Procurement in a Nutshell – Technical elimination stage permitted in open procurement procedures
11th January, 2019
This week's Procurement in a Nutshell examines the case of Monte SL v Musikene where the Court of Justice of the European Union examined how procurements which are conducted under the open procedure must be carried out.
In this regard, the judgment confirms that such procurements can be broken down into multiple stages even where the process would result in there being an insufficient number of tenders at the final stage to result in there being genuine competition.
Click here to read the judgment.
Monte SL (the Claimant) objected to a procurement for a supply contract relating to: “furniture and signage; specific musical equipment; musical instruments; electro-acoustic, recording and audiovisual equipment; computer equipment and reprographics” which was carried out by Musikene (the Contracting Authority).
The Claimant sought to argue that the procurement process was illegal because, despite being advertised as being conducted in line with the open procurement procedure, it contained an initial eliminatory stage whereby a tender would not progress to the subsequent economic evaluation if it failed to achieve a score of 35 out of 50 in relation to the technical criteria.
With regard to this, the contract award criteria clearly stated:
“Minimum score threshold required to continue to participate in the selection process: tenderers who do not obtain 35 points in relation to the technical tender will not proceed to the economic stage.”
In holding that the multi-stage approach to procurement was permitted, the Court made a number of useful observations.
First, the fact that both the Procurement Directive and the Public Contracts Regulations are silent in relation to the open procedure being conducted via this staged approach, but specifically refer to such stages in other procedures, did not mean that it was precluded in open procedure procurements.
Secondly, the Court reiterated that “Contracting Authorities are to base the award of public contracts on the most economically advantageous tender.” However, “the most economically advantageous tender from the point of view of the Contracting Authority is to be identified on the basis of the price or cost and may include the best price-quality ratio, which is to be assessed on the basis of criteria… including technical merit.”
Consequently, “it appears that a tender which does not reach such a threshold does not correspond, in principle, to the needs of the Contracting Authority and must not be taken into account for the determination of the most economically advantageous tender”. However, such an approach was not in itself discriminatory as ‘theoretically’ all tenders were capable of progressing through to the final stage of evaluation provided they achieved the required score relating to technical criteria.
Finally, in arriving at its decision, the Court emphasised the importance attached to transparency – recognising that the contract award criteria clearly outlined the two-stage approach from the outset and explaining that this was a strong factor behind the process being upheld as valid.
Why is this important?
The ruling is particularly useful in clarifying how the open procedure may be used in practice as well as confirming to Contracting Authorities that the procedure provides them with a degree more control than was perhaps previously thought to be the case. In this instance, the imposition of the initial elimination stage successfully reduced the number of bids which had to be reviewed in greater detail – thus saving the Contracting Authority both time and money. However, importantly the judgment reminds parties that should they look to adopt a similar approach, it is essential that they should be transparent and clarify this from the outset in their contract award criteria.
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 0191 204 4464.
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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