In its Judgment of 6 May 2013 in case T-288/11 Kieffer Omnitec v Commission (only available in French), the General Court of the European Union (GC) was presented with an important issue concerning the proportionality of quality assurance requirements under EU public procurement rules. In a setting that resembled the issue addressed a year ago by the Court of Justice (CJUE) in relation to general corporate social responsibility / fair trade requirements in Commission v Netherlands (Fair trade beverages) (C‑368/10), the GC was asked to consider whether requiring that tenderers be ISO certified for all their maintenance activities is disproportionate and, consequently, breaches the applicable EU rules.
In the case at hand, the European Commission had tendered a contract for the maintenance of HVAC, sprinklers and other equipment in one of its buildings. As a part of the tender requirements, the Commission requested that all tenderers furnished proof of ISO certification valid for the whole of their maintenance activities. A tenderer that failed to provide such proof (but which engaged a third party to ISO-audit its activities in the Commission's building in case it was awarded the contract) and was, hence, not considered for the award of the contract challenged this requirements on various grounds. Amongst the challenges raised by the disappointed tenderer, it is worth noting that it considered that extending the requirement to all maintenance activities instead of limiting it to the activities covered by the contract was excessive and disproportionate.
One of the arguments presented by the disappointed tenderer was that, despite the Commission not being directly subjected to the provisions of Directive 2004/18 on public procurement, the rules established in its article 49 should be taken into consideration. Such provision specifically addresses the issue of quality assurance standards and mandates that:
Should they require the production of certificates drawn up by independent bodies attesting the compliance of the economic operator with certain quality assurance standards, contracting authorities shall refer to quality assurance systems based on the relevant European standards series certified by bodies conforming to the European standards series concerning certification. They shall recognise equivalent certificates from bodies established in other Member States. They shall also accept other evidence of equivalent quality assurance measures from economic operators (emphasis added).
However, before entering the discussion of the proportionality of the requirement, the GC strangely separated itself from the use of Directive 2004/18 as a valid interpretation guide (by analogy). The GC considered that:
22 Before turning to the examination of the matter at hand, it is important at the outset to recall that, regarding the law applicable to procedures for the award of public service contracts undertaken by the institutions of the European Union, these procedures are governed by the provisions of Title V of Part I of the Financial Regulation as well as its Implementing Rules.
23 These provisions are based, of course, on the EU directives in this area (see, to that effect, judgment of 12 July 2007, Evropaïki Dynamiki / Commission, T-250/05, not published in the ECR, paragraph 1, and judgment of 9 September 2010, Evropaïki Dynamiki / EMCDDA, T-63/06, not published in the ECR, paragraph 4). However, Member States are the sole addressees of these directives and, therefore and in principle, these rules only govern public procurement by the institutions of the Member States. Such directives do not apply to public contracts awarded by the institutions of the Union on their own account, save for the question regarding the thresholds that determine the manner of publication, the choice of procedures and the applicable deadlines (judgment of 19 March 2010, Evropaïki Dynamiki / Commission, T-50/05, p. II-1071, paragraph 104).24 It follows that, in this case, in the examination of the first plea raised by the applicant, only the provisions of the Financial Regulation and the Implementing Rules need to be taken into consideration. Reversely, however, there is no need to take into account Article 49 of Directive 2004/18, cited by the applicant. (T-288/11 at paras 22 to 24, own translation from French).
With these remarks, the GC is departing from its previous practice to consider the rules under Directive 2004/18 as a valid guide for interpretation and is generating a risk of inconsistency in the development of EU public procurement law. Moreover, there is no good reason why the general criteria encapsulated in article 49 dir 2004/18 could not be expressly referred to since, it must be stressed, they are no more than a specification of the general principles of 'technical neutrality' (in broad terms) and proportionality that the GC must take into consideration anyway. Nonetheless, as we shall see, by excluding the use of the general provision as a valid analytical framework and 'chopping off' the last bit of article 49 dir 2004/18, the GC conveniently avoids the issue of having to consider if the Commission failed to accept 'equivalent quality assurance measures'.
Once the assessment is carried out precisely in terms of the proportionality of the ISO requirement, the GC finds that:
38 [...] the requirement [of full ISO certification] does not appear disproportionate to the extent that, on the one hand, Article 137, paragraph 3a of the Implementing Rules provides that "[w]hen the contracting authorities require the production of certificates drawn up by independent certification bodies attesting that the economic operator complies with certain standards of quality assurance, they shall refer to quality assurance systems based on the relevant European standards certified by bodies conforming to the European standards series concerning certification."
39 Moreover, as the Commission has rightly pointed out in its defense, in the selection of tenderers, when it comes to ensuring their technical capacity, the ISO certification must necessarily target the agent itself and not the contract to be awarded. In fact, ISO 9001 specifies requirements for the quality management system when an organization needs to demonstrate its ability to provide a product that meets customer and regulatory and legal requirements. This standard of "quality" is applicable to the process that a company uses to make its products or services and so can attest to the effectiveness and quality of its organization and its ability to provide the deliverables covered by the contract.
40 It is true that, except for ISO certifications attesting to the quality of the organization of the company, there are ISO certifications to attest to the quality of products or specific projects. However, as pointed out by the Commission, only the former may be required under the selection criteria of a given tender. The latter can only be used, as appropriate, as a contract performance condition, since they can only be obtained once the contract is in place in order to certify that the project or the product has been made in accordance with ISO standards.
