1. Major
road improvement works are planned for the Newmarket-on-Fergus area of County
Clare. These improvements will involve the construction of 9 kilometres of
dual carriageway, 3 kilometres of single carriageway, 5 bridges and 3
underpasses. The value of these works is estimated at £25 million and the
work will take 28 months to complete.
2. In
these proceedings, the applicant (Whelan Group) challenges the manner in which
the respondent (the County Council) has implemented the provisions of E.U.
Directive 93/37 (the Directive) concerning these proposed works.
3. It
is common case that the County Council opted to operate the restricted
procedure provided for in the Directive. No complaint is made in respect of
that decision. However, Whelan Group says that certain of the technical
specifications of the preselection criteria in the restricted procedure as
operated contain discriminatory requirements. In particular, they contend that
the requirement that a contractor shall, as a minimum, have satisfactorily
completed an individual road works project to the value of £10 million,
excluding VAT, within the period 1995 - 1999 is discriminatory. This
requirement, it is said, has the effect of insuring that only the largest
construction undertakings within the European Union or the State could compete
for this work. This, it is said, infringes principles of E.U. Public
Procurement Law and in particular those which prohibit discrimination,
inequality of treatment, lack of transparency and lack of proportionality.
4. In
due course I will examine these contentions but first it is necessary to set
out the background to the matter in some detail.
5. In
February, 2000, the County Council published in the Official Journal and in the
Irish Independent a contract notice in respect of the proposed works. That
notice made it clear that the County Council was adopting the restricted
procedure for the award of the contract.
7. The
contract notice also made it clear that not less than five applicants would be
invited to tender, following the pre-qualification process. Whelan Group
obtained the pre-qualification questionnaire from the County Council’s
consulting engineers and, having completed it, returned it to the County Council.
8. The
pre-qualification questionnaire gave the reason for adopting the restricted
procedure by reference to the financial scale and technical complexity of the
project. It was said that the use of the restricted procedure was to ensure
that all tenderers invited to tender would be of adequate financial and
economic standing and have the technical capability of carrying out the works.
Detailed evidence is contained in the affidavits as to the background to the
adoption of the restricted procedure. It is not necessary for me to explore
this aspect of the matter further since Whelan Group makes no complaint in this
application as to the use of the restricted procedure.
9. The
County Council has, in conjunction with the National Roads Authority, been
involved in the design and construction of roads in Co. Clare in accordance
with the National Plan for Roads. In co-operation with a number of other local
authorities in the region, a regional design office was set up in Co. Limerick.
The idea behind this was to establish a group of professionals to assist in
work relating to national primary roads. A steering committee was established
once a particular project was identified. The committee involved in the
project in suit was comprised of a representative of the consulting engineers,
a regional manager from the National Roads Authority, a representative from the
Regional Design Office and a senior engineer from the County Council. This
committee recommended the adoption of the restricted procedure. But it went
further. It recommended the adoption of a minimum criterion relating to the
value of other projects carried out by potential tenderers. This gave rise to
the adoption of a condition that a contractor would be required, as a minimum,
to have satisfactorily completed an individual road works project to the value
of £10 million pounds within the period 1995-1999. In this regard it is
to be noted that the advice which had been received from the consulting
engineers was to the effect that a potential tenderer ought to have completed
at least one road works project with a value exceeding £15 million pounds.
This advice was not accepted. In adopting the requirement which is contested
in these proceedings a number of matters were taken into account. They were that
10. Having
decided to apply the stipulation in question the County Council prepared a
pre-qualification questionnaire which had to be answered by all potential
tenderers. In the introduction to it, it pointed out that because of the
financial scale and technical complexity of the project the invitation to
tender was by means of the restricted procedure so as to ensure “that all
tenderers invited to tender shall be of adequate financial and economic
standing and have the technical capacity of carrying out the works”.
11. The
questionnaire also drew attention to the fact that any contractor who did not
comply with the specified minimum pre-qualification criteria would be excluded
from further consideration.
13. Section
D(1) of the questionnaire asked the contractor to “give details of the
Candidates experience on up to five Road and Bridge civil engineering
contracts, similar in type to this Project, which the Candidate has directly
carried out in the years 1995 to 1999 inclusive”.
16. Whelan
Group answered yes to that question and indicated that the work consisted of
road and bridge works for the County Councils of Cork, Limerick and Offaly to
the value of IR£11,900,000.
17. On
examination of the questionnaire, however, it was discovered that this was an
incorrect answer because Whelan Group had not carried out an individual project
to the value of not less than £10,000,000. The largest contract value of
works carried out had a tender price of £3.9 million pounds (exclusive of
V.A.T.). Because of this, the County Council took the view that the minimum
criteria specified in the questionnaire had not been met and consequently did
not invite Whelan Group to submit a tender. It is because of that that these
proceedings have been brought.
