C-31/87

1. The questions referred to the Court by a judgment of 28 January 1987 of the Arron- dissementsrechtbank, The Hague, relate to 4. According to the preamble to the the interpretation of certain provisions of directive, the coordination of national Council Directive 71/305/EEC of 26 July procedures for the award of public works 1971 concerning the coordination of contracts is, together with the abolition of procedures for the award of public works restrictions, one of the means necessary for contracts. 1 'the simultaneous attainment of freedom of establishment and freedom to provide services in respect of public works contracts awarded in Member States on behalf of the 2. They arose in proceedings in which State or regional or local authorities or Beentjes BV claimed damages from the other legal persons governed by public Netherlands State in respect of the loss law'. 2 As regards the substantive rules, arising from the fact that although it had Article 1 (b) of the directive defines the submitted the lowest tender under an invi- 'authorities awarding contracts' governed by tation to tender for a public works contract its provisions as 'the State, regional or local issued by the Waterland Local Land authorities and the legal persons governed Consolidation Committee (hereinafter by public law specified in Annex I'. Annex I referred to as 'the local committee'), did not refers to the local authorities in all the obtain the contract, which was awarded to Member States; in the Netherlands speci- the tenderer with the next lowest price. The fically, it mentions various categories of local committee justified its rejection of bodies, in particular university bodies. Beentjes' tender on the ground that it was less well qualified. Since Beentjes' claim was based directly on the alleged failure of the local committee to comply with provisions of the directive, the national court took the 5. According to the information provided view that it was necessary to obtain clarifi- by the national court, the local land consoli- cation from the Court of certain conditions dation committee is a body which 'has no for its application. legal personality of its own' and is responsible for carrying out land consoli- dation. It is appointed by the Provincial Executive of the province concerned and must comply with rules laid down by a 3. The first question concerns the scope of Central Committee set up by Royal Decree, the directive. It seeks to establish whether whose members are appointed by the Crown. * Translated from the French. 1 — OJ, English Special Edition 1971 (II), p. 682. 2 — First recital in the preamble.

10. In fact, the Court is faced with a 7. The argument put forward in the main phenomenon which is common in the proceedings by the Netherlands Govern- administrative life of developed societies: ment that the directive does not apply to the the 'fragmentation of the administration'. award of contracts by bodies such as the With increasing frequency, the laws of local committee is based on a simple States entrust functions which are by defi- comparison of the characteristics of this nition public to organs which are not committee with the abovementioned attached to the traditional administrative provisions of the Community measure. Since organization, but nevertheless have no legal the local committee is not a department of personality of their own. This fragmentation the State administration, an administrative reflects a desire to associate closely with the department of a local authority or one of functions concerned persons from outside the 'legal persons governed by public law the administration — this being reflected in specified in Annex I' of the directive, in the the composition of the organs — or to Government's view public works contracts reinforce the independence of such organs awarded by the body in question are not in the eyes of the public, by means of the covered by the directive. fact that the traditional administrative auth- orities may not give them instructions. Indeed, it may also correspond to a mixture of the two concerns. Thus, for example, we have witnessed for a number of years the 8. In this regard one should not ignore the appearance in certain States of 'independent paradoxical position of the local land administrative authorities' endowed with consolidation committee inasmuch as, important powers, in particular that of according to the information expressly laying down rules. But even leaving aside provided by the judgment of the national these recent creations, the everyday organ- court, Article 35 of the rules drawn up by ization of the administration has for a long the Central Committee required the local time given rise to organs such as examining committee to apply the directive when boards whose activity is in substance admin- awarding works contracts. It may therefore istrative but is carried out separately and be asked whether the applicability of the independently from the traditional directive, which is the subject of the first structures of the administration, which, question, can genuinely be in doubt, since because it has no hierarchical authority, is in the Netherlands public authorities — and functional terms held at arm's length. here I refer to the express terms of paragraph 5.4 of the national court's judgment — have decided that it is necessary for the local committee to 11. In so far as local land consolidation implement its provisions. committees in the Netherlands are in my

12. In this respect it is important not to 15. This approach which I propose, that of confuse functional independence and not keeping strictly to the letter of autonomy. While such organs are not expressions such as the 'State' or 'regional subordinate in hierarchical terms to the or local authorities' is not new to the Court. 'traditional' administration, whether central or local, their activities are carried out in the pursuit of interests which are not distinct from those of the State or a local 16. Thus, in an action against à Member authority. Their objectives fall within the State for failure to fulfil its obligations, normal competence of the State or a local in the judgment of 24 November 1982 authority. When an examining board issues in Commission v Ireland, 3 the Court diplomas it does so in the name of the State considered that where a government or, depending on the relevant legislation, a 'appoints the members of the Management local authority, and not in the name of Committee' of an organ, 'grants it public undefinable separate interests. The fact that subsidies which cover the greater part of its the interests of the general public are taken expenses and, finally, defines the aims and into account, either in the composition of the broad outline of the campaign the organs or by their functional inde- conducted by that institution to promote the pendence, is not sufficient to transform their sale and purchase of [national] purpose, which, since they have no legal products . . . ', it cannot 'rely on the fact personality of their own, is merely to that the campaign was conducted by a represent, in an innovative way, the State or private company in order to escape any a local authority. It follows that in the liability it may have under the provisions of absence of specific provisions the the Treaty'. 4 Community rules applicable to the State or to local authorities must automatically govern the activities of organs of the type considered here. 17. Moreover, in a reference for a preliminary ruling, in the judgment of 6 October 1981 in Broekmeulen, 5the Court held that the 'Appeals Committee for 13. In examining the application of the General Medicine' established by the Royal Community rules in question, however, it is Netherlands Society for the Promotion of necessary to determine the criteria for deciding whether certain organs are in fact 3 — Case 249/81 [1982] ECR 4005. inseparable from the State or local auth- 4 — Case 249/81, cited above, at paragraph 15. orities. 5 — Case 246/80 [1981] ECR 2311.

