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ECJ ruling on lawful award criteria and stipulatingweighting factors and sub-criteria post-publication

of tender documents.

This case study will be consideredwithin the following PASS Training Courses

Introduction to Public ProcurementImplementing the new Selection Process

Pre-Qualifying for Tenders

LIANAKIS AND OTHERS V DIMOSALEXANDROUPOLIS AND OTHERS

LIANAKIS CASE STUDY

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ECJ ruling on lawful award criteriaand stipulating weighting factorsand sub-criteria post-publicationof tender documents

Case C-532/06:Lianakis and Others vDimos Alexandroupolis and OthersSummaryIn 24 January 2008 the European Court of Justice (ECJ)handed down a preliminary reference clarifying twoimportant points relating to the obligations ofcontracting authorities in relation to award criteria. Theproceedings arose by way of a challenge in the Greekcourts to a tender process for the award of a servicescontract by a Greek local authority under Directive92/50 coordinating the procedures for the award ofpublic service contracts (the Services Directive).

The Greek court asked the ECJ to clarify under whatcircumstances a contracting authority may subsequentlystipulate weighting factors and sub-criteria to be applied toaward criteria stated in the contract notice.

In its ruling, the ECJ made two important findings:

1 A contracting authority cannot apply weightings andsub-criteria to award criteria set out in tenderdocumentation unless those weightings or sub-criteriahave been previously brought to the tenderers’ attention;and

2 A contracting authority cannot take account of atenderer’s experience, manpow er, equipment or abilityto perform the contract by an anticipated deadline aspart of the award criteria. Such criteria can only be takeninto account at pre-qualification stage.

BackgroundThis ruling arose from the disputed award of a contract forurban planning services by a Greek contracting authorityutilising an open procedure. The contracting authority hadreferred to the following as award criteria in the contractnotice and placed them in the following order of priority:

• Bidder’s proven experience;• Bidder’s manpower and equipment; and • Bidder’s ability to complete the project by theanticipated deadline, together with its commitmentsand professional agenda.

During the evaluation process, the evaluation teamdecided that they would evaluate each of the abovecriteria on the following basis with the following weightingsand sub-weightings:• Bidder’s proven experience (60%) – evaluated by referenceto the value of projects previously completed eg:1 between €500,000 and €1 million = 6 points;2 between €1 million and €1.5 million = 12 points 3 ... (up to a max score of 60 points for experience onprojects worth over €12 million)

• Bidder’s manpower and equipment (20%) – evaluatedby reference to the size of the teams proposed for theproject eg:

1 1-5 persons = 2 points 2 6-10 persons = 4 points 3 ... (up to a max score of 20 points for a team of 45persons or more)

• Bidder’s ability to complete the project by theanticipated deadline (20%) – evaluated by reference tothe value of current commitments eg:

1 Current work worth less than €15,000 = 20 points 2 Current work between €15,000 and €60,000 = 18points

3 Current work between €60,000 and €100,000 = 16points

4 ...(down to a min score of 0 points for work worthmore than ?1.5 million)

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Two unsuccessful bidders challenged the award of thecontract before the Greek courts arguing that thesuccessful consortium had been awarded the contract onthe basis of weighting factors and sub-criteria stipulatedafter the publication of the tender documents.The casecame before the ECJ by way of a preliminary referencefrom the Greek court.

ECJ rulingThe ruling first considered the lawfulness of using criteriarelating to experience, manpower and ability to completethe project as award criteria.The ECJ noted that while theServices Directive did not in theory preclude theexamination of the tenderers’ suitability and the awardingof a contract from taking place simultaneously, the twoprocedures are nevertheless distinct and are governed bydifferent rules.

It affirmed the basic principle that qualitative selectioncriteria are to be evaluated on the basis of economic andfinancial standing and technical capability whereas awardcriteria are limited to the lowest price or most economicallyadvantageous tender.

The evaluation of the most economically advantageoustender excludes criteria linked to evaluating a tenderer’sability to perform the contract.The ECJ concluded that byevaluating criteria linked to the experience, qualificationsand ability to properly perform the contract, the Greekcontracting authority had erroneously laid down awardcriteria which were more appropriately characterised ascriteria for qualitative selection.

The Court next considered whether a contracting authorityis permitted to subsequently set down weighting factorsand sub-criteria in respect of award criteria published in thetender documents. The ECJ noted that procurement rulesrequire that tenderers are made aware at the time theyprepare their tenders of the existence and scope of allelements taken into account by a contracting authority inidentifying the economically most advantageous offer aswell as their relevant importance.

Moreover, contracting authorities are bound to placetenderers on an equal footing throughout the tenderprocedure by adequately publishing the criteria andconditions governing the award of a contract. Accordingly,the ECJ concluded that a contracting authority cannotsubsequently apply weighting rules or sub-criteria in respectof published award criteria which it has not previouslybrought to the tenderers’ attention in the tenderdocuments.

Effect of decisionThis ECJ decision in relation to publication of sub-criteriaand weightings is important as it underlines the strict dutyupon contracting authorities to act as transparently aspossible in all aspects of the tendering process.

The Court was careful to distinguish a previous finding of theCourt in Case C-331/04 – ATI EAC and Others v ATCVVenezia SpA and Others – where it had ruled that sub-weightings could be developed subsequently to thepublication of the tender documents subject to certainconditions being met. The Court noted that in the ATI EACcase, the sub-criteria had been published beforehand andit was only the sub-weightings that were subsequentlystipulated whereas in the present case both the sub-criteriaand weighting factors were subsequently developed.

The Court’s findings in relation to the distinction betweenpre-qualification criteria and award criteria accords withprevious case law from the Court, particularly Case 31/87Beentjes; Case C-19/00 SIAC Construction; Case C-513/99Concordia Bus Finland; etc.

Whilst this ruling was made on the basis of the repealedServices Directive (92/50/EEC), the obligations placed uponcontracting authorities on the basis of this decision are justas valid under the current procurement directives (ieDirective 2004/18 and Directive 2004/17). It is notable thatthere is now an obligation under the new procurementdirectives to publish weightings for award criteria inadvance in the tender documentation unless it is notpossible in which case the criteria must be stated indescending order of importance.