UK Supreme Court Miller Judgment seeks to reassert Parliamentary sovereignty, but it does so in breach of EU law and in disservice to the UK Parliament

The UK Supreme Court (UKSC) has today handed down its Judgment in the well-known litigation concerning the UK's constitutional requirements for triggering Art 50 TEU and starting the process of leaving the EU -- see R (on the application of Miller and another) v Secretary of State for Exiting the European Union [2017] UKSC 5 (the Miller Judgment).

The UKSC has ruled that the UK Government cannot trigger Article 50 TEU without previous UK Parliament legislative intervention. In doing so, the UKSC has sought to reassert the basic constitutional principle of Parliamentary sovereignty. However, it has done so in a way that both infringes its duties under EU law and does a disservice to the UK Parliament.

Breach of UKSC's duties under EU law

One of the difficult legal issues on which the Brexit litigation hinged concerned the interpretation of Art 50 TEU and, in particular, the revocability of a notice given under Art 50(2) TEU. The interpretation of this point of law falls within the exclusive competence of the European Court of Justice (ECJ) under Art 263 TFEU. Interestingly, the UKSC stressed this monopoly of interpretation as a key element of EU law at para [64] of the Miller Judgment: 'so long as the United Kingdom is party to the EU Treaties, UK courts are obliged (i) to interpret EU Treaties, Regulations and Directives in accordance with decisions of the Court of Justice, (ii) to refer unclear points of EU law to the Court of Justice, and (iii) to interpret all domestic legislation, if at all possible, so as to comply with EU law' (emphasis added).

However, the UKSC has violated the ECJ's monopoly of interpretation of the EU Treaties by accepting the parties' commonly agreed position on the irrevocability of an Art 50(2) TEU notice at [26] of the Miller Judgment:

In these proceedings, it is common ground that notice under article 50(2) (which we shall call “Notice”) ... once given, it cannot be withdrawn. Especially as it is the Secretary of State’s case that, even if this common ground is mistaken, it would make no difference to the outcome of these proceedings, we are content to proceed on the basis that that is correct, without expressing any view of our own on either point. It follows from this that once the United Kingdom gives Notice, it will inevitably cease at a later date to be a member of the European Union and a party to the EU Treaties (emphases added). 

In doing so, the UKSC has infringed its obligation under Art 267(3) TFEU to engage in a preliminary reference to the ECJ concerning the interpretation of Art 50 TEU (for legal background see here and here). This cannot be saved by an argument that, under domestic procedural rules (or conventions), the UKSC had the possibility of taking this approach--and effectively dodging one of the most complex and unpredictable legal issues on which the litigation rested.

There are several reasons for this, but the primary one is that, as matter of EU law, a preliminary reference by the highest court of an EU Member State is unavoidable where the interpretation of EU law is necessary to enable it to give judgement--or, in other words, where the judgment relies on a given interpretation of EU law.

In my view, it is beyond doubt that the UKSC Miller Judgment is based on the interpretation that an Art 50(2) TEU notice is irrevocable, and that this represents the legally binding view of the majority judgment, regardless of the attempt to save the UKSC's view on this point in para [26] -- or, in other words, it is not (logically, legally) true that the UKSC's Miller Judgment operates 'without expressing any view of our own on either point' (ie regarding the revocability or not of the Art 50(2) TEU notice).

There are explicit indications of this interpretation in paras [59], [81], [92] and [104], where the Judgment indicates that

... analyse the effect of the 1972 Act and the arguments as to whether, in the absence of prior authority from Parliament in the form of a statute, the giving of Notice by ministers would be ineffective under the United Kingdom’s constitutional requirements, as it would otherwise impermissibly result in a change in domestic law [59]

 ... A complete withdrawal represents a change which is different not just in degree but in kind from the abrogation of particular rights, duties or rules derived from EU law. It will constitute as significant a constitutional change as that which occurred when EU law was first incorporated in domestic law by the 1972 Act. And, if Notice is given, this change will occur irrespective of whether Parliament repeals the 1972 Act [81]

... There is a substantial difference between (i) ministers having a freely exercisable power to do something whose exercise may have to be subsequently explained to Parliament and (ii) ministers having no power to do that thing unless it is first accorded to them by Parliament. The major practical difference between the two categories, in a case such as this where the exercise of the power is irrevocable, is that the exercise of power in the first category pre-empts any Parliamentary action. When the power relates to an action of such importance to the UK constitution as withdrawing from the Treaties, it would clearly be appropriate for the power to be in the second category [92]

 Although its invocation [of Art 50 TEU] will have the inevitable consequence which Lord Pannick described ... [104, all emphases added]. 

In view of the relevance of the points of irrevocability of the Art 50(2) TEU notice, it is clear to me that the UKSC had an obligation to seek the interpretation of this provision by the ECJ and that, in not doing so, it has breached EU law. Moreover, beyond what some may consider a highly technical or academic point, by not seeking this clarification the UKSC has also done a disservice to the UK Parliament.

Disservice to the UK Parliament

The UK Parliament will imminently enter into debates and legislative action concerning the trigger of the process to withdraw from the EU by serving notice under Art 50(2) TEU. Unless political events unfold in a surprising way, and based on a previous Parliamentary resolution, the UK Parliament should be considered to be politically committed to support the UK Government's stated commitment to trigger Art 50 TEU by the end of March 2017.

However, these debates and eventual Parliamentary decisions will develop under the shadow of uncertainty that remains around the revocability or not of the Article 50(2) TEU. In that regard, the debates and positions expressed by MPs will not be as meaningful as they could if it was clear that the triggering Art 50 TEU would actually put (or not) the UK in the unavoidable course of leaving the EU -- with or without an exit deal, and regardless of the assessment of the fallback position. This can result in the need to make wild assumptions and to necessarily decide on the basis of worse case scenario analysis that may not reflect an alternative (possible) reality of reduced definiteness of the triggering of Art 50 TEU.

The UKSC could have avoided this situation by referring the question for interpretation to the ECJ. On the contrary, by premising its Judgment on the irrevocability of the notice, the UKSC has raised the stakes and the risks of Parliamentary debate even higher and created a situation where decisions are bound to be made in a rushed fashion and in a scenario of all or nothing (perceived) implications of the giving of notice under Art 50(2) TEU. It is hard to see how this can contribute to the practical enablement of Parliamentary sovereignty.

GC rules on possibility to offer summary motivation for procurement decisions where disappointed tenderers have been actively engaged in information exchange (T-419/15)

In its Judgment of 17 January 2017 in Cofely Solelec and Others v Parliament, T-419/15, EU:T:2017:8 (available only in French), the General Court (GC) assessed the compatibility with the rules on public procurement by the EU institutions of the partial cancellation of a tender for a works contract by the European Parliament (EP). The interesting detail in the facts of the case is that the EP decided to partially cancel the tender after the award of the contentious lot had already been challenged, as well as the very succinct motivation it provided for such a decision. The reasoning of the GC, even if based on the Financial Regulation, is of general interest concerning the 2014 Public Procurement Package.

