C-448/01

OPINION OF MR MISCHO — CASE C-448/01

O P I N I O N OF ADVOCATE GENERAL MISCHO delivered on 27 February 2003 1

1. As a result of review proceedings initi- I — The legal context ated by a tenderer whose tender was rejected by the contracting authority and who contends that a criterion, relating to the supply of green electricity, for the award of a contract was unlawful, the Bundesvergabeamt (Federal Procurement A — The Community legislation Office) (Austria) has asked the Court to interpret Article 26 of Council Directive 93/36/EEC of 14 June 1993 coordinating procedures for the award of public supply contracts 2and Articles 1 and 2(1)(b) of 2. Article 26 of Directive 93/36 is headed 'Criteria for the award of contracts' and Council Directive 8 9 / 6 6 5 / E E C of reads as follows: 21 December 1989 on the coordination of the laws, regulations and administrative provisions relating to the application of review procedures to the award of public supply and public works contracts. 3 '1. The criteria on which the contracting authority shall base the award of contracts shall be:

(b) or, when award is made to the most economically advantageous tender, various criteria according to the contract in question: e.g. price, delivery date, running costs, cost-effectiveness, 1 — Original language: French. quality, aesthetic and functional char- 2 —OJ 1993 L 199, p. 1. acteristics, technical merit, after-sales 3 — OJ 1989 L 395, p. 33. service and technical assistance. I - 14530

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2. In the case referred to in point (b) of paragraph 1, the contracting authority shall state in the contract documents or in the contract notice all the criteria they intend to apply to the award, where possible in descending order of importance.'

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5. Article 3(2) of Directive 96/92/EC of the from renewable energy sources in the inter- European Parliament and of the Council of nal electricity market 5states that: 19 December 1996 concerning common rules for the internal market in electricity 4 reads as follows:

'The promotion of electricity produced from renewable energy sources is a high Community priority as outlined in the White Paper on Renewable Energy Sources... for reasons of reliability and 'Having full regard to the relevant provi- diversification of energy supply, of envi- sions of the Treaty, in particular Article 90, ronmental protection and of social and Member States may impose on undertak- economic cohesion. That was endorsed by ings operating in the electricity sector, in the Council in its resolution of 8 June 1998 the general economic interest, public ser- on renewable sources of energy.' vice obligations which may relate to relia- bility, including reliability of supply, regu- larity, quality and price of supplies and to environmental protection. Such obligations must be clearly defined, transparent, non- discriminatory and verifiable; they, and any revision thereof, shall be published and notified to the Commission by Member 7. The 12th recital of Directive 2001/77 States without delay. As a means of carry- states: ing out the abovementioned public service obligations, Member States which so wish may introduce the implementation of long- term planning.'

'The need for public support in favour of renewable energy sources is recognised in the Community guidelines for State aid for environmental protection, which, amongst other options, take account of the need to internalise external costs of electricity gen- 6. The second recital of Directive eration. However, the rules of the Treaty, 2001/77/EC of the European Parliament and in particular Articles 87 and 88 and of the Council of 27 September 2001 thereof, will continue to apply to such on the promotion of electricity produced public support.'

10. Article 3(1) of the same directive pro- vides as follows:

'Member States shall, not later than 27 October 2003, ensure that the origin of electricity produced from renewable 'Member States shall take appropriate steps energy sources can be guaranteed as such to encourage greater consumption of elec- within the meaning of this Directive tricity produced from renewable energy according to objective, transparent and sources in conformity with the national non-discriminatory criteria laid down by indicative targets referred to in paragraph 2. each Member State. They shall ensure that These steps must be in proportion to the a guarantee of origin is issued to this effect objective to be attained.' in response to a request.'

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B — The national legislation ment relating to the contract award pro- cedure.

14. In Austria the conclusion of public contracts is governed by the Bundesver- 3. After the award of the contract, the gabegesetz (Federal Procurement Law, Bundesvergabeamt shall, in accordance Bundesgesetzblatt für die Republik Öster- with the conditions of subparagraph 1, reich I, 1997/56, 'the BVergG'). determine only whether the alleged illegal- ity exists or not.'

