C-27/98

FRACASSO AND LEITSCHUTZ

OPINION OF ADVOCATE GENERAL SAGGIO delivered on 25 March 1999 *

1. By order of 27 January 1998 the Bun- The Community and national provisions desvergabeamt, Republic of Austria, sought from the Court of Justice a preliminary ruling on two questions concerning the interpretation of Article 18 of Council Directive 93/37/EEC of 14 June 1993 con- cerning the coordination of procedures for 3. The Directive coordinates the national the award of public works contracts (here- provisions on the award of public works inafter 'the Directive').1 contracts. The preamble indicates that 'the simultaneous attainment of freedom of establishment and freedom to provide ser- vices in respect of public works contracts awarded in Member States on behalf of the State, or regional or local authorities or other bodies governed by public law entails not only the abolition of restrictions but also the coordination of national proce- 2. The questions are concerned essentially dures for the award of public works with the compatibility of the Federal Aus- contracts' (second recital). The next recital trian rules on contracts (Bundesgesetz über adds that 'such coordination should take die Vergabe von Aufträgen, hereinafter 'the into account as far as possible the proce- BVergG') with Article 18 of the Directive, dures and administrative practices in force which contains the general principles con- in each Member State'. The first sentence of cerning arrangements for awarding con- the 10th recital makes it clear that 'to tracts, in view of the fact that Article 55(2) ensure the development of effective compe- of the abovementioned Austrian rules pro- tition in the field of public contracts, it is vides that the administration may with- necessary that contract notices drawn up by draw a tender notice where, after exclusion the contracting authorities of Member of tenders not meeting the legal require- States be advertised throughout the Com- ments, only one tender remains. The issue munity'. is therefore whether the Directive requires the administration, after examining the suitability of the tenderers, to award the contract even if only one tender has been admitted as valid.

The last relevant provision is Article 55(2) of the Austrian Law, whose compatibility with the Directive is at issue in the pro- Title IV contains the 'Common rules on ceedings before the national court and participation'. Under Article 18: 'Contracts according to which the contract notice shall be awarded on the basis of the criteria may be withdrawn where, after exclusion laid down in Chapter 3 of this title, taking of tenders under Article 52, only one tender into account Article 19, after the suitability remains. I would point out for the sake of of the contractors not excluded under completeness that Article 52(1) of the Article 24 has been checked by the con- BVergG provides that, before the successful tracting authorities in accordance with the tenderer is chosen, the contracting autho- criteria of economic and financial standing rity, relying on the results of the prelimin- and of technical knowledge or ability ary inquiries, is required immediately to referred to in Articles 26 to 29.' eliminate tenders submitted by undertak- ings which fail to fulfil any of the require- ments. This involves the exclusion, for example, of tenders submitted without the necessary authorisations, or those which are defective as regards economic, financial 5. The Austrian rules on public works or technical capacity or the requisite cred- contracts are contained in the BVergG, ibility of the undertaking (paragraph 1), which has been in force since 1 January and tenders for which the total price has 1994. 2 That Law provides that contracts not been determined plausibly (paragraph for works and services must, after accom- 3). plishment of the prescribed procedure, be awarded in conformity with the principles of free and fair competition and equal treatment for all bidders and tenderers to authorised, efficient and reliable undertak- ings at appropriate prices (Article 16(1)). The same Law provides, however, that tendering procedures are required to be The facts and the questions referred concluded only where there is an express provision to that effect (Article 16(5)).