In the case, the EP had called for tenders for several lots of works regarding the refurbishment of one of its buildings. One of the lots concerned electrical work. The economic operators whose joint offer had been ranked second opposed the award of the contract on the basis that the winning tender was abnormally low. The EP initially dismissed the allegation of abnormality of the lowest priced offer and intended to proceed to the signature of the contract. This was challenged judicially by the disappointed tenderers, which prompted the EP to reassess the claim of abnormality of the lowest-priced tender. While that challenge was at judicial stage, the EP decided to cancel the tender for that lot. The reasons provided to the disappointed tenderers for such decision were that

After an in-depth analysis of the documents in the file, it appeared that the tender of the successful tenderer was not admissible insofar as the documents submitted concerning the selection criteria did not provide an assurance that they [the criteria] were fully satisfied. The other offers received, including yours, substantially exceeded the estimate of the value of the contract previously relied upon by the contracting authority and are therefore unacceptable (T-419/15, para 56, own translation from French). 

The procedural circumstances of the case are complicated due to the cross-challenges of the award decision to the apparently abnormally low offer and of the subsequent decision to partially cancel the tender, and the fact that disappointed tenderers received different pieces of information in the course of each of the judicial procedures. However, the point in the GC's reasoning I find interesting is that it considers that

59 ... it is settled case-law that the statement of reasons required by Article 296 TFEU must be adapted to the nature of the act in question and must show clearly and unequivocally the reasoning of the institution ... so as to enable the persons concerned to know the reasons for the measure adopted and the competent court to exercise its review power ...

60 As regards the intensity of the statement of reasons, there is no requirement that the decision should specify all the relevant elements of fact and of law. The sufficiency of the statement of reasons given for a decision may be assessed in the light not only of its wording but also of the context in which it was adopted and of all the legal rules governing the matter concerned ... It is sufficient that the decision expounds the main points of law and fact in a succinct but clear and relevant manner ...

61 Furthermore, where a decision has been adopted in a context which is well known to the person concerned, it may be motivated in a succinct manner ...

72 ... the applicants took part in the tender procedure run by the Parliament and alerted the latter several times as to certain irregularities, in particular as regards the tender of the successful tenderer and, consequently, the context in which the contested decisions were adopted was familiar to them.

73 ... in accordance with the case-law cited ... above, the contested decisions could be the subject of a summary statement of reasons (T-419/15, paras 59-61 and 72-73, own translation from French and references to previous case law omitted). 

This is interesting because the GC is creating space for contracting authorities to preserve the confidentiality of some information (in the case, in particular, the way the EP had arrived at the estimate of the contract value, which disclosure was considered damaging of the EP's options to obtain value for money in any future re-run of the tender), but it also seems to create a tricky set of incentives for disappointed tenderers, which will have to assess the extent to which an active participation in information exchange with the contracting authorities reduces their protection in terms of debriefing and rights to challenge procurement decisions.

Interestingly, the Judgment goes on to assess whether the EP erred in its assessment that the offer of the disappointed tenderers was unacceptable due to its high cost (per comparison with the estimate). The analysis is relevant because it concerns the ability of the EP to justify its estimate for the cost of the tendered works in relation to (a) its available budget and (b) to the cost of the offer eventually rejected (both benchmarks being challenged by the disappointed tenderer). This approach to the justification of the cost estimates was implicitly supported by the GC in relation to the obligation to provide reasons (above) by indicating that part of the information to which the disappointed tenderer was privy, and which allowed for the summary motivation of the partial annulment decision, included the fact that the lowest-priced offer was almost €11 million cheaper than its own offer (para 67), and that the lowest-priced offer was "within an acceptable range relative to the controller's estimate of the costs on the basis of the detailed surveys [for the work]" (T-419/15, para 68, own translation from French).

In my view, the key point concerning the justification of the estimates comes at the end of the GC's reasoning, where it actually deactivates any claim based on under-estimation of the cost of the works on the basis of a budgetary logic that is difficult to work around:

107 In any event, in the present case, the tenderers' offer, irrespective of the correctness of the [estimated] value of the contract, was greater than Parliament's available budget, so that the latter could not have been awarded to it.

108 In other words, in view of the absence of sufficient budgetary appropriations allocated by the budgetary authority to the contract at issue, the Parliament's annulment of the tender was a logical, if not necessary, choice (T-419/15, paras 107-108, own translation from French).

As mentioned, from a strict legality assessment, this is a definitive argument. However, practically, it seems difficult to square with procurement practice that does not result in wasted effort and frustration. Given the absolute budgetary constraint, it could be desirable for the contracting authority to pre-disclose this limit, so that no excessive offers are submitted and tenderers that cannot (or do not want to) carry out the work within the allocated budget can spare themselves (and the evaluation team/contracting authority) the trouble. However, this transparency would be undesirable in terms of price signalling and allowing tenderers to engage in limit pricing [at least under some market circumstances; for discussion, see A Sanchez-Graells, Public Procurement and the EU Competition Rules, 2nd edn (Oxford, Hart, 2015) 73 ff].

So one can but wonder whether budgetary rules could be reviewed to create some flexibility in terms of allocation of budget, particularly in projects where the estimation of costs is challenging (which does not mean to say that this was the situation in the specific case). Otherwise, the uneasy relationship between budgetary and procurement rules will continue to create difficult situations (and frustration for practitioners).
 

New edition of Public Procurement Indicators published by the European Commission -- some odd uk numbers

In late December 2016, the European Commission published its Public Procurement Indicators 2015. The statistical information included in this report shows some interesting trends, such as the general increase of procurement expenditure in the EU in 2015 -- which was up by almost 7% from 2014, to reach a total of €450.21 billion -- as well as the continued trend of concentration of procurement expenditure that results from aggregation and/or centralisation of procurement at Member State level.

Regarding the trend towards greater concentration of procurement expenditure in large awards, it is interesting to note that 'at EU level more than one third of the value ... is awarded through contract award notices of 100 million euros or more. This relative concentration of procurement, in large awards, is extremely remarkable in the UK and to a lesser extent in Poland and France. On the opposite side Germany and France concentrate a large fraction of the value procured in the works sector in the smaller size awards'.

This seems surprising because projects of more than €100 million may be relatively common in works (ie infrastructure), as well as large framework agreements for common use equipment (notably, IT hardware), but services contracts of that size would have seemed much less common at first thought (although it is possible that IT expenditure is moving from goods to services as cloud computing and other services are 'virtualised'). In any case, the the fact that the trend is much stronger in the UK than in the rest of the EU (combined) strikes as odd.

Indeed, as the Commission's report stresses, the UK leads the statistics for the award of very large contracts (ie those of a value over €100 million), both for works (66%) and, possibly more remarkable, for services (70%) -- with a smaller but still very significant lead on goods (52%). What is worth emphasising is that the UK's figures are 10 times the magnitude of those for any other Member State (and around 50 to 100 times those of most Member States) both for works and services, and that they double the figures for any other Member State in goods (while still being around 50 to 100 times those of most Member States).

