High Court of Ireland Decisions

1. Major road improvement works are planned for the Newmarket-on-Fergus area of County Clare. These improvements will involve the construction of 9 kilometres of dual carriageway, 3 kilometres of single carriageway, 5 bridges and 3 underpasses. The value of these works is estimated at £25 million and the work will take 28 months to complete.

2. In these proceedings, the applicant (Whelan Group) challenges the manner in which the respondent (the County Council) has implemented the provisions of E.U. Directive 93/37 (the Directive) concerning these proposed works.

3. It is common case that the County Council opted to operate the restricted procedure provided for in the Directive. No complaint is made in respect of that decision. However, Whelan Group says that certain of the technical specifications of the preselection criteria in the restricted procedure as operated contain discriminatory requirements. In particular, they contend that the requirement that a contractor shall, as a minimum, have satisfactorily completed an individual road works project to the value of £10 million, excluding VAT, within the period 1995 - 1999 is discriminatory. This requirement, it is said, has the effect of insuring that only the largest construction undertakings within the European Union or the State could compete for this work. This, it is said, infringes principles of E.U. Public Procurement Law and in particular those which prohibit discrimination, inequality of treatment, lack of transparency and lack of proportionality.

4. In due course I will examine these contentions but first it is necessary to set out the background to the matter in some detail.

5. In February, 2000, the County Council published in the Official Journal and in the Irish Independent a contract notice in respect of the proposed works. That notice made it clear that the County Council was adopting the restricted procedure for the award of the contract.

6. Paragraph 10 of the notice, which dealt with qualifications, read as follows:-

7. The contract notice also made it clear that not less than five applicants would be invited to tender, following the pre-qualification process. Whelan Group obtained the pre-qualification questionnaire from the County Council’s consulting engineers and, having completed it, returned it to the County Council.

8. The pre-qualification questionnaire gave the reason for adopting the restricted procedure by reference to the financial scale and technical complexity of the project. It was said that the use of the restricted procedure was to ensure that all tenderers invited to tender would be of adequate financial and economic standing and have the technical capability of carrying out the works. Detailed evidence is contained in the affidavits as to the background to the adoption of the restricted procedure. It is not necessary for me to explore this aspect of the matter further since Whelan Group makes no complaint in this application as to the use of the restricted procedure.

9. The County Council has, in conjunction with the National Roads Authority, been involved in the design and construction of roads in Co. Clare in accordance with the National Plan for Roads. In co-operation with a number of other local authorities in the region, a regional design office was set up in Co. Limerick. The idea behind this was to establish a group of professionals to assist in work relating to national primary roads. A steering committee was established once a particular project was identified. The committee involved in the project in suit was comprised of a representative of the consulting engineers, a regional manager from the National Roads Authority, a representative from the Regional Design Office and a senior engineer from the County Council. This committee recommended the adoption of the restricted procedure. But it went further. It recommended the adoption of a minimum criterion relating to the value of other projects carried out by potential tenderers. This gave rise to the adoption of a condition that a contractor would be required, as a minimum, to have satisfactorily completed an individual road works project to the value of £10 million pounds within the period 1995-1999. In this regard it is to be noted that the advice which had been received from the consulting engineers was to the effect that a potential tenderer ought to have completed at least one road works project with a value exceeding £15 million pounds. This advice was not accepted. In adopting the requirement which is contested in these proceedings a number of matters were taken into account. They were that

10. Having decided to apply the stipulation in question the County Council prepared a pre-qualification questionnaire which had to be answered by all potential tenderers. In the introduction to it, it pointed out that because of the financial scale and technical complexity of the project the invitation to tender was by means of the restricted procedure so as to ensure “that all tenderers invited to tender shall be of adequate financial and economic standing and have the technical capacity of carrying out the works”.

11. The questionnaire also drew attention to the fact that any contractor who did not comply with the specified minimum pre-qualification criteria would be excluded from further consideration.

12. Under the legend “Works Carried Out” the questionnaire provided as follows:-

13. Section D(1) of the questionnaire asked the contractor to “give details of the Candidates experience on up to five Road and Bridge civil engineering contracts, similar in type to this Project, which the Candidate has directly carried out in the years 1995 to 1999 inclusive”.

14. In response to that question the Applicant answered as follows:-

15. In section D 2 the contractor was asked:-

16. Whelan Group answered yes to that question and indicated that the work consisted of road and bridge works for the County Councils of Cork, Limerick and Offaly to the value of IR£11,900,000.

17. On examination of the questionnaire, however, it was discovered that this was an incorrect answer because Whelan Group had not carried out an individual project to the value of not less than £10,000,000. The largest contract value of works carried out had a tender price of £3.9 million pounds (exclusive of V.A.T.). Because of this, the County Council took the view that the minimum criteria specified in the questionnaire had not been met and consequently did not invite Whelan Group to submit a tender. It is because of that that these proceedings have been brought.