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17. The tender had to state a price in ATS figure and the quantity actually supplied per kilowatt hour. This was to apply for the would not affect the agreed price per whole contract period and was not to be kilowatt hour. subject to escalation or adjustment. In addition to supplying electricity, the sup- plier was required to provide other services (in particular, to measure the electricity used by the Federal offices, to calculate the annual consumption, etc.). The supplier had to undertake to supply the Federal offices, so far as technically possible, with 19. It was specified as a particular ground electricity from renewable energy sources for elimination that tenders would be and in any case not knowingly to supply eliminated if they did not contain proof electricity generated by nuclear fission. that 'in the past two years and/or in the However, the supplier was not required to next two years the tenderer has generated submit proof of his sources of supply. In the or purchased, and/or will generate or pur- event of a breach of the undertaking to chase, and has supplied and/or will supply supply electricity from renewable energy to final customers, at least 22.5 gigawatt sources or the undertaking not to supply hours per annum of electricity generated electricity generated by nuclear fission, it from renewable sources'. The award crite- would be open to the contracting authority ria laid down were net price per kilowatt to terminate the contract and to impose a hour, which was given a weighting of 55%, penalty. and 'electricity from renewable sources', which was given a weighting of 4 5 % . As regards the latter criterion, it was stipulated that 'only the amount of energy that can be supplied from renewable sources in excess of 22.5 gigawatt hours per annum will be taken into account'.

if consumption exceeded 1 million gigawatt dination contracts with the largest supplier hours per annum and included a table for of electricity certified as coming from 1999 to 2002 showing the different renewable sources. In 1999 and 2000, only amounts of electricity which could be hydroelectric power from Switzerland was supplied from renewable sources in each purchased and would continue to be pur- year in that period. The largest quantity chased. In total, the quantity of electricity shown was 5 280 gigawatt hours per which would be supplied from renewable annum. A tender was also submitted by sources was many times greater than the BEWAG, showing a price of ATS 0.465 per amount which was the subject of the kilowatt hour and including a table show- invitation to tender, and reference was ing the proportion of the total electricity made to the annual accounts for further generated or supplied by it which was information. accounted for by renewable energy. The contracting authority concluded from the table that the quantity stated was 449.2 gigawatt hours.

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curement Review Commission). The Com- or if the decision to award the contract in mission refused to conduct conciliation question to one of the applicants' co-ten- proceedings on the ground that there was derers were found to be unlawful as a result no prospect of success. of any other finding of the Bundesver- gabeamt.

24. The applicants then lodged an appli- 26. On 24 October 2001 the framework cation for review with the Bundesver- agreement was awarded to KELAG, subject gabeamt. They asked for the various to the conditions subsequent set out in the decisions to be set aside, in particular the aforementioned decision. decision rejecting the tender for want of information on the generation and pur- chase of electricity from renewable energy sources during a certain period, the decision prescribing as an award criterion the provision of information on the gener- ation and purchase of electricity from renewable energy sources in a certain I I I— The questions referred quantity during a certain period, and the decision prescribing as an award criterion the availability of more than 22.5 gigawatt hours of electricity from renewable sources. 27. In order to determine the applications In addition, the applicants applied for an in the review proceedings for certain interim order prohibiting the contracting decisions of the contracting authority to authority from awarding the contract. be set aside, the Bundevergabeamt, by order of 13 November 2001, referred the following questions to the Court for a preliminary ruling:

able sources to a group of consumers mitted would have been different had not more closely defined, where the they been re-evaluated disregarding the maximum number of points is given to unlawful award criterion? whichever tenderer states the highest amount and a supply volume is taken into account only to the extent that it exceeds the volume of consumption to be expected in the context of the contract to which the invitation to tender relates? 4. Do the provisions of Community law relating to the award of public contracts, in particular Article 26 of Directive 93/36/EEC, require the con- tracting authority to cancel the invi- tation to tender if it transpires in review proceedings under Article 1 of Directive 89/665/EEC that one of the award criteria it laid down is unlaw- 2. Do the provisions of Community law ful?' relating to the award of public contracts, in particular Article 2(1)(b) of Directive 89/665/EEC, prohibit making the setting aside of an unlawful decision in review proceedings under Article 1 of Directive 89/665/EEC dependent on proof that the unlawful decision was material to the outcome of the procurement procedure? IV — Discussion