A recalculation of the figures concerning very large contracts excluding data for the UK shows that 22% of procurement expenditure at EU27 level is awarded through contracts of €100 million or more for works and services, and 25% for goods (and, anecdotally, it should be taken into account that a  significant part of the latter is attributable to Italy's Consip centralised procurement activities). Thus, the fact that UK alone can move total figures up by 11% (ie a deviation of 50% of the EU27 statistics) seems quite striking.

Moreover, in general, the UK shows a disproportionately high share of contracts advertised in TED (and the estimated value of its contracts is larger throughout the value scale, with many less small contracts and many more large contracts than the EU average, which has an effect on the obligation to publish notices). This is particularly noticeable when compared to other EU countries with large procurement expenditure -- eg in 2015 the UK advertised an estimated 37% of its public expenditure, whereas Germany advertised less than 10% (see graphs below).

In view of these statistical divergences, a closer look at the UK numbers seems necessary in order to try to understand this trend towards concentrated expenditure through very large contracts. However, there is no detailed information in the report on the basis of which to carry out a qualitative analysis.

Many hypotheses are imaginable, such as the possibility that very large centralised contracts are tendered (for example, by the Crown Commercial Service) but they are not necessarily executed to a large percentage of their estimated value, or that the UK is actually significantly more centralised in terms of procurement than other Member States, particularly in services. Each of these possibilities opens itself up for speculation--for instance, about the reliability of statistical information that could include awarded but unexecuted procurement value (which may be very, extremely relevant in the inminent Brexit-related negotiations, as well as for any reevaluation of GPA coverage both for the EU and the UK) or, on the second scenario, about the drivers for such significant differences in centralisation volumes in different Member States and about the possibility of centralised procurement of services in a way that still allows for proper provision of (public) services to end users.

Either way, I find these issues most intriguing and, in case the issue of unexecuted (contracted) expenditure is included in the statistics, I think that more work should go into the collection of actual information and the publication of raw data that allows for refined analysis--ideally, in relation to the 2016 version of the public procurement indicators.

Evidence on Brexit impact on UK-EU trade in services submitted to the House of Lords' Sub-Committee on EU Internal Market

The UK House of Lords' Sub-Committee on EU Internal Market has now published the evidence I submitted to their inquiry Brexit: future trade between the UK and EU in services. Here is the full text (also available in pdf here), which includes some scenarios excluded by yesterday's Theresa May's Brexit Speech (see my thoughts here). Comments would be most welcome, particularly in view of future work related to the Great Repeal Bill and other Brexit-related changes to public procurement regulation in the UK.

Executive Summary

1. Bilateral UK-EU procurement-related trade can be estimated at around 15% of the total value of procurement, or close to 2.5% of GDP. This includes both direct and indirect cross-border procurement-related trade. The magnitude is larger if access to WTO GPA markets is considered.
2. The UK’s exposure to public procurement-related trade in services in the EU is particularly relevant; the UK alone accounts for 84 % of the total value procured at EU level in awards of more than 100 million euros (approx. £85 mn).
3. Losing the possibility of this cross-border trade would clearly be detrimental to the UK public sector, which would be at risk of not obtaining top quality services and/or facing increased prices from reduced competition amongst domestic suppliers. UK businesses would also be negatively affected if they lost the option of direct and indirect trade in services to the EU.
4. The EU has developed a sophisticated acquis of public procurement rules, which the UK has successfully shaped in successive rounds of negotiations, most recently in the 2011-2014 period leading to the approval of the current EU rules.
5. The UK has adopted a copy-out approach to the transposition of the EU rules, which ensures that UK businesses only need to know one regulatory regime in order to be able to sell to the public sector both in the UK and in the rest of the European Union.
6. EU public procurement law ensures that UK businesses have full access to the public sector markets of all other EU Member States, and that EU businesses have full access to the UK public sector markets. This ensures free trade in services in the context of public procurement under conditions of transparency, equal treatment and non-discrimination.
7. These advantages would be limited or lost if the UK were to lose access to the EU internal market. The extent of that restriction or loss of free public procurement-related trade in services would depend on the future relationship between the UK and the EU, as well as its impact on the UK’s status under the WTO Government Procurement Agreement (GPA).
8. EEA membership would require full compliance with the EU public procurement acquis and would entail no changes in access to EU and GPA procurement markets.
9. A tailor-made Free Trade Agreement (FTA) like the recent EU-Ukraine Deep and Comprehensive Free Trade Area (DCFTA), would also require full compliance with the EU public procurement acquis. Access to GPA procurement markets would depend on the UK’s status under WTO GPA.
10. If the UK sought to rely on the WTO GPA only, it would need to clarify whether it can retain its status as a party in its own right or, having lost derived membership linked to EU membership, seek fresh accession. Either way, the scope of coverage of the reciprocal commitments between the UK and the rest of GPA parties (including the EU) would need to be clarified and probably renegotiated, with the UK facing pressure to accept deeper commitments than currently negotiated by the EU en bloc. The main risk implicit in this option would concern the continuity of access to the procurement markets of GPA parties (including the EU), as well as having to make additional coverage concessions in order to retain current access to those markets.
11. If the UK sought to reach a solution similar to CETA, it may also be at risk of having to provide more stringent access commitments to the EU than currently. This has been the case of CETA, which is based on the WTO GPA mechanism, and where only Canada made additional coverage concessions to the benefit of EU (including UK) businesses.
12. ‘Hard Brexit’, ie no trade agreement of any kind combined with loss of WTO GPA membership, would imply loss of access to EU and worldwide procurement markets, for services but also for goods and works. This would likely have a major impact both on the UK public sector and in its business community, particularly that reliant on cross-border direct and indirect procurement-related trade.

Submission

The purpose of this document is to provide the House of Lords EU Internal Market Sub-Committee with evidence of the contribution that the EU public procurement rules make to the facilitation of trade in services between the UK and the rest of the EU. It also aims to highlight the barriers to trade that could arise post-Brexit—which are however contingent on the legal configuration of the future relationship between the UK and the EU and, notably, on the level of access to the internal market.

1. Economic Relevance of Procurement-Related Trade in Services

1.1. Trade in services is facilitated by the EU public procurement rules (described below 2.). Establishing the magnitude of procurement-related trade in services is difficult due to a lack of reliable data and because services can be exported/imported, but they are also susceptible of “localised” provision through the establishment of subsidiaries in other Member States. A UK business wishing to provide services to the public sector in other Member States may thus decide to provide them directly from the UK, or rather to establish a subsidiary, branch or other organisational unit in those Member States. The same applies to EU businesses seeking to provide services to the UK public sector. Both options are direct benefits of access to the EU’s internal market. Therefore, the economic dimension of direct trade in services through imports/exports and indirect trade in services through the exercise of freedom of establishment needs to be jointly taken into account.

1.2. In a recent research briefing,[1] the House of Commons Library (HoCL) indicated that

… the extent of direct cross-border public procurement is limited. An estimated 1.3% of the value of larger UK public sector contracts was awarded directly abroad in 2009-2011. Some 0.8% of the value of larger public contracts secured by UK companies was directly from abroad.

