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Procurement - Relying On The Capacity Of Third Parties

Procurement - Relying On The Capacity Of Third Parties

In an opinion delivered on 8 September 2015, Advocate General Jääskinen addressed the ability of an economic operator to rely on the experience of a third party when tendering for a public contract.

Directive 2004/18 gives economic operators the option of relying “where appropriate” on the “capacity of other entities” to meet the technical requirements set out in a tender. In this case, the Warsaw-based contracting authority had excluded a tenderer, PARTNER Apelski Dariusz (“PARTNER”), who was relying on the resources and experience of a third party, “PUM”.

The exclusion was on the basis that PARTNER did not have the necessary means for executing the requirements of the contract.  It considered the absence of PUM’s “personal participation” in the performance of the contract to be problematic: PUM was based 227km away from Warsaw and would not be present to directly participate, instead offering to “make available the necessary resources” through the provision of training, consultation and advice.

The Advocate General’s opinion states that the contracting authority was wrong to exclude PARTNER on this basis. His view is that the existence of the words “where appropriate” in the Directive does not place any substantive limitation on the circumstances in which an economic operator can rely on the capacities of a third party.  Indeed, contracting authorities are precluded from imposing conditions which might hinder a tenderer’s entitlement to do so.  It is for the tenderer to determine how, in fact, it will access the capacities of the party on which it relies.

The key factor is that the tenderer actually has the necessary capacity at its disposal and can demonstrate as much to the contracting authority.

In this case, the Advocate General opined that since the technological ability of PUM was capable of being transferred to PARTNER without PUM participating directly in the execution of the contract, PARTNER did have the necessary capacity at its disposal.

Advocate General Jääskinen, referencing the case of Swm Costruzioni 2 and Mannocchi Luiginio (case C-94/12), did concede that there were certain works with special requirements which could not be met by combining the capacities of more than one operator. However, such a requirement must be specified in the contract notice or tendering specifications, and must be proportionate.

The opinion also highlights that we now have Directive 2014/24 (although, it was not in force at the time the contract award procedure for the matter in question was published), which provides rules on the reliance by tenderers on the capacities of others which are more detailed than the previous Directive. 

In particular, the ‘New Directive’ provides that where the tenderer is dependent on “educational and professional qualifications” or “professional experience” it may only rely on the capacities of other entities where they will actually perform the works or services for which those capacities are required (Article 63(1)). 

Further, the New Directive permits contracting authorities to require “certain critical tasks” to be performed directly by the tenderer itself (Article 63(2)).

The Advocate General considered that in so far as the New Directive codifies or adds detail to case-law in which the ‘Old Directive’ was applied, it can be used as a guide. 

We await publication of the Regulations which will implement the New Directive in Scotland.  It seems, however, that in the intervening period, we can rely on the more developed provisions of Article 63 of the New Directive to guide our interpretation of the existing regime.

In other news...

On 14 September 2015, the Procurement Reform (Scotland) Act 2014 (Commencement No 1) Order 2015 (SSI 2015/331) was published, bringing into force on 28 September 2015 section 29 of the Procurement Reform (Scotland) Act 2014 which gives the Scottish Ministers the power to publish guidance about the selection of economic operators and the award of contracts in relation to procurements regulated under the Act.  We expect the guidance to be published within the next 6 weeks.  Further updates on this to follow.

Ruth McNaught

Roddy Cairns
Trainee Solicitor