the Federal Government, Salzburg) to pub- awarded on the basis of the criteria laid lish in spring 1996 a contract notice for the down in Chapter 3 of Title TV, taking into execution of construction works on the Al account Article 19, after the suitability of Westautobahn. On completion of the requi- the contractors not excluded under Arti- site procedures, the contract was awarded cle 24 has been checked by contracting to the company ARGE Betondecke-Salz- authorities in accordance with the criteria burg West. In November of the same year, of economic and financial standing and of the same contracting authority, after a technical knowledge or ability referred to further technical evaluation of the works in Articles 26 to 29, to be interpreted as involved, announced a competition for a requiring contracting authorities to accept contract for works along 'the carriageway a tender even if it is the only tender still of the Salzburg Westautobahn from km remaining in the tendering procedure? Is 292.7 to km 297.7, final extension; supply Article 18(1) sufficiently specific and pre- and installation of a steel guard rail'. By cise for it to be relied on by individuals in tender notice of 24 April 1997, it formally proceedings under national law and, as part opened the procedure for final award of the of Community law, to be used to oppose contract for the work in question. Follow- provisions of national law?' ing verification of the eligibility of the four competing undertakings, only one was left in contention, namely the consortium com- prising Bietergemeinschaft Metalmeccanica Fracasso SpA-Leitschutz Handels- und Montage GmbH. The contracting authority therefore decided to avail itself of the power to terminate the tendering procedure under the abovementioned Article 55(2) of the BVergG. Following an amicable agree- ment reached in conciliation proceedings before a special federal supervisory com- mission (Bundes-Vergabekontrollkommis- The first preliminary question sion), 3 the consortium applied for review under Article 113 of the BVergG. The Third Chamber of the Bundesvergabeamt, to which the matter was assigned, decided to seek a preliminary ruling from the Court of Justice on the following question:

the fact that only one tender has been governments which have intervened in admitted as valid. these proceedings, although considering that the Member States remain free to grant the contracting authorities the power to cancel a competitive procedure, lays emphasis on the risks which might arise if that power were abused. 8. The Community Directive at issue, like all the directives on contract procedures, which constitute a consistent body of legislation as regards the principles and purposes which they embody and the manner in which their text is drafted, does not give specific guidance on this point. That fact is not surprising, moreover, since the Directive merely seeks to coordinate national procedures and does not purport I consider it reasonable for the Community to lay down exhaustive rules intended to rules, and in particular, so far as is relevant supplant entirely the various national legal here, the Public Works Directive, not to be systems for the award of contracts. That dissociated from the procedures governing conclusion follows from the Directive cases of that kind in the various national itself: the third recital states that such laws. In that regard, it is appropriate to set coordination must 'take into account as out briefly the arguments of the parties to far as possible the procedures and admin- these proceedings. istrative practices in force in each Member State'.

In the light of that fact, it is reasonable to entertain doubts as to whether the circum- stances of this case might not fall outside 10. The plaintiff in the main proceedings, the scope of the Directive, with the result in expounding its view that the contract that the answer to the question should must be awarded to the sole remaining remain within the purview of the Member tenderer, maintains that a systematic read- State, by virtue of the principle just referred ing of the provisions of the Directive, in to whereby, '[a]s far as possible', national particular Articles 7, 8, 18 and 30 — as procedures and practices should be interpreted, in its view, by the Court 4— respected. shows that the right of the contracting authority to decline to award a contract or to recommence the procedure must be

The Commission, on the contrary, submits In addition, the Austrian Government, on that specifically by virtue of Article 8(2) of the basis of similar arguments, states that the Works Directive, according to which Article 18 of the Directive merely lays 'The contracting authority shall inform down a common rule on participation, candidates or tenderers who so request of simply indicating what types of undertak- the grounds on which it decided not to ing may be taken into account by the award a contract in respect of which a prior contracting authority for the award of call for competition was made or to contract. recommence the procedure', the opposite conclusion should be drawn. In its view, that provision shows indisputably that the Directive gives the contracting authority the right to terminate a tendering procedure by cancelling it. Furthermore, the Commis- sion argues, it can clearly be inferred from the rationale of the Directive that it is based Finally, the French Government, interven- on the fundamental requirement of subject- ing in the oral procedure, emphasised that ing public works contracts to effective under French law also (in particular, under competition (10th recital) or real competi- Article 95 ter of the Public Contracts Code) tion (see Article 22 regarding negotiated the contracting authority may, in the public procedures), a requirement which would be interest, decide not to bring a tendering frustrated by the alleged obligation on the procedure to its conclusion. contracting authority to conclude a con- tract even where there was only one tenderer.