A — The Court's jurisdiction to reply to 3. Do the provisions of Community law the questions relating to the award of public contracts, in particular Article 26 of Directive 93/36/EEC, prohibit making the setting aside of an unlawful decision in review proceedings under Article 1 of Directive 89/665/EEC 28. In its written observations, the Com- dependent on proof that the unlawful mission is uncertain as to whether the decision was material to the outcome Court of Justice has jurisdiction to reply of the procurement procedure, where to the questions referred to it, in view of the that proof has to be achieved by the fact that, according to the Commission, review body examining whether the decisions of the Bundesvergabeamt are not ranking of the tenders actually sub- of the nature of judgments. I - 14538

31. The first question asked by the Bun- desvergabeamt is whether the provisions of Community law relating to the award of public contracts, in particular Article 26 of Directive 93/36/EEC, prohibit a contract- ing authority from laying down an award criterion in relation to the supply of elec- 33. First of all, the Bundesvergabeamt tricity which is given a 45% weighting and questions whether the Community law of which requires a tenderer to state, without public contracts permits the contracting being bound to a defined supply period, authority to lay down criteria seeking to how much electricity he can supply from obtain advantages not susceptible of direct renewable sources to a group of consumers financial evaluation, such as respect for the not more closely defined, where the maxi- environment. The Bundesvergabeamt has mum number of points is given to which- certain doubts on this point in view of the ever tenderer states the highest amount and fact that, according to its findings, the Commission considers that an award cri- terion must procure a direct economic 6 — Case C-249/01 Hackermüller [2003] ECR I-6319 advantage to the contracting authority.

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34. It must be observed that, since the authority to identify the most economically Bundesvergabeamt formulated its question advantageous tender must necessarily be of and the interveners submitted their written a purely economic nature...'. observations, the Court has stated its position on this point in the judgment of 17 September 2002 in Case C-513/99 Concordia Bus Finland. 7

7 — Case C-513/99 ECR I-7213. 9 — [2001] ECR I-2099. 8 — OJ 1992 L 209, p. 1. 10 — Paragraph 73.

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'renewable energy'. The Bundesvergabeamt contract would be contrary to the general observes that the authority itself admitted principles of the law of public contracts, as that it was unable to check technically recognised by the Court in its case law, in whether the electricity supplied was particular the principles of equality and actually generated from renewable energy transparency, and the prohibition of arbit- sources. In those circumstances, the ques- rary decisions'. tion had to be asked whether the contract- ing authority was permitted to lay down an award criterion where it was impossible to ascertain whether that criterion enabled the desired objective to be attained.

42. On this point reference may be made to the judgment in Case C-243/89 Commis- sion v Denmark, 11 where the Court observed that Observance of the principle 39. The Netherlands Government alone of equal treatment of tenderers requires expressly discusses this problem raised by that all the tenders comply with the tender the Bundesvergabeamt. According to that conditions so as to ensure an objective government, the provisions of Community comparison of the tenders submitted by the law applying to the procedures for the various tenderers'. 12 award of contracts require a contracting authority to use only award criteria which permit the accuracy of the information given by suppliers regarding the award criteria to be actually checked.

43. In the same way, in the judgment in Case C-19/00 SIAC Construction 13 the Court observed that 'when tenders are being assessed, the award criteria must be 40. I concur with the Netherlands Govern- applied objectively and uniformly to all ment's position. tenderers'. 14

45. Certainly it is not easy to establish the source of the electricity supplied to con- 48. It follows that, even though it is not sumers because they have no means of knowing whether the current from the easy to determine the source of the elec- socket is generated from renewable energy tricity supplied, there are means of doing sources or not. so, for example, by requiring certificates or, as the Netherlands Government observes, 'by requiring tenderers to prove the quan- tity of electricity which is generated or purchased by them and comes from renew- able sources, as well as the quantity from renewable sources which is intended, in 46. This difficulty was recognised by the accordance with the contracts they have Court in the PreussenElektra judgment made, for customers other than the con- cited above, at paragraph 79 of which the tracting authority'. court observed that 'the nature of electric- ity is such that, once it has been allowed into the transmission or distribution sys- tem, it is difficult to determine its origin and in particular the source of energy from which it was produced'. 3. The causal connection between the award criterion and the contracting auth- ority's purpose

