Public tender procedure: exclusion of the bidder due to matters questioning its integrity

√     Serious professional misconduct of the economic operator
√     Breach of contractual obligations

According to the law[1], the exclusion of an economic operator from the public tender procedures can be done by the contracting authority, among others, due to a serious professional misconduct of such bidder or the breach of contractual obligations under other public procurement contracts; both cases question its integrity.

The exclusion decisions of the contracting authorities based on such grounds are often challenged before the National Council for the Resolution of Disputes (CNSC) or the courts of law. The rulings are generally in the sense that the contracting authority has full discretion in respect of the exclusion measure, but the situation of the economic operator shall be carefully analysed considering the facts justifying the exclusion measure and the concrete rehabilitation actions taken by the economic operator and the gravity of the actions, as we further present below.

1.     Serious professional misconduct

Lately, we notice quite often the exclusion measure based on the breaches of cartel competition rules for rigging auctions or other similar misconducts sanctioned through a court or an administrative authority decision. Still, according to Law no. 98/2016 on public procurement (the Public Procurement Law) the bidder is entitled to provide evidence about self-cleaning measures to demonstrate its credibility/reliability.

In a recent CNSC decision on this matter[2], it was stated that the evidence submitted by the bidder did not have sufficient credibility as the taken measures merely created the appearance of competition compliance (i.e. the presented measures related to a training for compliance with the competition rules only in the year in which the Competition Council decision was issued, with no evidence that it was actually held). Thus, the proof of rehabilitation must be concrete, as specified in the Competition Rules Compliance Guide and actually implemented among company’s employees. In practice, in some cases, the Competition Council requires proof of training and compliance programmes by the economic operator also with its contractual partners, in order to broaden awareness of competition rules in the business environment.

Another interesting matter revealed by this CNSC decision is the active role of the contracting authority for assessing whether an exemption from exclusion was necessary, which is admirable and encourages economic operators to give due importance to the fact that they can demonstrate their credibility by implementing concrete rehabilitation measures.

2.     Breach of contractual obligations

There are also cases when the courts considered contracting authorities’ exclusion decisions as unjustified, thus being annulled by the court. In a case law, the court’s reasoning was based on the breach by the contracting authority of the principle of proportionality provided for by the Public Procurement Law[3]. Thus, the court held as disproportionate the measure of exclusion from the public tender of an economic operator by reference to the circumstances in which the misconduct took place and the reduced gravity of the breaches. In particular, within a 20-year term of the contract with a high volume of provided services, the contracting authority ascertained repeated breaches within only one contractual year. However, some of such breaches were successfully contested by the economic operator and other measures were assessed as being of reduced gravity by the court.

Separately from the above, we note that the bidders are quite reluctant when filling the European single procurement document (in Romanian, DUAE) if they are in the situation of previous misconducts or breaches of the public procurement contracts. Our view is that, in order to benefit of the exemption from exclusion, the economic operator shall mention in the DUAE that a reason for exclusion is incidental. The assessment of the sufficiency of the proof provided will be done by the contracting authority after the DUAE is submitted, in the context of the requests for clarification. On such occasion the economic operator will be able to prove its credibility.

Considering the above, the bidders that have committed actions affecting their credibility can still successfully participate in awarding procedures, but only to the extent that they have further taken concrete and effective rehabilitation actions. The contracting authorities in their turn should carry out a full, specific and proportionate analysis of such self-cleaning actions in order to permit all the interested and capable bidders with relevant experience to have the possibility to attend and even win the relevant contracts.

[1] Law no. 98/2016 on public procurement.

[2] Please see CNSC Decision no. 2212/C2/2465 dated 02.12.2020.

[3] See Decision no. 684 of 07.02.2018 issued by the Bucharest Court of Appeal

 

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