend that the public procurement regime is applicable?
"133. I cannot see how it can be just to debar a litigant who has a real and genuine interest in obtaining the relief which he seeks from relying, in support of his claim for that relief, on grounds (which may be good grounds) in which he has no personal interest…
134. It seems to me that a litigant who has a real and genuine interest in challenging an administrative decision must be entitled to present his challenge on all available grounds."
"The claimants have not been shown to be affected in any way by the choice of tendering procedure. They have seized on the point simply as a fall-back way to stop the project. I see no wider public interest to be served by allowing a challenge, and in all the circumstances the claimant should not in my view, be regarded as having sufficient interest for the purposes of the PFI challenge."
SHOULD THIS COURT REQUEST A PRELIMINARY RULING FROM THE COURT OF JUSTICE ON THE MEANING OF THE DIRECTIVE?
FINAL OBSERVATIONS AND DISPOSITION OF THIS APPEAL