Public Procurement - The European Court of Justice provides guidance on “self-cleaning” measures in its judgment

Background

In 2014, the European Union legislator introduced the concept of “self-cleaning” measures in the European Directives on public procurement.  The rules regarding “self-cleaning” allow an economic operator to which an exclusion ground applies to demonstrate to the contracting authority that it has become a trustworthy contractor again by providing evidence of the appropriate measures it has taken to remedy its past mistakes.  The contracting authority will review the “self-cleaning” measures presented by an economic operator and determine whether or not they suffice to deem the economic operator trustworthy.  

This option of “self-cleaning” provides perspectives for economic operators to which exclusion grounds apply.  However, in practice, we often see that these economic operators face a number of legal and practical questions when wishing to rely on the rules regarding “self-cleaning”: eg when and where should it be stated that an exclusion ground applies… when should the “self-cleaning” measures be shared with the contracting authority… how pro-active should they be...  

In this contribution we look at the guidance given by the European Court of Justice (the ECJ) in its judgment of 14 January 2021 (C-387/19, the Norré-Behaegel Case).

The Norré-Behaegel Case

In May 2016 the Flemish Administration (Vlaams Agentschap Wegen en Verkeer) published a notice of a public call for tenders for a works contract.  The contracting authority chose to exclude the joint venture comprising RTS Infra BVBA and Norré-Behaegel from the tender process because its members had previously committed acts of grave professional misconduct. RTS Infra BVBA and Norré-Behaegel challenged the decision of 13 October 2016 before the Council of State in Belgium (Raad van State). They claimed that, before being excluded, they should have been allowed to demonstrate that they had taken corrective measures evidencing their reliability, in accordance with the “self-cleaning” measures introduced in 2014 in the Directives on public procurement.  

The 2014 Directives on public procurement entered into force on 18 April 2016.  However, Belgium was late in transposing them into national law.  Consequently, RTS Infra BVBA and Norré-Behaegel had to argue the direct application of the rules on “self-cleaning” before the Council of State in order to be able to rely on them.  The Flemish Administration questioned whether

(i) Norré-Behaegel should have pro-actively declared that they had taken “self-cleaning” measures to the contracting authority and

(ii) the “self-cleaning” measures had direct effect.  The Council of State referred the Norré-Behaegel Case to the ECJ for a preliminary ruling on whether the 2014 Directives on public procurement allow a tenderer to be excluded when it has not indicated on its own initiative that it has taken corrective measures and whether the “self-cleaning” measures had direct effect.  

The ECJ found that the “self-cleaning” measures have direct effect.  We do not go into further detail on this part of the judgment in this contribution, but focus on the first question:  if a tenderer has not been upfront in relation to “self-cleaning” measures, should a contracting authority give it the opportunity to present evidence of reliability?
The ECJ ruled that requiring the tenderers to adopt a pro-active approach in relation to providing evidence on “self-cleaning” measures is in line with Directive 2014/24 of 26 February 2014 on public procurement if:

(i) it is spelled out in a clear, precise and unequivocal manner in the implementing legislation and

(ii) is brought to the attention of the economic operators in the tender documents.  Consequently, the requirement of pro-activity should be clear from the tender documentation.  

Our view of the case

Economic operators are often hesitant to share information on or even state that they have adopted “self-cleaning” measures.  Given the sensitive nature of some of the exclusion grounds, this is not surprising.  However, in our view we should not read the judgment in the Norré-Behaegel Case as confirming that a hesitant (or even reluctant) attitude is a successful strategy in dealing with “self-cleaning” measures for the following reasons: 

• The Belgian implementation of the 2014 Directives on public procurement provides for a pro-active approach in this regard. 
• The ECJ’s judgment only relates to the provision of “evidence” in relation to self-cleaning measures (eg policies that have been adopted, amendments to the governance structure, etc), but not the response to the yes or no question on whether “self-cleaning” measures have been adopted when submitting the ESPD (see below).
  
• Since the contracting authority may ask for further clarification and documentation in relation to the “self-cleaning” measures, tenderers should be aware of this fact and prepare a strategy on how to deal with this when submitting a request for participation. For example, if a tenderer is unwilling to submit certain documents, does it make sense to participate at all as, in principle, participation will imply submitting a statement in which the tenderer itself states that (it finds that) an exclusion ground applies(to it).  If such a tenderer is unwilling to submit further documentation or (for legitimate reasons of confidentiality) is forced to be vague on the subject of “self-cleaning”, it should carefully consider whether the opportunity at hand is worth it.  

Consequently, based on this case law, an economic operator is not required to provide the underlying evidence of the “self-cleaning” measures taken in relation to a situation that qualifies as a ground for exclusion upfront - unless explicitly required in the tender documents.  However, in most public procurement procedures an economic operator is required to submit a European single procurement document (ESPD) together with its request for participation.  The ESPD is a standardized self-declaration form through which an economic operator declares whether or not any exclusion grounds apply to it. If any exclusion grounds apply, the ESPD provides for the possibility for the tenderer to declare that “self-cleaning” measures have been taken to remedy this situation.  

Therefore, the ECJ in the Norré-Behaegel Case allows for some flexibility in relation to when underlying evidence needs to be provided proving that “self-cleaning” measures have been taken.  However, it does not decide the question of whether there is any flexibility over when an economic operator should state, that even though an exclusion ground applies, it has taken “self-cleaning” measures and should be regarded as a trustworthy contractor.  In principle, an economic operator makes such a statement in the ESPD submitted with the request for participation (if the procedure requires that an ESPD is submitted).  

It is noteworthy that the ECJ did not provide any guidance on the referring judge’s comment that the self-cleaning measures include a form of “self-accusation”, which is an issue many economic operators struggle with in practice.  

In his opinion in the Norré-Behaegel Case the Advocate General rightfully states, “[t]here is nothing to compel an economic operator to participate in a public procurement procedure. If it does, however, it must comply with the rules of that procedure”.  Meaning that if a tenderer finds that an exclusion ground applies to it, but does not necessarily want an officially signed document stating as much (eg like the ESPD), it can simply opt not to participate.  However, in his opinion, the Advocate General recognises that there is room for interpretation, for example in relation to “grave professional misconduct”.  As this is a broad concept that is open for interpretation, it is not always easy for an economic operator to foresee whether its behaviour qualifies as such.  In our experience, there are indeed certain situations that are difficult to qualify with certainty.  However, often asking the question entails answering it or if a situation prompted an economic operator to take certain measures, eg introduce new or more robust policies, etc (ie take measures that qualify as self-cleaning measures) it is likely that the situation could qualify as an (optional) exclusion ground – it is advised to carefully assess these instances.  A case-by-case assessment needs to be made, also in light of the general public procurement policies and/or strategies, such as statements submitted in the past, potential consequences for ongoing contracts and/or tender procedures etc.

Consequently, with its judgment in the Norré-Behaegel Case, the ECJ has provided clear guidance on whether or not an economic operators should be pro-active in providing underlying evidence of “self-cleaning” measures, but not clear guidance on the “self-accusation” dilemma that many operators are faced with in practice when wanting to rely on the “self-cleaning” measures.