Division of a contract into lots – Lowest price award criterion – Opportunity for the tenderer ranked second to be awarded a lot on condition that it accepts to perform that lot at the price offered by the tenderer ranked first which has been awarded another and larger lot of that contract.’

‘Does this method of awarding public contracts amounts to an amendment of the tender in breach of the principles of equal treatment and transparency set out in Article 18(1) of Directive 2014/24?’

Background and legal context 

The reference for a preliminary ruling at issue stems from a tendering procedure for the award by a Danish central purchasing body of a framework agreement divided into lots relating to the provision of library materials and related preparatory services with the lowest price award criterion.

It concerns the interpretation of Article 18 of Directive 2014/24/EU on the principles of equal treatment and transparency whose corollaries are the prohibition of amending the tender after the time limit for the receipt thereof and the ban on negotiations between the contracting authority and the tenderer during the procedure as fully transposed into domestic law by Article 2 of the Udbudsloven (the Danish Law on Public Procurement).

In the present case, the terms set out in tender specifications provided that two (out of eight) lots were interdependent (meaning that the tender submitted for one lot is automatically extended to the other lot) and that the same tenderer may have been awarded several lots.

Furthermore, the lex specialis of the tendering procedure at issue, for the purposes of this analysis, stipulated that the ranked second would have been awarded one of the two lots provided that it had agreed to supply the products and perform the services exactly at the same prices as those offered by the tenderer ranked first.

If the second tenderer hadn’t accepted this condition the opportunity would have passed to the next tenderer on the list, and so on.

The rationale behind such a design of the procurement procedure in question is to maintain competition in a market (such as that of library materials in Denmark) in which operate few specialised suppliers. Therefore the contracts relating to books are divided geographically into two lots (Lot 1 “East”, the largest one, and Lot 2 “West”, of lower value) (the so called ‘East/West model’).

SKI had received tenders from Audio Visionary Music A/S (‘AVM’) and from BibMedia which each submitted tenders for all of the lots. It awarded Lot 2 (West) to BibMedia who offered the lowest price and proposed to award Lot 1 (East) to AVM, on the condition that it accepted to perform that lot at the prices offered by BibMedia.

AVM accepted such proposal, but subsequently lodged a complaint with Klagenævnet for Udbud (Public Procurement Complaints Board, Denmark; ‘the Complaints Board’) which found that SKI had infringed the principles of equal treatment and transparency by applying a procedure the terms of which meant, in essence, that the tenderer ranked second could modify its tender (namely the essential term of the price) after the period for submitting tenders had expired.

Against this decision SKI brought an action before the Retten i Glostrup (Glostrup District Court, Denmark) which was remitted to the Østre Landsret (High Court of Eastern Denmark, Denmark), court of first instance and referring court.

The High Court noted that the Court of Justice has previously clarified the scope of the ban on negotiation resulting from Article 18 of Directive 2014/24 as regards reservations contained in a tender – See Commission v Denmark, C-243/89, EU:C:1993:257, paragraphs 37 and 40, where the CJEU ruled that non-compliance with fundamental requirements laid down in tender conditions must lead to exclusion -, but that it never expressed itself on a similar case.

For this reason the referring court decided to ask to the Court of Justice whether the principles of transparency and equal treatment in Article 18 of Directive 2014/24 and the consequent ban on negotiations preclude a tenderer who has submitted the second most economically advantageous tender in connection with an open procedure for separate lots from being given the opportunity, after the deadline for submission of the tender has expired, and in accordance with the predetermined terms in the specifications, to supply the proposed services within a lot under the same terms as a tenderer who has submitted the most economically advantageous tender and who, therefore, is awarded another lot.

The findings of the Court of Justice

The CJEU observes that such a method of awarding public contracts does not contain any element of negotiation within the meaning of the case-law cited on the ban on negotiations and the prohibition of amending the tender after its submission (judgments of 14 September 2017, Casertana Costruzioni, C‑223/16, EU:C:2017:685, paragraph 35, and of 3 June 2021, Rad Service and Others, C‑210/20, EU:C:2021:445, paragraph 43) (See paragraph 33).

In particular, according to the CJEU such a method ‘guarantees, for the award of all lots, that the criterion of the lowest price is fulfilled, without the possibility for the contracting authority to derogate from that criterion or to ask a tenderer to amend its tender, since the contracting authority must base its decision on the prices offered before the expiry of the period for submitting tenders and to observe, throughout that procedure, the order of ranking resulting from those tenders (…) In that ranking, the tenderer which offered the lowest price takes first place and that tenderer’s price is that at which the entirety of the contract will be concluded’ (See paragraphs 34 and 35).

The opportunity, provided by the tender specifications to the tenderer ranked second, of being awarded one lot of the contract depends solely on its decision to accept to perform the lot at the price offered by the tenderer ranked first (See paragraphs 36 and 37).

By taking this decision the tenderers ranked from second place to last place have no possibility to change their position in the ranking by amending their own tenders (See paragraph 38).

It follows from all the foregoing that: ‘a contract award procedure such as that at issue in the main proceedings comes, without breaching the principles of equal treatment and transparency, within the scenario referred to in Article 46 of Directive 2014/24, namely that in which a contracting authority decides to award a contract in the form of separate lots, specifying in the procurement documents whether a tender may be submitted for a single lot, for several lots or for all of the lots and indicating which objective and non-discriminatory criteria will be applied to determine the award of lots’(See paragraph 39).

Based on this reasoning the Court answers to the request for a preliminary ruling in the sense that: ‘Article 18(1) of Directive 2014/24/EU of the European Parliament and of the Council of 26 February 2014 on public procurement and repealing Directive 2004/18/EC must be interpreted as meaning that the principles of equal treatment and transparency set out in that provision do not preclude, in a procedure for the award of a public contract divided into lots, the tenderer which has submitted the second most economically advantageous tender from being awarded, in accordance with the terms set out in the procurement documents, a lot on the condition that that tenderer accepts to deliver the supplies and perform the services relating to that lot at the same price as that offered by the tenderer which submitted the most economically advantageous tender and which has therefore been awarded another, larger lot of that contract’.

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