public tendering procedure to a conclusion procedure is the manifestation of a power by making an award of contract. 6 vested in the contracting authorities by the laws of the Member States and that, until such time as a final decision awarding a contract is adopted, the contracting autho- rity is essentially free to decline to award a contract on supervening grounds of public interest or because of a reappraisal of the feasibility of the planned works (lack of 12. I do not consider that the plaintiff's adequate resources, changes in the state of view can be upheld. First, there can be no the art in a particular technological sector, question of disregarding a requirement and so forth). 7 such as that contained in Article 8(2), which expressly provides that a decision may be taken not to award a contract. Secondly, I consider that Article 18 is a procedural provision which binds the con- tracting authority as regards the criteria for awarding contracts (or those in Chapter 3 of the same Title), at the same time laying down common rules for the qualification of tenderers, which is in the nature of a precondition for participation in the pro- cedure. No other conclusion can thus be drawn from Article 18 but that the criteria for the selection of candidates and the 14. The considerations outlined so far do grounds for their exclusion from the pro- not imply that that power to adopt self- cedure must be specifically those listed in protective measures of that kind is absolute that provision: to adopt any other inter- and not amenable to any judicial review. In pretation — and particularly one which principle, the comparison of several tenders purports to perceive in the provision an is not an objective complete in itself, being obligation to award a contract even if only rather the idea underlying the rules one undertaking has presented itself and whereby administrative action is rationa- been found eligible — would simply lised. Consequently, the possibility cannot amount to stretching the legislative provi- be excluded that, in certain cases, dealing sion beyond its proper bounds. with a single candidate seeking a contract may produce even better results than recourse to a competition. In fact, whilst it is true that the provisions of the Directive

all presuppose a comparison of several vehicles, issued by the European Parlia- tenders, it is also true that, by virtue of ment. 8 In a context different from that of Article 18, the administration is required to the present case (there were several tenders, notify candidates and tenderers of the not just one), the Court of First Instance reasons for which it has decided not to stated that 'the contracting authority is not award a contract or to recommence the bound to follow through to its end a procedure. procedure for awarding a contract' (para- graph 54 of the judgment), observing that in that respect the contracting authority enjoys a broad discretion provided that its decision is in no way arbitrary (paragraph 60). 15. In other words, if it cannot be inferred from the Directive that the contracting authority is required in every case to award a contract even where there is only one tender, it must conversely be conceded that that authority may sometimes award a I am of the opinion that, although that case contract, once the procedure has been concerned the Services Directive, the prin- conducted in accordance with the require- ciple is certainly sound and may be exten- ments of publicity and equal treatment ded to the Public Works Directive, and also contained in the Directive, even if it does to all the other directives concerning con- so to the only tenderer who presented tracts, the principle being a general one himself or remained in the procedure, and which is to be found in the legal traditions there can be no possible recourse to a non- of the Member States, which those direc- existent principle of competition at any tives purport to respect. cost. In my opinion, the provisions of Article 8(2) of the Directive must be appraised in that light. They are without doubt intended to prevent the contracting authority from freeing itself of a potential contracting party in an entirely arbitrary manner or in disregard of fundamental 17. It should be added, however, that the principles of Community law. obligation to state the reasons for which the contracting authority decided not to award the contract or to recommence the procedure, referred to in Article 8(2) of the Directive, must be seen for what it is. It allows the legality of the administrative decision to be reviewed, at least in cases 16. As indicated earlier, the conclusion that where the decision cancelling the procedure the Directive does not exclude the possibi- appears inappropriate or contrary to other lity of the administration being entitled to provisions of Community law. That would withdraw a competition notice was be the case where, for example, the con- recently upheld by the Court of First tracting authority adopted measures solely Instance with reference to a tendering procedure for a contract for transport services to be provided by chauffeur-driven 8 — Case T-203/96 Embassy Limousines, cited above.

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FRACASSO AND LEITSCHUTZ

light of the answer given to the first already been taken by the Court on pre- question, the second has become academic. vious occasions, albeit in relation to the equivalent provision of the previous version of the Directive. 9

Nevertheless, I shall answer the question, merely stating that the answer must be in the affirmative. Article 18 imposes on the 22. I therefore propose that the Court rule contracting authority unconditional and in response to the second question that sufficiently precise obligations for it to be Article 18 of Directive 93/37 is sufficiently relied on by individuals before national clear and precise to be relied on before a courts. I would add that the same view has national court.

9 — Beentjes, cited above, paragraph 44.

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