4. The connection between the award cri- terion and the subject-matter of the contract

50. On this point, as the Netherlands Government, which is the only participant in these proceedings to state its position on this problem raised by the Bundesver- 53. Fourth, according to the Bundesver- gabeamt, rightly observes, given the nature gabeamt, 'since the criterion in question of the service to be provided, namely the was concerned only with how much could supply of electricity from renewable be supplied, and not how much could be sources, it is immaterial whether the sup- supplied to the authority — in this regard plier generates it himself or purchases it the authority committed itself exclusively from other suppliers of the same kind of to electricity from renewable sources in any electricity. Electricity from a renewable case — it appears questionable whether source is by nature comparable, whether there are any direct economic advantages it is generated by the supplier or by a third for the authority linked to such an award party. criterion'.

54. The question of the connection 51. I also consider that the fact that the between the award criterion and the sub- award criterion does not, according to the ject-matter of the contract has been dis- findings of the Bundesvergabeamt, permit cussed at length by the participants in these the purpose pursued by the contracting proceedings. authority, namely increasing the generation of electricity from renewable energy sources, to be achieved, is not in itself evidence that that criterion is contrary to the Community legislation on public contracts. 55. The defendant in the main proceedings and the Austrian Government consider that, when determining the most economi- 15 — Emphasis added. cally advantageous tender in the award

56. On this point the Austrian Government observes that, the greater the amount of power available to an undertaking, the greater the reliability of supply, thus guar- anteeing supply of the amount required during periods of peak demand on the 59. On the other hand, the applicants in electricity network or when there is a large the main proceedings, the Netherlands temporary rise in consumption by the Government and the Commission consider electricity buyer. that, in so far as the award criterion stipulates that only the amount of energy supplied from renewable sources in excess of 22.5 gigawatt hours per annum, which is the estimated annual consumption of the Federal offices covered by the contract, is 57. According to the same Government, to be taken into account, that criterion is supported by the defendant in the main contrary to Directive 93/36 because there is proceedings, the reliability of supply as not a sufficient connection between that such is certainly a criterion which has some criterion and the subject-matter of the bearing upon the contract, but rather an contract. economic criterion: the more efficient a tenderer is, the smaller the risk that the contracting authority's demand for elec- tricity will not be met and that it will have to find a costly alternative in the short term. 60. According to the applicants in the main proceedings, in fact the award criterion in question grades the tenderers' capacity to supply as much electricity as possible from renewable energy sources and, in that way, 58. According to the Swedish Government, ultimately ranks the tenderers themselves. it does not appear from the actual wording In fact, therefore, the criterion was a of Directive 93/36 or from the case-law disguised criterion of selection. I - 14544

68. As the applicants in the main proceed- ings, the Netherlands Government and the Commission rightly observe, an award 64. The order of the Bundesvergabeamt criterion consisting in allotting points for makes no reference to the fact that this the amount of electricity generated from criterion should in reality be understood as renewable energy sources which the ten- seeking to ensure the reliability of supply. derer will be able to supply to a group of In the following discussion, therefore, I shall proceed on the assumption that the criterion in question does not have that 17 —[2000] ECR 1-7445. purpose. 18 — Paragraphs 110 to 112 of my opinion. The subject of discussion was Directive 92/50, the relevant provisions of which are in essence the same as those of Directive 93/36. See paragraph 36 above. 16 — [1995] ECR 1-563, paragraph 44. 19 — Emphasis added.

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consumers not more closely defined, 72. This example, although hypothetical, account being taken only of the supply shows that, of the two suppliers who are volume exceeding the consumption to be perfectly capable of fulfilling the contract expected in the context of the invitation to conditions, in reality the criterion in ques- tender, is not connected with the subject- tion only favours the large supplier because matter of the contract. It is clear from the of its size. However, the size of an under- very wording of this criterion that it does taking is not in itself an objective reason not relate specifically to the actual subject- justifying a difference in the treatment of matter of the contract. two tenderers who are able to fulfil the conditions connected with the subject of a contract.

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derers must be informed in advance of the problematic, since it could be objected that award criteria chosen by the contracting the authority must not permit consider- authority and the criteria must be formu- ations not open to monetary evaluation to lated in such a way that the different influence the award decision to such a tenders can be compared fairly and objec- degree'. tively.