18. Whelan Group in its amended statement grounding the application specified the following grounds:-

19. The County Council accepts that it is obliged to comply with the terms of the Directive and that this prevents the applications of arbitrary or discriminatory criteria and furthermore that the Council is obliged to ensure equality of treatment for all potential contracting parties. It says that the adoption of the qualification criteria by it is consistent with the terms of the Directive and that it is not in breach of any obligations owed to Whelan Group. It says that the criteria set forth by it are objectively justified, non-discriminatory and respect the principle of equal treatment.

20. Both sides have referred to the European Procurement Guidelines in the course of their submissions. Although that guide is expressed to have no legal value and does not necessarily represent the official position of the Commission, it nonetheless provides some assistance. In dealing with the restricted procedure, which was adopted here, it says at paragraph 3.2 as follows:-

21. At paragraph 6.3 the guidelines further stipulate that:-

22. Article 18 of the Directive provides as follows:-

23. Article 22, insofar as it is relevant, provides as follows:-

24. Article 27, insofar as it is relevant, provides as follows:-

25. Reliance was placed by the applicant upon the Commission Interpretive Communication on Concessions under Community Law in support of its contention that the stipulation in this case was in breach of the requirement of equality of treatment, lacked transparency and was disproportionate. The Communication has this to say in relation to each of these contentions:

26. Under the heading of “Equality of treatment” it reads:-

27. Dealing with proportionality, the document has this to say:-

28. The applicant contends that the County Council is in breach of these obligations. It asks for a series of declarations from the Court to this effect. The effective relief which it seeks is an order from the Court removing the requirement that a contractor shall have completed one individual project to the value of £10,000,000. If that were to be done then the applicant would be in a position to be considered by the County Council for the award of the contract.

29. In my view the applicant is not entitled to the reliefs which it seeks. The selection of the pre-qualification criterion which is sought to be impugned in these proceedings was made on the advice of an expert standing committee. It took the view that this criterion was necessary having regard to the financial scale and technical complexity of the project. It was taken in accordance with the practice determined by the National Roads Authority which took into account its experience nationally in relation to the use of the restricted tendering procedure. The stipulation was included in order to ensure the technical capability of tenderers. The stipulation sought to minimise the risk of delays to the project and the implications that would arise from that for public funds. This criterion applied to all potential contractors and I cannot see how it can therefore be said to be discriminatory. It is an objective criterion. It is capable of objective assessment and application. There is a rational basis for it. It is transparent because every potential tenderer who was notified of the requirement had to comply with it. It manifestly relates to economic and technical conditions. The Directive does not attempt to set out the technical or economic criteria that are to be applied. It indicates the references or methods of proof by which technical and economic criteria are to be judged. That much is clear from the terms of the Directive itself and from the decisions of the European Court in Joined Cases 27 to 29/86, S A Constructinos et entreprises industrielles (CEI) -v- Societe cooperative ‘Association intercommunate pour les antoroutes des Ardennes’ [1987] E.C.R. 3347 and Case 31/87, Gebroeders Beentjes BV -v- State of the Netherlands [1988] E.C.R. 4635. In the CEI case the Court stated (by reference to Directive 71/305 which was the predecessor of Directive 93 37) at pg. 15 of its judgment, p. 3373 of the report:-

30. Neither Articles 26 nor 27 of the Directive in suit here set out what the financial or technical criteria should be. They provide methods for adducing evidence of compliance with those criteria.

31. In particular Article 27.1(b) recognises the liceity of a requirement that evidence be furnished in relation to a list of works carried out, which list can include the value, date and site of the works. If the contracting authority is authorised to require and receive such evidence then it must be entitled to use criteria such as the value of works carried out in the previous five years as a pre-qualification criterion. I do not see that the use of what the applicant has described as a “tick the box” approach was impermissible in the evaluation of whether or not an applicant has complied with a legitimate condition precedent. I am fortified in this view by the express provisions of Article 22. That recognises the use of minimum conditions as a basis for selecting candidates for the restricted procedure. They can be of an “economic and technical nature”. As evidence can be sought as to the value of works performed by the contractor in the preceding five years it must be the case that the value of those works can be used as a minimum condition provided of course that there is an objective and non-discriminatory basis for choosing such a criterion. In my view there is in this case both an objective and a non-discriminatory basis for choosing the criterion.

32. There is in my view nothing to support the case of Whelan Group that the criterion chosen in this case does not relate to its technical ability. It clearly does.

33. Finally I am satisfied that the condition specified in this case did not suffocate genuine competition. True it is that the applicant is excluded because of its inability to comply with the condition in question but once the stipulation is proportionate, (as I believe it to be) and a rational basis exists for it and is applied objectively it does not in my opinion offend the requirements of Community law.

34. I therefore dismiss these proceedings.