However, this misrepresents the economic importance of cross-border public procurement between the UK and the rest of the EU by suggesting that it only affects between 0.8% and 1.3% of large value procurement contracts. The HoCL research briefing does not mention indirect cross border effects derived from the establishment of EU suppliers in the UK, and UK suppliers in other EU Member States, who then sell from their respective “localised” subsidiaries (for instance, Siemens UK would qualify as a domestic supplier for the purposes of direct cross border tenders, while most people would agree that the Siemens group is German for industrial policy purposes).

1.3. The European Commission published data in 2011 that estimated indirect cross-border procurement to be much closer to 25% in value at EU level.[2] The disaggregated data for the UK showed that the actual economic relevance of cross-border public procurement is around 16.5% of the value of large UK public sector contracts (13.8% by number of contracts). The EU has an average penetration of direct and indirect cross-border procurement of 16.9% by value of contracts (and 13% by number of contracts). Given that procurement expenditure represents around 16% of GDP,[3] bilateral UK-EU procurement-related trade can be estimated at around 15% of the total value of procurement, or close to 2.5% of GDP.

1.4. Similar data for the economic relevance of public procurement-related trade in services under the World Trade Organisation Government Procurement Agreement (WTO GPA; see 2.2. below) is difficult to compile.[4] In any case, bearing in mind that the GPA parties have opened procurement activities worth an estimated US$ 1.7 trillion annually to international competition to suppliers from GPA parties offering goods, services or construction services, and by simple logic, it is plain to see that the magnitude in GDP terms of public procurement-related trade in services is even larger if access to WTO GPA markets is considered.

1.5. The UK’s exposure to public procurement-related trade in services within the EU is particularly relevant in the UK. As stressed by the European Commission in a recent report using 2014 data,[5] 

The concentration of procurement in large notices is outstanding in the UK, particularly in the procurement of services, where the UK alone accounts for 84 % of the total value procured at EU level in awards of more than 100 million euros [(approx. £85 mn)].

1.6. Losing the possibility of this cross-border trade would clearly be detrimental to the UK public sector, which would be at risk of not obtaining top quality services and/or facing increased prices from reduced competition by domestic suppliers. UK businesses would also be negatively affected if they had difficulties engaging in direct and indirect exports of services to the EU.

2. EU Law Facilitating Procurement-Related Trade in Services

2.1. On the basis of the rules on the free movement of goods and services in the Treaty on the Functioning of the European Union, the EU has accumulated a well-developed public procurement acquis, which currently comprises the following instruments:

• Directive 2014/23/EU on concession contracts[6]
• Directive 2014/24/EU on public procurement[7]
• Directive 2014/25/EU on utilities procurement[8]
• Directive 2009/81/EC on defence and security procurement[9]
• Remedies Directives, as amended by Directive 2007/66/EC[10]

2.2. The EU public procurement acquis is coordinated with the EU’s international obligations under the World Trade Organisation Government Procurement Agreement (WTO GPA),[11] and compliance with EU law allows its Member States, including the UK, to benefit from the advantages of that international instrument of procurement liberalisation. Therefore, through compliance with the EU public procurement acquis, the UK (both its public sector and its business community) benefit from access to the EU internal market and to the public procurement markets of WTO GPA signatories.[12]

2.3. The UK has been a key player in shaping these rules, most notably in the period between 2011-2014, which lead the adoption of the 2014 Public Procurement Package (ie Directives 2014/23, 2014/24 and 2014/25), with Cabinet Office clearly stressing that the “revised [EU] package represents an excellent overall outcome for the UK, with progress achieved on all of our priority objectives”.[13]

2.4. These EU rules have been transposed in the UK following a copy-out approach. In England and Wales, the transposition has most notably resulted in the Public Contracts Regulations 2015, as amended by the Public Procurement (Amendments, Repeals and Revocations) Regulations 2016. Similar rules have been adopted by the devolved administrations with public procurement powers.[14] Even if there is a perception that EU law (as transposed) imposes significant constraints on the development of effective or efficient procurement in the UK, this perception is unsubstantiated.[15]

2.5. There are numerous other EU law instruments that facilitate procurement-related cross-border trade in services, such as the Services Directive (2006/123/EC),[16] or technical rules establishing the Common Procurement Vocabulary (CPV).[17] This is also facilitated by EU rules on technical standardisation more generally. Even if this may seem more relevant for procurement-related trade in goods, it is still relevant for services in terms of eg general quality assurance systems.

2.6. The rules in the statutory EU public procurement acquis are complemented by a large body of case law of the Court of Justice of the European Union, which has been deciding an average of over 30 public procurement cases per year in recent years.[18] The CJEU case law has extended the general principles of equal treatment and non-discrimination beyond the strict scope of application of the EU public procurement Directives, thus expanding the scope of the EU’s internal market for public procurement.

2.7. Taken as a whole, EU public procurement law, including the case law of the Court of Justice, ensures that UK businesses have full access to the public sector markets of all other EU Member States, and that EU businesses have full access to the UK public sector markets. This ensures free trade in services in the context of public procurement under conditions of transparency, equal treatment and non-discrimination. No tariff or non-tariff measures are allowed.

2.8. Additionally, for UK businesses, given the copy-out approach adopted by the Government for the transposition of the 2014 EU rules, this effectively means that knowledge of a single set of rules—ie the Public Contracts Regulations 2015, which replicate Directive 2014/24/EU[19]—allows them to bid for services contracts in other EU jurisdictions with minimal additional requirements, other than those related to language and the specific constraints of each tender. This has, for instance, clearly supported the creation of a true single public procurement market in the island of Ireland, with strong levels of penetration of Northern Irish exports to the Republic of Ireland estimated at around 58%.

2.9. These advantages would be limited or lost if the UK were to lose access to the EU internal market post-Brexit. The extent of that restriction or loss of free public procurement-related trade in services would depend on the future relationship between the UK and the EU.

3. Alternative UK-EU Relationships and Implications for Trade in Procurement-Related Services

3.1. If the vote to leave the EU in the referendum held on 23 June 2016 leads to the UK withdrawing from the EU, a number of scenarios emerge for the future relationship between the UK and the rest of the EU. Each of these scenarios would have different implications in terms of public procurement-related trade in services.[20]

3.2. If the UK were to retain access to the internal market as a member of the European Economic Area (EEA), there would be no significant substantive changes and business would continue largely as usual. EEA Member States need to comply with the EU public procurement acquis, as all EU public procurement directives are declared texts with EEA relevance. Compliance is supervised by the EFTA Surveillance Authority rather than the European Commission, but both entities work closely in their enforcement efforts. Cases can be brought to the EFTA Court rather than the Court of Justice of the European Union, but the EFTA Court needs to ensure harmonious interpretation of EU and EEA law and, consequently, relies on CJEU case law. In this case, the UK would retain access to EU and GPA procurement markets.