75. In this connection, reference may be made to the SIAC Construction judgment 78. On this point I consider that, provided cited above, in paragraph 42 of which the that the authority applies valid criteria, it is Court observed that 'the award criteria free to decide on the weighting of those must be formulated, in the contract docu- criteria, as the defendant in the main ments or the contract notice, in such a way proceedings observes. as to allow all reasonably well-informed and normally diligent tenderers to interpret them in the same way'.

79. In paragraph 42 of the Evans Medical 76. It is for the national court to determine and Mac f arlan Smith judgment, cited whether, having regard to all the docu- above, the Court stated that 'in selecting ments submitted in the main proceedings, the most economically advantageous the award criteria of the contract in ques- tender, contracting authorities may choose tion meet that requirement. the criteria which they intend to apply, but their choice may relate only to criteria designed to identify the most economically advantageous tender'.

6. The 45% weighting given to the award criterion

80. If the contracting authority is free to choose the award criteria, I think it is also free to choose the weighting between them, 77. Finally, according to the Bundesver- provided that the weighting aims to ident- gabeamt, 'it appears that giving the dis- ify the most economically advantageous puted criterion a weighting of 45% is tender.

84. On this point it must be observed, as the Austrian Government points out, that the national provision concerned relates to the question of under what conditions a C — The second question decision by the contracting authority may be set aside, and not the question, governed by Article 1(3) of Directive 89/665, of the conditions under which a tenderer may seek a review. 82. The second question from the Bundes- vergabeamt is whether the provisions of Community law relating to the award of p u b l i c c o n t r a c t s , in p a r t i c u l a r Article 2(l)(b) of Directive 89/665, prohibit making the setting aside of an unlawful decision in review proceedings under 85. Secondly, as the Austrian Government Article 1 of Directive 89/665 dependent rightly notes, Directive 89/665, and in

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particular Article 2(1)(b), 20 does not lay 87. Consequently the national court must down such conditions for setting aside a ascertain whether, taking account of the decision. Specifically, the directive does not circumstances of the case, the abovemen- state whether the setting aside of an tioned condition is less favourable than that unlawful decision in the context of review concerning similar domestic actions and proceedings under Article 1 of the same whether it makes it practically impossible directive may be subject to a requirement of or excessively difficult to exercise rights proof that the unlawful decision materially conferred by the Community legal order. affected the outcome of the award pro- cedure.

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contracts, in particular Article 26 of Direc- submitted by reference to the remaining tive 93/36, prohibit making the setting award criteria and decided whether this aside of an unlawful decision in review results in a different ranking from that proceedings under Article 1 of Directive following the examination carried out by 89/665 dependent on proof that the unlaw- the authority'. ful decision was material to the outcome of the procurement procedure, where that proof has to be achieved by the review body examining whether the ranking of the tenders actually submitted would have been different had they been re-evaluated dis- regarding the unlawful award criterion.

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2. The parties' submissions request of a tenderer whose ranking gave no grounds for hope and where the alleged irregularity in the award procedure did not mean in any case that he or any other third parties concerned would have been given a higher ranking even if the award procedure had been properly conducted. 94. In their written observations, the defendant in the main proceedings and the Austrian Government do not share the doubts of the Bundesvergabeamt as to whether the approach described by it is compatible with Community law. 98. At the hearing, however, the Austrian Government asserted that the Bundesver- gabeamt had raised the third question on the basis of an Austrian provision which had been repealed several years previously and that, in substance, the Government agreed with the view expressed by the 95. The defendant in the main proceedings Commission. maintains that a breach of the rules con- cerning the award of public contracts which does not result in a different ranking of tenders in no way affects the choice of the best tender. However, according to the Austrian Government, if the choice of the 99. The Commission and the applicants in best tender is not affected, a tenderer who the main proceedings consider that the seeks a judicial review will obtain neither approach described by the Bundes- the contract nor compensation. vergabeamt is contrary to Community law.

96. The same Government adds that dis- 100. The applicants contend that to ignore regarding the criterion in question would a prescribed award criterion, even if it is not have altered the award procedure in unlawful, is to disregard the central prin- any way. The reason was that KELAG had ciples of Community law on the award of also offered by far the lowest price. public contracts, such as publicity and transparency.

