Procurement in a Nutshell – Court of Justice considers discretionary grounds for the exclusion of tenderers
8th July, 2019
A recent Italian case, which made its way to the Court of Justice of the European Union (CJEU), is a useful reminder of the discretionary exclusions available to Contracting Authorities. Under these exclusions, providing certain criteria are met, Contracting Authorities are able to reject organisations from participating in a procurement procedure.
The case concerned a call for tenders organised by the City of Naples for school catering services for the 2017/2018 academic year. During the procurement process, one bidder (Mecca) sought to contest the eligibility of another bidder (Sirio) to be included in the process on the basis that a previous contract with Sirio had been terminated as a result of its poor performance during which school pupils and staff were taken ill after consuming food provided under the contract. Sirio argued that this should not be held against them since they were in the process of appealing that termination.
What were the grounds on which the challenge was made?
Mecca alleged that Sirio’s performance of the previous contract amounted to a breach of 57 (4) (c) & (g) of the Public Contracts Directive (57 (8) (c) & (g) of the Public Contracts Regulations 2015) in that it constituted “grave professional misconduct” and demonstrated “persistent deficiencies in the performance of a substantive requirement under a prior public contract” which led to the early termination of that contract. The decision of the CJEU meant that the previous termination could be used as grounds for exclusion from the procurement, even though it was under appeal.
Why is this important?
The case is a useful reminder to Contracting Authorities of the discretionary exclusions available to them which they may look to impose on organisations which fail to satisfy their contractual obligations. Similarly, the facts also serve as a warning to organisations looking to tender for contract opportunities that any previous poor contractual performances may be taken into account when they come to bid for future contracts.
How can I find out more?
If you have any queries on the issues raised or on any aspect of procurement, please contact us via our procurement hotline on 0330 137 3451.
Please note that this briefing is designed to be informative, not advisory and represents our understanding of English law and practice as at the date indicated. We would always recommend that you should seek specific guidance on any particular legal issue.
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