3.3. If the UK were to seek access to the EU’s internal market through a tailor-made Free Trade Agreement (FTA) with the EU, it is also very likely that the EU would insist on the retention of UK public procurement law as is as the continued substantive coordination of EU and UK rules. This is clear, for instance, in the recent EU-Ukraine Deep and Comprehensive Free Trade Area (DCFTA),[21] which Chapter 8 on public procurement requires that

Ukraine will, over several years, adopt current and future EU legislation on public procurement. With the exception of defence procurement, Ukrainian suppliers and service providers will have full access to EU public procurement markets, and EU suppliers and service providers will have the same to the Ukrainian procurement market.

If the UK wanted to retain access to defence procurement (including services), it would need to also include continued compliance with Directive 2009/81 in its tailor-made FTA with the EU. Moreover, entering into a tailor-made FTA with the EU would not ensure access to GPA procurement markets, which would depend on the status under the WTO GPA (see immediately below 3.4.).

3.4. If the UK sought to exclusively rely on WTO GPA membership, there would be difficult legal issues to resolve. First, it would be necessary to determine whether the UK is a party to the WTO GPA in its own right or if its membership derives from its being part of the EU. If the latter, the UK would have to negotiate fresh accession to the WTO GPA, which would imply loss of access to GPA markets in that intervening period. Second, and regardless of continued or new membership, it would be necessary to determine the scope of coverage of the UK’s commitments towards the remaining parties of the GPA, and vice versa. Given the UK’s bargaining position as a sub-part of the EU, it is not out of the question that the UK would be under pressure to accept more stringent commitments to open up its procurement markets to GPA parties than it currently has to do under the scope of coverage negotiated by the EU as a whole. This could trigger protracted negotiations, also negatively impacting on access to GPA procurement markets. Finally, it would be necessary for the WTO GPA parties to accept that the UK’s domestic procurement system meets the relevant requirements. The easiest way of doing so would be to retain the current rules because, as indicated above (2.2.), they are already coordinated with the WTO GPA.

If the UK managed to secure continued or fresh membership of the WTO GPA, and unless it managed to persuade the rest of the WTO GPA parties to alter the current schedules of coverage in a manner that benefitted the UK on balance—which is by no means a given—and to accept its departure from the EU public procurement acquis, it is also likely that there would be scope for relatively minor technical adjustments to UK public procurement law and to the international openness of the UK public procurement markets. Thus, there is not much to be gained in this scenario and the main risk implicit in a future UK-EU relationship based on WTO GPA rules only would concern the continuity of access to the procurement markets of GPA parties (including the EU), as well as the risk of having to make additional coverage concessions in order to retain access to those markets in the present terms.

3.5. This would also apply if the UK were to aim for reciprocal commitments with the EU beyond the WTO GPA but on the basis of the WTO GPA mechanism, as recently achieved by Canada in the EU-Canada Comprehensive Economic and Trade Agreement (CETA).[22] In fact, in CETA, only Canada made additional coverage concessions to the benefit of EU (including UK) businesses, as access to EU public procurement markets for Canadian undertakings was already provided in practice.[23]

3.6. Finally, a scenario of ‘hard Brexit’ ie no trade agreement of any kind, combined with the loss of WTO GPA membership—which can be considered more likely in this scenario due to the EU’s foreseeable unwillingness to recognise the UK’s continued membership (see above 3.4.)—would imply loss of access to EU and worldwide procurement markets, for services but also for goods and works. This would likely have a major impact both on the UK public sector and in its business community, particularly that reliant on cross-border direct and indirect procurement-related trade in services.

4. Final Remarks

Short of ensuring full access to the EU internal market and GPA procurement markets, Brexit will have a negative effect on future public procurement-related trade in services between the UK and EU, as well as between the UK and the rest of GPA signatory parties.

_________________________________________

[1] Commons Briefing papers CBP-7213, Brexit: impact across policy areas, 26 August 2016, available at http://researchbriefings.parliament.uk/ResearchBriefing/Summary/CBP-7213.

[2] See Final report on cross-border procurement above EU thresholds, prepared by Ramboll and HTW Chur for the European Commission, DG Internal Market and Services, March 2011, pp. 36-41, available at http://ec.europa.eu/internal_market/publicprocurement/docs/modernising_rules/cross-border-procurement_en.pdf.

[3] European Commission, DG TRADE, Public Procurement in a nutshell, available at http://ec.europa.eu/trade/policy/accessing-markets/public-procurement/index_en.htm.

[4] For statistical information, see https://www.wto.org/english/tratop_e/gproc_e/gpstat_e.htm.

[5] DG GROW G4 - Innovative and e-Procurement, Public Procurement Indicators 2014, 2 February 2016, p. 2, available at http://ec.europa.eu/DocsRoom/documents/15421/attachments/1/translations/en/renditions/pdf.

[6] OJ L 94, 28.3.2014, p. 1–64. See also Commission Delegated Regulation (EU) 2015/2172 of 24 November 2015 amending Directive 2014/23/EU in respect of the application thresholds for the procedures for the award of contracts, OJ L 307, 25.11.2015, p. 9–10.

[7] OJ L 94, 28.3.2014, p. 65–242. Commission Delegated Regulation (EU) 2015/2170 of 24 November 2015 amending Directive 2014/24/EU in respect of the application thresholds for the procedures for the award of contracts, OJ L 307, 25.11.2015, p. 5–6.

[8] OJ L 94, 28.3.2014, p. 243–374. See also Commission Delegated Regulation (EU) 2015/2171 of 24 November 2015 amending Directive 2014/25/EU in respect of the application thresholds for the procedures for the award of contracts, OJ L 307, 25.11.2015, p. 7–8.

[9] OJ L 216, 20.8.2009, p. 76–136. See also Commission Regulation (EU) 2015/2340 of 15 December 2015 amending Directive 2009/81/EC in respect of the application thresholds for the procedures for the award of contracts, OJ L 330, 16.12.2015, p. 14–15.

[10] OJ L 335, 20.12.2007, p. 31–46. Non-official consolidated versions of the General Remedies Directive (89/665/EEC) and the Utilities Remedies Directive (92/13/EEC) are respectively available at http://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=CONSLEG:1989L0665:20080109:en:PDF and http://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=CONSLEG:1992L0013:20080109:en:PDF. It is worth noting that the European Commission is currently assessing the need for their further revision.

[11] See https://www.wto.org/english/tratop_e/gproc_e/gp_gpa_e.htm.

[12] A full updated list is available at https://www.wto.org/english/tratop_e/gproc_e/memobs_e.htm.

[13] Procurement Policy Note 05/13 – Further progress update on the Modernisation of the EU Procurement Rules, 25 July 2013, https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/225398/PPN_-_outcome_of_negotiations.pdf.

[14] See eg the Public Contracts (Scotland) Regulations 2015.

[15] For details, see http://www.howtocrackanut.com/blog/2016/11/30/brexit-and-public-procurement-some-thoughts-after-kcl-seminar.

[16] OJ L 376, 27.12.2006, p. 36–68.

[17] Commission Regulation (EC) No 213/2008 of 28 November 2007 amending Regulation (EC) No 2195/2002 on the Common Procurement Vocabulary (CPV), OJ L 74, 15.3.2008, p. 1–375.

