Most large EU institutional IT and consultancy contracts are awarded as multiple framework contracts operated "in cascade": the contracting authority ranks the successful tenderers first, second and third, and each specific contract is offered to the first-ranked contractor, passing to the next only if the first declines or cannot deliver. A tenderer ranked second or third has, formally, won. Commercially, it may have won very little. Two judgments of the General Court delivered in 2015 in actions brought by the European Dynamics group, in which JuriSpectrum's founding partner acted for the applicants, illustrate what such a tenderer can challenge and where the limits lie.

The ranking is a decision, and it can be attacked

Neither case turned on standing. In Case T-536/11 (Commission, computing services for the development and maintenance of software, several lots) and Case T-299/11 (OHIM, now EUIPO, programme and project management and IT consultancy, tender AO/021/10), the applicants had been placed in the cascade but not first. The General Court examined the substance in both. The position assigned in a cascade is a decision affecting the tenderer's legal position, and the same grounds are available as to an excluded tenderer: insufficient reasons, breach of the tender specifications and of equal treatment, manifest error of assessment, together with a claim for damages.

T-536/11: reasons, confidentiality and the relative advantages

The Financial Regulation then in force required the contracting authority, on request, to inform an unsuccessful tenderer of the characteristics and relative advantages of the successful tender. In T-536/11 the Commission had disclosed the evaluation comments on the applicants' own bids but redacted parts of the evaluators' comments on the higher-ranked bids, invoking the business secrets of those tenderers. The applicants argued that this made it impossible to understand why they had not been ranked first.

The General Court (Ninth Chamber, judgment of 8 July 2015) dismissed the action. It held that the right of the disappointed tenderer to the information needed to defend its rights must be balanced against the right of other economic operators to the protection of their confidential information and business secrets, and that a redacted debriefing can satisfy the duty to state reasons provided the tenderer is given sufficient knowledge of the relative advantages of the bids ranked above it. The pleas alleging misapplication of the award criteria and manifest errors of assessment were also rejected, as was the claim for damages, and the applicants were ordered to pay the costs.

The practical lesson is that a challenge built on the thinness of a debriefing letter will succeed only if the tenderer can show that what was withheld actually prevented it from understanding its relative score. A comparative table of scores, with the evaluators' substantive comments on the tenderer's own bid, will usually be enough for the Court.

T-299/11: undisclosed weighting and the first award for loss of opportunity

Three months later, the Fourth Chamber reached the opposite result against OHIM (judgment of 7 October 2015). The tender specifications listed several project-management tasks on an equal footing under the first award criterion. OHIM's debriefing letter, however, explained that the winning tenders had identified change management and communication as the two most essential tasks. The Court read this as the application of a weighting between sub-criteria that had not been disclosed to tenderers; it further found that the reasons given on the second award criterion were insufficient and identified a further error in the scoring. It annulled the ranking decision.

It then went further than any previous judgment: it held that the applicants had lost the opportunity of being awarded the framework contract as the contractor ranked first in the cascade, that this loss was compensable, and it ordered the parties to agree on the amount. It was the first time the EU courts had awarded damages for loss of opportunity in a procurement case.

The Court of Justice narrows the damages route

On appeal (Case C-677/15 P, judgment of 20 December 2017) the Court of Justice preserved the annulment but set aside the finding that the undisclosed weighting breached equal treatment and transparency: weighting factors for sub-criteria may be fixed after the tender deadline provided they do not alter the award criteria, contain nothing which could have affected the preparation of the tenders and were not adopted with discriminatory intent. The findings that depended on that analysis fell with it, and so did the damages award. The remaining defects, including the insufficient reasons on the second criterion, sustained the annulment but not the claim for damages: the applicants had not shown that, absent the errors, they would have been ranked first. The same pattern was repeated in the parallel EUIPO case T-556/11 and its appeal C-376/16 P.

What a second- or third-ranked tenderer should do

  • Ask in writing, immediately, for the characteristics and relative advantages of every bid ranked above yours, and record precisely what is refused and on what confidentiality ground.
  • Compare the evaluators' comments with the published criteria and sub-criteria: an emphasis in the debriefing that does not appear in the specifications is the most promising ground for annulment.
  • Treat annulment and damages as separate battles. Annulment restores the procedure; compensation for loss of opportunity requires evidence that a lawful evaluation would have placed you higher, and a failure to state reasons will not, by itself, establish that causal link.
  • Watch the clock: the action for annulment must be lodged within two months, and the five-year limitation period for damages runs from notification of the ranking decision, not from any later annulment.
A cascade ranking is a decision like any other. Challenging it well means challenging the evaluation, not the format of the debriefing.

Sources

  1. Case T-536/11 European Dynamics Luxembourg and Others v Commission, judgment of 8 July 2015
  2. Case T-299/11 European Dynamics Luxembourg and Others v OHIM, judgment of 7 October 2015
  3. Case C-677/15 P EUIPO v European Dynamics Luxembourg and Others, judgment of 20 December 2017
  4. Case T-556/11 European Dynamics Luxembourg and Others v EUIPO, judgment of 27 April 2016, and Case C-376/16 P, judgment of 3 May 2018
  5. Case C-469/11 P Evropaïki Dynamiki v Commission, judgment of 8 November 2012 (limitation period for damages)
  6. A. Sánchez Graells, How to Crack a Nut, commentary on T-536/11 (July 2015)
  7. A. Sánchez Graells, How to Crack a Nut, commentary on T-299/11 (October 2015)

This article is provided for general information only and does not constitute legal advice. It reflects the law and the authors' views at the date of publication. For advice on a specific situation, please contact the firm.