18. Whelan
Group in its amended statement grounding the application specified the
following grounds:-
19. The
County Council accepts that it is obliged to comply with the terms of the
Directive and that this prevents the applications of arbitrary or
discriminatory criteria and furthermore that the Council is obliged to ensure
equality of treatment for all potential contracting parties. It says that the
adoption of the qualification criteria by it is consistent with the terms of
the Directive and that it is not in breach of any obligations owed to Whelan
Group. It says that the criteria set forth by it are objectively justified,
non-discriminatory and respect the principle of equal treatment.
20. Both
sides have referred to the European Procurement Guidelines in the course of
their submissions. Although that guide is expressed to have no legal value and
does not necessarily represent the official position of the Commission, it
nonetheless provides some assistance. In dealing with the restricted
procedure, which was adopted here, it says at paragraph 3.2 as follows:-
25. Reliance
was placed by the applicant upon the Commission Interpretive Communication on
Concessions under Community Law in support of its contention that the
stipulation in this case was in breach of the requirement of equality of
treatment, lacked transparency and was disproportionate. The Communication has
this to say in relation to each of these contentions:
28. The
applicant contends that the County Council is in breach of these obligations.
It asks for a series of declarations from the Court to this effect. The
effective relief which it seeks is an order from the Court removing the
requirement that a contractor shall have completed one individual project to
the value of £10,000,000. If that were to be done then the applicant
would be in a position to be considered by the County Council for the award of
the contract.
29. In
my view the applicant is not entitled to the reliefs which it seeks. The
selection of the pre-qualification criterion which is sought to be impugned in
these proceedings was made on the advice of an expert standing committee. It
took the view that this criterion was necessary having regard to the financial
scale and technical complexity of the project. It was taken in accordance with
the practice determined by the National Roads Authority which took into account
its experience nationally in relation to the use of the restricted tendering
procedure. The stipulation was included in order to ensure the technical
capability of tenderers. The stipulation sought to minimise the risk of delays
to the project and the implications that would arise from that for public
funds. This criterion applied to all potential contractors and I cannot see
how it can therefore be said to be discriminatory. It is an objective
criterion. It is capable of objective assessment and application. There is a
rational basis for it. It is transparent because every potential tenderer who
was notified of the requirement had to comply with it. It manifestly relates
to economic and technical conditions. The Directive does not attempt to set
out the technical or economic criteria that are to be applied. It indicates
the references or methods of proof by which technical and economic criteria are
to be judged. That much is clear from the terms of the Directive itself and
from the decisions of the European Court in
Joined Cases 27 to 29/86, S A Constructinos et entreprises industrielles (CEI)
-v- Societe cooperative ‘Association intercommunate pour les antoroutes
des Ardennes’
[1987] E.C.R. 3347 and
Case
31/87, Gebroeders Beentjes BV -v- State of the Netherlands
[1988] E.C.R. 4635. In the
CEI
case
the Court stated (by reference to Directive 71/305 which was the predecessor of
Directive 93 37) at pg. 15 of its judgment, p. 3373 of the report:-
30. Neither
Articles 26 nor 27 of the Directive in suit here set out what the financial or
technical criteria should be. They provide methods for adducing evidence of
compliance with those criteria.
31. In
particular Article 27.1(b) recognises the liceity of a requirement that
evidence be furnished in relation to a list of works carried out, which list
can include the value, date and site of the works. If the contracting
authority is authorised to require and receive such evidence then it must be
entitled to use criteria such as the value of works carried out in the previous
five years as a pre-qualification criterion. I do not see that the use of what
the applicant has described as a “tick the box” approach was
impermissible in the evaluation of whether or not an applicant has complied
with a legitimate condition precedent. I am fortified in this view by the
express provisions of Article 22. That recognises the use of minimum
conditions as a basis for selecting candidates for the restricted procedure.
They can be of an “economic and technical nature”. As evidence
can be sought as to the value of works performed by the contractor in the
preceding five years it must be the case that the value of those works can be
used as a minimum condition provided of course that there is an objective and
non-discriminatory basis for choosing such a criterion. In my view there is in
this case both an objective and a non-discriminatory basis for choosing the
criterion.
32. There
is in my view nothing to support the case of Whelan Group that the criterion
chosen in this case does not relate to its technical ability. It clearly does.
33. Finally
I am satisfied that the condition specified in this case did not suffocate
genuine competition. True it is that the applicant is excluded because of its
inability to comply with the condition in question but once the stipulation is
proportionate, (as I believe it to be) and a rational basis exists for it and
is applied objectively it does not in my opinion offend the requirements of
Community law.