41 Contrary to what the applicant claims, the Court considers that the requirement of a certificate attesting that the bidders to comply with ISO [for all their maintenance activities] is proportionate to the subject of the contract. (T-288/11 at paras 38 to 41, own translation from French, emphasis added).
In my view, there are several objections to be raised to the finding of the GC. Firstly, as mentioned in passing, this 'maximalistic' approach to quality control that links it to a selection criteria may run contrary to the approach taken by the CJEU in Commission v Netherlands (Fair trade beverages). Indeed, the CJEU took a very restrictive approach to the use of general technical requirements that go beyond those specified in art 48 dir 2004/18. As the CJEU clearly put it 'Article 48 exhaustively lists the factors on the basis of which the contracting authority may evaluate and assess the technical and professional abilities of the tenderers' (C-368/10 at para 105).
In that regard, it is worth stressing that art 48 dir 2004/18 only mentions quality assurance in the following respects: i) an indication of the technicians or technical bodies involved in quality control [art 48(2)(b)]; ii) a description of the technical facilities and measures used by the supplier or service provider for ensuring quality [art 48(2)(c)]; and, only in relation to specific products to be supplied, certificates drawn up by official quality control institutes or agencies of recognised competence attesting the conformity of products clearly identified by references to specifications or standards [art 48(2)(j)(ii)]. Therefore, when art 49 dir 2004/18 refers to the 'production of certificates drawn up by independent bodies attesting the compliance of the economic operator with certain quality assurance standards', it can be said that it is only referring to the requirement of art 48(2)(j)(ii)--and clearly sets a strong link (and limitation) with the specific products (not services) to be supplied in a given contract. Failing that, and in any case, art 49 requires contracting authorities to accept 'equivalent quality assurance measures'.
In my view, then, the finding of the GC in Kieffer Omnitec is irreconcilable with the case law of the CJEU on selection criteria and with the foreseeable interpretation of art 49 dir 2004/18. Moreover, even from a broader perspective--and similarly to what I have argued elsewhere [Sanchez Graells, Public Procurement and the EU Competition Rules (Oxford, Hart, 2011) pp. 315]:
Even if rules on qualitative selection and non-discrimination requirements are formally complied with in a given tender, the adoption of certain award criteria could generate the same results as an infringement of those rules. That could be the case if the award criteria or their weighting favoured tenders submitted by certain operators on the basis of conditions that could not have been used for the purposes of the qualitative selection of candidates or that automatically exclude de facto a significant number of tenders (or even restrict the number of compliant tenders to one). For instance, they could do so by requiring the implementation of quality management systems for the purposes of the specific contract that would have proven excessive or irrelevant for the purposes of assessing the general suitability of the tenderer; or that exclude certain operators because they focus on requirements whose implementation would be impossible for tenderers that did not comply with these or other requirements beforehand, or whose partial implementation would not be economically viable with regard exclusively to the specific contract.[1] In these instances, the adoption of such award criteria could generate significant distortions or restrictions of competition—without, it must be admitted, generating a substantial potential for discrimination. Therefore, such a strategy should be banned and contracting authorities should guarantee that the award criteria and their weighting ensure equality of opportunity of all tenderers and, consequently, should not focus on or advantage compliance with criteria not restricted to the tender itself—ie criteria that undertakings would be in a position to comply with or not depending on previous or general conditions unrelated (or not specifically related) to the subject-matter of the contract.[2]
[1] In similar terms, rejecting the possibility of establishing general requirements that go further than required by the object of the contract, see P Trepte, Regulating Procurement. Understanding the Ends and Means of Public Procurement Regulation (Oxford, Oxford University Press, 2004) 197–8.
[2] For instance, if certifying compliance with a given quality standard for the product required the previous certification of the general operations of the undertaking as being compliant with a more general quality control system, and the tender documents did not require tenderers to be certified under that standard—then, giving better evaluations to certified than to non-certified products would generate a distortion of competition by de facto excluding or reducing the chances of award to non-certified undertakings (which would not be in a position to get the products certified only for the purposes of the tender). Therefore, by indirectly advantaging or requiring compliance with a condition not imposed at the qualitative selection stage, which refers to more general conditions unrelated to the specific contract, the contracting authority would be distorting competition in a way that should be declared to run contrary to the directives.
As the discussion above shows (despite it being referred to award criteria), the GC has opened the door to the requirement of general certification for undertakings to participate in tenders. In my view, this is incorrect, in that contracting authorities can only be concerned with the quality assurance of the products they are supplied or the services they receive, but cannot use procurement as a regulatory tool to mandate quality assurance compliance that goes beyond the remit of the contractual object--in the same manner that the CJEU clearly said in Commission v Netherlands (Fair trade beverages) that public procurement cannot be used to mandated corporate social responsibility.
In my opinion, the Judgment of the GC in Kieffer Omnitec is a knee-jerk reaction to an action brought by a disappointed bidder that clearly did not meet the technical requirements (properly) set by the European Commission. It will be desirable to hear the CJEU interpret art 49 dir 2004/18 and to rule on its (analogous) application to the procurement conducted by the EU Institutions--particularly because the trends to potential inconsistent development of EU public procurement law and the regulatory use of procurement for quality control purposes are not desirable at all.