Medicine, an association governed by 20. If the Court accepts this analysis, it private law, was to be regarded, 'in the must find that the public works contracts absence, in practice, of any right of appeal awarded by organs such as a local land to the ordinary c o u r t s . . . in a matter consolidation committee in the Netherlands involving the application of Community are awarded on behalf of the State and, law', as a court or tribunal within the accordingly, are governed by the provisions meaning of Article 177 of the Treaty since it of the directive. operates with the consent and cooperation of the public authorities and its decisions, taken after contentious proceedings, are as a matter of fact recognized as final. 21. The second question relates to the substance of the directive and seeks to establish whether, under its provisions, it is possible to exclude a tenderer on the basis of various qualitative criteria not expressly specified in the contract notice. 18. It therefore seems to me to be consistent with the realistic approach adopted by the Court in its decisions to 22. Article 20 of the directive lays down, as regard the Community provisions governing a matter of principle, a distinction between the award of public works contracts by the criteria for checking the suitability of State and regional and local authorities as contractors and criteria for awarding the applying to the award of works contracts by contract: an organ whose constitutive documents, while establishing its functional inde- pendence, show that it acts on behalf of the State or a regional or local authority. 'Contracts shall be awarded on the basis of the criteria laid down in Chapter 2 . . . after the suitability of contractors . . . has been checked by the authorities awarding contracts in accordance with the criteria of economic and financial standing and of 19. In this instance, the committee in technical knowledge or ability referred to in question is responsible under legislation for Articles 25 to 28.' carrying out land consolidation at local level. In view of the fact that its activity in this respect must comply with the 23. The directive deals with the assessment instructions of a central committee whose of whether contractors are qualified under members are appointed by the Crown and two heads: financial and economic standing that under the Netherlands law concerning on the one hand (Article 25), and technical appeals against administrative decisions it is knowledge and ability on the other (Article regarded as an administrative organ of the 26). central authorities, it is clear that the local committee, which has no legal personality of its own, performs an administrative function on behalf of the State. In addition, 24. With regard to economic and financial its members are appointed by the Provincial standing, which has not been disputed in the Executive, a public authority, and the main proceedings but is mentioned in the expenses which it incurs are financed by the national provisions cited by the Netherlands public authorities. State and referred to in the wording of the

question, it may be seen that, pursuant to concerning questions referred to the Court Article 25 of the directive, proof may be for a preliminary ruling by the Belgian furnished 'as a general rule' by one or more Conseil d'Etat, 6 the references set out in of three 'references' described in the three Article 25 and 26 designate qualitative indents (a) to (c) of that article; the aspects — for instance work carried out awarding authorities must specify in the previously, tools, plant and technical contract notice which reference or equipment, average manpower — without references they have chosen and 'what laying down any requirement as to the references other than those mentioned standard. It follows that with regard to such under (a), (b) and (c) are to be produced'. requirements the awarding authorities are left a certain leeway.

26. This brief summary of the provisions of described under indents (a) to (e) of Article the directive concerning the assessment of 26 are exhaustive in character since the the suitability of contractors calls for three awarding authorities are not empowered to comments. seek 'other references', as they may do under Article 25 with regard to financial and economic standing. They are therefore not entitled to apply criteria concerning 27. In the first place, contrary to the affir- additional qualitative aspects not referred to mations of the Netherlands State referred to in the indents in question. In the Trans- at paragraph 6.2 in the national court's poroute judgment of 10 February 1982 7 the judgment, it appears that the purpose of Court has already emphasized the Articles 25 and 26 of the directive is not exhaustive nature of the references other solely to standardize the documents which than those concerning economic and may be required in applying criteria of financial standing. qualitative selection. They also fix these criteria, as is shown by Article 20.