104. It has consistently been held that it is solely for the national court to determine the relevance of the questions which it submits to the Court. 24 41 ... [T]he principle of equal treatment implies an obligation of transparency in order to enable compliance with it to 24 — See, in particular, the judgments in Case C-415/93 Bosman be verified (see, by analogy, Case [1995] ECR I-4921, paragraph 59; Case C-66/00 Bigi [2002) ECR I-5917, paragraph 18, and Case C-153/00 Der C-275/98 Unitron Scandinavia and Weduwe, [2000] ECR I-11319. 3-S [1999] ECR I-8291, paragraph 31). I - 14552

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42 More specifically, this means that the versions of Article 26(2) or Directive award criteria must be formulated, in 93/36, 26 from which it is said to follow the contract documents or the contract that alteration of the award criteria in the notice, in such a way as to allow all course of the procedure cannot in principle r e a s o n a b l y w e l l - i n f o r m e d and be ruled out. normally diligent tenderers to interpret them in the same way.

110. The provision that the award criteria are not to be altered in the course of the procedure will not be fulfilled if the review body which is required to establish whether 43 This obligation of transparency also the conditions for setting aside a decision means that the adjudicating authority are fulfilled, carries out a re-evaluation of must interpret the award criteria in the the tenders without regard to one of the same way throughout the entire pro- award criteria. cedure (see, along these lines, Case C-87/94 Commission v Belgium, cited above, paragraphs 88 and 89)'. 25

113. I therefore propose that the reply to 115. It is clear from the Bundesver- the third question should be that the gabeamt's observations concerning the provisions of Community law relating to third question that the third and the fourth the award of public contracts, in particular questions are closely connected in that, in Article 26 of Directive 93/36, prohibit the Bundesvergabeamt's opinion, if the making the setting aside of an unlawful third question receives a reply in the decision in review proceedings under affirmative, that would automatically lead Article 1 of Directive 89/665 dependent to the same reply to the fourth. on proof that the unlawful decision was material to the outcome of the procurement procedure, where that proof has to be achieved by the review body examining whether the ranking of the tenders actually submitted would have been different had they been re-evaluated disregarding the unlawful award criterion. 116. The interveners who have commented on this question have also proposed that the reply be the same as that to the third question.

E — The fourth question

117. For my part, I think the fourth ques- 114. The fourth question from the Bundes- tion must be reworded if it is to receive a vergabeamt is whether the provisions of helpful reply. I - 14554

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118. The mere fact that, in review proceed- criteria it laid down is unlawful and is ings under Article 1 of Directive 89/665, therefore set aside by the review body. one of the award criteria is found to be unlawful cannot lead to the conclusion that the contracting authority must withdraw the invitation to tender.

120. The question which arises is therefore whether the provisions of Community law relating to the award of public contracts, in 123. Consequently I propose that the reply particular Article 26 of Directive 93/36, to the fourth question should be that the require the contracting authority to cancel provisions of Community law relating to the invitation to tender if it transpires in the award of public contracts, in particular review proceedings under Article 1 of Article 26 of Directive 93/36, require a Directive 89/665 that one of the award contracting authority to cancel the invi- tation to tender if it transpires in review proceedings under Article 1 of Directive 27 — 'A Member State may provide that, after the conclusion of 89/665 that one of the award criteria it laid a contract following its award, the powers of the body responsible for the review procedures shall be limited to down is unlawful and is therefore set aside awarding damages to any person harmed by an infringe- ment.' by the review body.

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V — Conclusion

124. Having regard to the foregoing observations, I propose that the following replies be given to the questions from the national court:

— First question

— Third question

The provisions of Community law relating to the award of public contracts, in particular Article 26 of Directive 93/36/EEC, prohibit making the setting aside of an unlawful decision in review proceedings under Article 1 of Directive 89/665/EEC dependent on proof that the unlawful decision was material to the outcome of the procurement procedure, where that proof has to be achieved by the review body examining whether the ranking of the tenders actually submitted would have been different had they been re-evaluated disregarding the unlawful award criterion.

— Fourth question

The provisions of Community law relating to the award of public contracts, in particular Article 26 of Directive 93/36/EEC, require a contracting authority to cancel the invitation to tender if it transpires in review proceedings under Article 1 of Directive 89/665/EEC that one of the award criteria it laid down is unlawful and is therefore set aside by the review body. I - 14557