[18] For more details on the calculations and decisional trends, see my analysis of the CJEU’s 2015 annual report at http://www.howtocrackanut.com/blog/2016/8/24/a-second-look-at-the-cjeus-public-procurement-activity-2006-2015.

[19] For detailed assessment, see the web commentary I co-authored with Dr Pedro Telles (Swansea), which is freely available at www.pcr2015.uk.

[20] For analysis, amongst others, see the opinions of Michael Bowsher QC (http://publicsectorblog.practicallaw.com/procurement-law-after-brexit/), Global Counsel (https://www.global-counsel.co.uk/sites/default/files/special-reports/downloads/Global%20Counsel_Impact_of_Brexit.pdf) or Professor Sue Arrowsmith (https://www.achilles.com/images/locale/en-EN/buyer/pdf/UK/sue-arrowsmith-brexit-whitepaper.pdf).

[21] http://trade.ec.europa.eu/doclib/docs/2013/april/tradoc_150981.pdf.

[22] See http://ec.europa.eu/trade/policy/in-focus/ceta/index_en.htm.

[23] European Commission, DG TRADE, CETA – Summary of the final negotiating results, p. 12, available at http://trade.ec.europa.eu/doclib/docs/2014/december/tradoc_152982.pdf. 

PM May's Speech has brought limited clarity of Brexit impact on procurement, but can consequences be significant?

In her Brexit speech of earlier today, Theresa May PM has clarified a few things, including that the model for a future relationship between the UK and the EU that she is "proposing cannot mean membership of the single market". She has also indicated that her Government would not consider an open-ended transitional arrangement because that could plunge Britain into “permanent political purgatory”. This seems to indicate a very clear direction towards a so-called hard Brexit that generates risks of an actual cliff edge (or a very short 'smoothing period') for UK and EU economic operators, including the public sector, businesses and consumers.

However, she has also expressed that her plan includes the priority for the UK to "seek the greatest possible access to [the EU's single market] through a new, comprehensive, bold and ambitious Free Trade Agreement". And that she hopes that this can be done in parallel to the Article 50 TEU negotiations, so that it is in place within 2 years. Prof Peers has aptly synthesised what came to mind.

It is difficult to anticipate the implications of all these contradictory goals in the area of public procurement regulation, but three main alternative scenarios seem now on the table:

1. successful completion of a UK-EU FTA that can be in force at the time the UK leaves the single market, and which allows for continuity of EU and UK commitments under the WTO rules (notably, the Government Procurement Agreement, GPA) [FTA scenario];
2. no UK-EU FTA (either at all, or because it is incomplete/in negotiation at the time the UK exits the single market), but agreement (not only between UK and EU, but also by their international trading partners) of  'workable' arrangements based on WTO rules (including GPA) [WTO/GPA safety net scenario]; and
3. no UK-EU FTA and no workable agreement under WTO rules (including GPA) [unregulated international trade scenario].

The implications of each of these scenarios in the area of public procurement would, in my view, be as follows: 

1. A tailor-made FTA would probably include features similar to the recent EU-Ukraine Deep and Comprehensive Free Trade Area (DCFTA), and this would require full compliance with the EU public procurement acquis. In short, this would imply the continuation of the status quo and no need for reform of the Public Contracts Regulations 2015 (although that would be possible because the current transposition followed an extremely restrictive copy-out approach that severely constraints its potential to unleash better procurement practices and results). 
   
   Access to GPA procurement markets would depend on the UK’s status under WTO GPA and the continued acceptance of the EU's coverage commitments by the other WTO GPA signatories, but this option could easily secure continued access to GPA markets because the UK and the EU could make a solid case that the trade reality in their procurement markets has not changed in a material way.
   
   This would be possible if the UK Government accepted the need for continuity in the public procurement area, which is something PM May hinted would be happening on a sectoral basis by stressing that the UK-EU FTA "... may take in elements of current Single Market arrangements in certain areas ... as it makes no sense to start again from scratch when Britain and the remaining Member States have adhered to the same rules for so many years." 
    
2. Failure to complete an FTA could still allow for WTO GPA-based trade in public procurement markets, not only between the UK and the EU, but in the wider context of GPA markets (although in my view this would be less likely because a breakdown in the trade relations between the UK and the EU would most likely trigger calls for renegotiation, at least of coverage, from other GPA signatories).
   
   In that case, if the UK sought to rely on the WTO GPA only, it would need to clarify whether it can retain its status as a party in its own right or -- having lost derived membership linked to EU membership -- seek fresh accession to the GPA. Either way, the scope of coverage of the reciprocal commitments between the UK and the rest of GPA parties (including the EU) would need to be clarified and probably renegotiated, with the UK facing pressure to accept deeper commitments than currently negotiated by the EU en bloc (and the EU's commitments may at the same time be also under pressure to be renegotiated due the lower volume of the EU27 procurement markets as compared to the EU28). The main risk for the UK implicit in this option would concern the discontinuity of access to the procurement markets of GPA parties (including the EU), as well as having to make additional coverage concessions in order to retain (similar to) current access to those markets.  
   
   Additionally, the UK would still need to convince the rest of GPA signatories (including the EU) that its procurement system complies with the general (minimum) requirements of the agreement. The easiest way of doing so would be to retain current rules that implement the EU public procurement acquis, which ensure compliance with the EU’s (and UK's future) international obligations under the WTO GPA. In that regard, the possibility of introducing significant reforms to the Public Contracts Regulations 2015 would also be limited, or at least conditioned by the risk of triggering what could potentially be protracted negotiations on substance of procurement regulation, in addition to the above mentioned negotiations on (adjustment of) coverage.
    

3. The implications of the final scenario of unregulated international trade are clear, at least from a legal perspective. "Hard Brexit", ie no trade agreement of any kind combined with loss of WTO GPA membership (or a workable arrangement ensuring continued reciprocal favourable treatment while access is (re)gained), would imply loss of access to EU and worldwide procurement markets (either totally or partially). Clearly, it would also provide the UK with an opportunity to close up its procurement markets to non-domestic bidders, but this would severely damage the UK public sector in many different ways, including potential higher prices, which does not seem like a desirable policy road to take. Either way, this would likely have a major impact both on the UK public sector and in its business community, particularly that reliant on cross-border direct and indirect procurement-related trade. At the same time, it would open the possibility of a complete overhaul of public procurement rules in the UK, including the repeal of the Public Contracts Regulations 2015, with or without a replacement. However, it would also imply complete isolation of UK (public procurement) markets and is clearly an undesirable state of things.

All in all, then, it seems that if the UK Government actually seeks to ensure that free trade remains a feature of the UK's economy, particularly through continuity of WTO (GPA) based trade and the conclusion of a "new, comprehensive, bold and ambitious Free Trade Agreement" with the EU, there is limited scope for reform of the Public Contracts Regulations 2015 other than to overcome the self-imposed limitations derived from the copy-out of a set of rules that is meant to be developed and fleshed out by the Member States. If that is seen as a worthwhile exercise, it can start tomorrow and irrespective of Brexit, because the regulatory space exists under currently applicable EU public procurement acquis. I am not optimistic that this will happen, though (and have not been since before the referendum).