28. Clearly these criteria are to some extent references described in these articles, which incomplete, because, as Mr Advocate General Mischo noted in his Opinion 6 — Judgment of 9 July 1987 in Joined Cases 27 to 29/86 [1987] ECR 3347. delivered on 11 June 1987 in cases 7 — Case 76/81 [1982] ECR 417.

in the light of Article 20 must be interpreted be void. This approach cannot in my view as both listing the qualitative factors for be reconciled with the intention behind the assessment and describing the documents to adoption of Directive 72/277/EEC or with be used for that assessment, it seems to me the concerns addressed by the Community that by requiring the awarding authorities to legislature in the basic measure, Directive specify in the notice the references which 71/305/EEC. are to be produced the directive imposes upon them inter alia a duty to inform contractors of the qualitative aspects, in other words the criteria, on the basis of 32. In the case which is the subject of the which their suitability will be checked. national proceedings, the contract notice, Accordingly, in my view, the provisions in section 11 of which was blank, stated in fine question prohibit an awarding authority that from excluding a contractor on the basis of qualitative aspects in respect of which references were not required in the contract

A statement such as munities, 8 the notice must state, under that referred to above cannot by definition heading 11, 'the minimum economic and be a reference capable of proving economic technical conditions required of the and financial standing in accordance with contractors'. Without wishing to underes- Article 25, and does not appear to have any timate the value, in particular in budgetary relation to one of the indents of Article 26, terms, of standardizing the publication of which, as I have stressed, are exhaustive. contract notices in the Official Journal of the This situation may seem paradoxical in so European Communities, I think it would be far as the absence in the invitation to tender excessive to consider that the references of any valid statement of criteria regarding concerning economic and financial standing economic and financial standing means that and technical knowledge and ability there is no condition whatsoever as to the required by awarding authorities must suitability of contractors and thus that in appear exclusively, if the notice is to be principle any undertaking is suitable. valid, under heading 11 and that a reference However, it must be stressed that it is the concerning the qualitative aspects provided awarding authority which, by wrongly for in Articles 25 and 26 but appearing applying the directive, has placed itself in under another heading in the notice would this situation.

BEENTJES v NETHERLANDS STATE

33. For the sake of completeness in the expressly cited, concern the nature of the discussion of the second question, I think it work to be carried out or the manner in is also necessary to clarify, having regard to which it is to be done, to the exclusion of the situation which gave rise to this any considerations relating to the reference for a preliminary ruling, the contractor. In simpler terms, it may be said conditions of application of the provisions that the criteria for the award 'to the most of the directive concerning the criteria for economically advantageous tender' concern awarding the contract. the 'product' and not the 'producer', the quality of the 'work' and not that of the contractor. 34. Under Article 20 contracts must be awarded on the basis of the criteria laid down in Chapter 2. In that chapter, Article 36. The directive thus draws a clear 29 (1) provides that: distinction between the criteria for checking the suitability of a contractor, which concern the qualities of the contractor as 'the criteria on which the authorities such, and those for awarding the contract, awarding contracts shall base the award of which relate to the qualities of the service contracts shall be: which he offers, of the work which he proposes to carry out.

OPINION OF MR DARMON — CASE 31/87

to Directive 72/277/EEC is reserved for 41. In the present case, the national court 'criteria for the award of the contract'. The asks whether the provisions of the directive, sole 'criterion' appearing in the notice was whose substance I have just discussed, may that referred to above, concerning the be relied upon by an individual employment of a certain quota of unem- ployed persons to carry out the work. This criterion, which has no relation to the intrinsic qualities of the work to be carried 'if in the incorporation of those out, of the service to be provided, of the p r o v i s i o n s . . . in national legislation the 'product', could not be regarded as one of contracting authority is given wider powers the criteria for the award of the contract to refuse to award a contract than are within the meaning of the directive, and permitted under the directive'. consequently constitute a ground for excluding a tenderer. In such a situation, in which no criterion for awarding the contract has been validly specified in the In the Transporoute judgment, with regard contract notice or the contract documents, to national provisions which, in the words it appears that under the actual terms of of Mr Advocate General Reischl, did not Article 29 only the criterion of the lowest reproduce exactly the terms of Article 29 of price may be applied. the directive, the Court held that the provisions of the article should be applied by the awarding authority, which clearly implies that the provisions in question are directly applicable. The Court held that

BEENTJES v NETHERLANDS STATE

a provision such as Article 21 (2) of the in the directive. Accordingly it is my view Uniform Rules, the national measure that the tenderer must be given the implementing the directive, whose effect is protection intended by the directive, whose to release the awarding authority from the relevant provisions must override the duty to comply with the criteria laid down national implementing provision.

43. Consequently, I propose that the reply to the questions submitted by the Arrondissementsrechtbank, The Hague, should be as follows:

(1) The provisions of Council Directive 71/305/EEC apply to works contracts awarded by a body which has no legal personality of its own where its compo- sition, its function and the means it has for carrying out that function show that it acts on behalf of the State or a regional or local authority.

(2) Under these provisions a contractor may be excluded only on the basis of one or more of the criteria of suitability concerning the aspects set out in Articles 25 or 26 and specified in the contract notice, or on the basis of one or more of the criteria for the award of contracts contained in Article 29 and specified in the contract notice or the contract documents, where the lowest price is not taken as the exclusive criterion for awarding the contract.

(3) A public awarding authority is bound to comply with those provisions, and may not rely on a national implementing provision which confers on it a general discretion concerning assessment of the contractor and his tender.