World Bank's "Benchmarking Public Procurement 2017"

The World Bank has recently published its report Benchmarking Public Procurement 2017, where it presents a 'cross-country analysis in 180 economies on issues affecting how private sector does business with the government. The report covers two thematic pillars: the procurement process and complaint review mechanisms'.

The information is structured around eight main indicators, which cover the following areas:

1. Needs assessment, call for tender, and bid preparation: The indicators assess the quality, adequacy, and transparency of the information provided by the procuring entity to prospective bidders.
2. Bid submission phase: The indicators examine the requirements that suppliers must meet in order to bid effectively and avoid having their bid rejected.
3. Bid opening, evaluation, and contract award phase: The indicators measure the extent to which the regulatory framework and procedures provide a fair and transparent bid opening and evaluation process, as well as whether, once the best bid has been identified, the contract is awarded transparently and the losing bidders are informed of the procuring entity’s decision.
4. Content and management of the procurement contract: The indicators focus on several aspects during the contract execution phase related to the modification and termination of the procurement contract, and the procedure for accepting the completion of works.
5. Performance guarantee: The indicators examine the existence and requirements of the performance guarantee.
6. Payment of suppliers: The indicators focus on the time and procedure needed for suppliers to receive payment during the contract execution phase.
7. Complaints submitted to the first-tier review body: The indicators explore the process and characteristics of filing a complaint before the first-tier review body.
8. Complaints submitted to the second-tier review body: The indicators assess whether the complaining party can appeal a decision before a second-tier review body and, if so, the cost and time spent and characteristics for such a review. 

The report aims to make progress in the much needed collection of more information, particularly of statistical nature, about the procurement systems that exist around the world. In its own words, '[i]t aims to promote evidence-based decision making by governments and to build evidence in areas where few empirical data have been presented so far. As researchers recognize, “the comparison of different forms of regulation and quantitative measurement of the impact of regulatory changes on procurement performance of public entities will help reduce the costs of reform and identify and disseminate best practices.”' [with reference to Yakovlev, Tkachenko, Demidova & Balaeva, 'The Impacts of Different Regulatory Regimes on the Effectiveness of Public Procurement' (2015) 38 (11) International Journal of Public Administration 796-814].

The report also recognises some of its main substantive and methodological limitations (see p.26). However, even taking those into account, the benchmarking exercise seems rather imperfect and with limited potential to inform policy-making and reform. A couple of examples will illustrate why. 

First, in terms of the methodology for the scoring of procurement systems, I am not sure I understand the logic for the award of points or the scale used to weight the different criteria. For instance, when assessing the accessibility of the procurement process, procurement systems are awarded 1 point if bidders are required to register on a government registry of suppliers, and 0 points if there is no registration requirement. To my mind, this is contrary to what logic would dictate because a system that does not require previous or additional registration is more open than one that does.

Similarly, when assessing the existence and requirements for the provision of bid securities, procurement systems get get a score of 1 for either option they provide in a range of questions concerning whether a bid security or a bid declaration is required, whether the bid security amount is no more than a certain percentage of the contract value or value of the submitted bid, or no more than a certain flat amount; whether suppliers have choice regarding the form of bid security instrument; or if bidders are required to post a bid security instrument, whether there is a time frame for the procuring entity to return the instrument. Additionally, procurement systems are awarded an additional maximum of 1 point for each of the forms of bid security instrument they accept: cash deposit, bank guarantee, insurance guarantee (1/3 of a point each). This means that systems that have more flexibility in the way they regulate bid securities will get higher scores (which is fair enough), but that systems that do not require bid securities will get no points. This, for instance, makes the UK (50 points) lag behind Spain (94 points) in this indicator, despite the fact that the UK is recorded as having no bid security requirement and Spain being recorded as requiring a bid security proportionate to the value of the contract (I am not assessing this information which, at least in the case of Spain, requires some nuances). once again, this is contrary to what logic would dictate because procurement systems that do not require bid securities are more open and accessible (particularly to SMEs).

Second, in terms of the comparisons that can be made with the scores as published, I am not sure that the way the information is presented can actually help understand the drivers of different scores for different countries. Most points are awarded on the basis of a yes/no answer to given questions. Given that some questions are rather open-ended or simply confusing (eg the question concerning Criteria for bid evaluation queries whether the procurement system includes "Price and other qualitative elements", but all procurement systems get a score of 1 regardless of the answer), their ability to allow for comparisons is minimal. Moreover, the individual scoring for each criterion is not provided, which prevents direct comparisons even where questions are narrower and actually award different scores to different answers.

Overall, sadly, I am afraid that the report Benchmarking Public Procurement 2017 can only be seen as a first step towards creating a useful system and scoring matrix to benchmark all public procurement systems in the world. I would think that this is possible, particularly once the field work of information collection is in place (unless it was collected as direct responses to the questionnaire linked to the scoring rule) and that the published version of the report can be significantly improved solely on the basis of a better analysis of the raw information collected by the World Bank team. On that point, it is a shame that this information is not published by the World Bank and I would invite them to reconsider the possibility of publishing the database of raw information, so that more specific proposals on how to improve the scoring method without having to collect additional information can be developed.

ECJ creates randomness in right to challenge procurement decisions by excluded tenderers (C-355/15)

In its Judgment of 21 December 2016 in Technische Gebäudebetreuung and Caverion Österreich, C-355/15, EU:C:2016:988, the European Court of Justice (ECJ) offered additional interpretation of the rules on active standing to challenge public procurement decisions under the Remedies Directive (RD) and, in particular, its Article 1(3), according to which 'Member States shall ensure that the review procedures are available, under detailed rules which the Member States may establish, at least to any person having or having had an interest in obtaining a particular contract and who has been or risks being harmed by an alleged infringement'.

This provision had been interpreted in broad terms ('favor revisionis') in Fastweb (C‑100/12, EU:C:2013:448, see here), where the ECJ strengthened the right of non-compliant tenderers to challenge procurement decisions. It is in comparison to Fastweb that Technische Gebäudebetreuung and Caverion Österreich raises some tricky issues--and, once more, it is surprising that this ECJ judgment was adopted without an Advocate General opinion.

In the case at hand, and given the wording of the Austrian transposition of Art 1(3) RD granting active standing to 'An[y] undertaking which had an interest in the conclusion of a contract...', the legal question for the ECJ concerned a new aspect of the concept of 'any person having or having had an interest in obtaining a particular contract', as it relates to economic operators that have participated in the tender, but are no longer under active consideration by the contracting authority.

The interpretive difficulty stemmed in part from the contrast between the open wording of Art 1(3) RD and the seemingly more limited concept that could be extracted from Art 2a(2) RD, when it establishes a standstill obligation in relation only to concerned tenderers, which are defined as those who 'have not yet been definitively excluded. An exclusion is definitive if it has been notified to the tenderers concerned and has either been considered lawful by an independent review body or can no longer be subject to a review procedure'. Given that Art 2a(1) RD establishes that 'Member States shall ensure that the persons referred to in Article 1(3) have sufficient time for effective review of the contract award decisions taken by contracting authorities, by adopting the necessary provisions respecting the minimum conditions set out in paragraph 2 of this Article', the link between the general rule on active standing in Art 1(3) RD and the more limited rule on standstill in Art 2a(2) that aims to make that active standing effective does raise some complex issues.

In Technische Gebäudebetreuung and Caverion Österreich, the question arose from the fact that the challenger of the procurement decision had been excluded from the procedure by a decision of the contracting authority that had become final (after two appeals) at the time of the challenge. The Austrian review courts considered that the finality of the exclusion extinguished the right to challenge the award decision because 'the rights of a tenderer whose bid has been properly excluded cannot be infringed by illegalities relating to the procedure followed to select another bid for the purposes of awarding the contract' (C-355/15, para 16).

In order to determine the compatibility of this position with EU law, the ECJ broke down the issue in two parts. It first distinguished the current case from Fastweb. It then proceeded to clarify the purpose of the challenge rights provided by Art 1(3) RD. While each of the two parts of the reasoning make some sense independently, their lack of coordination can create difficult cases under spurious circumstances.

In distinguishing the cases, the ECJ indicated that

29 ...  the judgment of ... Fastweb ... gave concrete expression to the requirements of the third subparagraph of Article 1(1) and Article 1(3) of Directive 89/665 in a situation in which, following a public procurement procedure, two tenderers bring an action for review, each seeking the exclusion of the other. In such a situation, both of the tenderers have an interest in obtaining a particular contract.

30      However, the situation at issue in the main proceedings is very clearly distinguishable from the situations at issue in the two cases giving rise to the judgments of ... Fastweb and ... PFE (C‑689/13, EU:C:2016:199).

31      First, the bids of the tenderers concerned in [Fastweb and PFE] had not been the subject of an exclusion decision of the contracting authority, unlike the bid submitted by the consortium in the main proceedings in the present case.

32      Secondly, it was in the course of the same, single set of review proceedings relating to the award decision that, in both cases, each tenderer challenged the validity of the other tenderer’s bid, each competitor having a legitimate interest in the exclusion of the bid submitted by the other, which may lead to a finding that the contracting authority is unable to select a lawful bid ... In the main proceedings in the present case, by contrast, the consortium brought an action, first, against the exclusion decision adopted in respect of it and, secondly, against the award decision, and it is in the course of that second set of proceedings that it contends that the successful tenderer’s bid is unlawful.

33      It follows that the principle of case-law stemming from the judgments of [Fastweb and PFE] does not apply to the procedure and litigation at issue in the main proceedings (C-355/15, paras 29-33, references omitted).

Despite being very formalistic and relying on procedural aspects of the litigation rather than on the material situation (ie, tenders with only two bidders in which each holds an interest in the exclusion of the other so that, in case of dual exclusion, the contracting authority is obliged to re-run the procedure and, thus, each has a fresh opportunity to participate), this is not an unreasonable approach and the ECJ seems clear in establishing an implicit condition for active standing that requires the contracting authority itself to not have excluded the tenderer (or its offer) at the time where the challenge of the award decision takes place. This is however a restriction of the (potential) widest interpretation of Art 1(3) RD. And this restriction brings complications in light of the second part of the analysis carried out by the ECJ in Technische Gebäudebetreuung and Caverion Österreich.

Indeed, in addressing the specific issue of the finality of exclusion decisions that exclude the right to challenge under Art 1(3) RD, the ECJ considered that

34 ... as is apparent from Article 1(3) and Article 2a of Directive 89/665, that directive ensures effective review of unlawful decisions adopted in the context of a public procurement procedure, by enabling any excluded tenderer to challenge not only the exclusion decision, but also, as long as that challenge has not been resolved, the subsequent decisions which would harm it if its exclusion were annulled.

35 In those circumstances, Article 1(3) of that directive cannot be interpreted as precluding a tenderer such as the consortium from being refused access to the review of the award decision, provided that it must be considered a definitively excluded tenderer within the meaning of the second subparagraph of Article 2a(2) of that directive (C-355/15, paras 29-33, emphases added).

In my view, this interpretation is criticisable both in own terms, and due to the effects it creates. The ECJ has adopted an interpretation of Art 1(3) that is conditioned by Art 2a(2)--that is, a sort of systemic interpretation where the special rule may be seen to exclude or restrict the general rule--without first addressing the possible coordination of both provisions without the second altering the scope of application of the first one--ie, in a true systemic interpretation.

This excludes an alternative, broader interpretation of the rules on active standing in the Remedies Directive that I would have much rather preferred, which would have determined that all economic operators having had an interest in the award of the contract (included definitely excluded ones) have the right to challenge the award decision under Art 1(3) RD, even if only those that are concerned tenderers or candidates benefit from the facilitative procedural measures derived from standstill under Art 2a(2) RD [see A Sanchez-Graells, Public Procurement and the EU Competition Rules, 2nd edn (Oxford, Hart, 2015) 439-441]. This would have respected the fact that, in the revision of the RD in 2007 (when Art 2a(2) was introduced), the wording of the relevant part of Art 1(3) was not amended. It would also not diminished or altered the effectiveness of Art 2a(2) RD, as the standstill period would in any case not benefited excluded tenderers ro candidates, who would have to overcome the additional burden of following the tender procedure very closely when they intended to challenge the final award decision.

Additionally, the position adopted by the ECJ in Technische Gebäudebetreuung and Caverion Österreich creates an element of randomness derived from the uncertainty around decision times for challenges, appeals (and further appeals) of exclusion decisions. Thus, in swift jurisdictions where exclusion decisions can very quickly become final, the rights to challenge award decisions by tenderers excluded by the contracting authority can be effectively suppressed. In contrast, in slower jurisdictions where finality of exclusion decisions takes longer to reach, tenderers excluded by the contracting authority will still have the opportunity to challenge award decisions. In either case, there is no requirement for a coordination of both procedures, so it could well be that the challenge brought by an excluded tenderer is decided before an eventual confirmation of the exclusion decision, which seems to create an undesirable situation under the logic of the ECJ in Technische Gebäudebetreuung and Caverion Österreich. Overall, this Judgment creates this element of randomness in the recognition or not of active standing to challenge award decisions to tenderers excluded by the contracting authority, which is undesirable.

More generally, this case indicates once more the shortcomings of the system created by the Remedies Directive, which is patchy and incomplete, and requires a fundamental revision [see A Sanchez-Graells, "If It Ain't Broke, Don't Fix It'? EU Requirements of Administrative Oversight and Judicial Protection for Public Contracts", S Torricelli & F Folliot Lalliot (eds), Administrative oversight and judicial protection for public contracts (Larcier, 2017) forthcoming]. If nothing else, to clarify whether this is solely about justiciability of review rights of economic operators that can have an interest in being awarded that specific contract under the conditions in which it is tendered (a narrow interpretation), or whether it serves broader purposes of control and review of procurement activity, as a substitute for faltering public oversight of this important public sector function (a broad interpretation). There are arguments both ways, but not having this very basic and foundational aspect clear does create problems as the case law of the ECJ continues shaping the system one preliminary reference at a time...