A Tale of Hazardous Waste

 The Beentjes- ruling C-31/87 from the European Court of Justice (ECJ)  is well-known for introducing at a relatively early stage in public procurement case-law the notion of contract performance conditions as an additional category of criteria alongside requirements to what is to be delivered and by whom.  This and subsequent rulings provided an important basis for laying down contract performance requirements to pursue public policies, in addition to requirements to the characteristics of what needs to be delivered[1]

 Such requirements might include   for example waste management and measures to save water or electricity during the production and delivery process. The requirements are   not impacting on the characteristics of the delivery as such – as it would have been the case in case of for example maximum emission or noise levels for vehicles or the use of sustainable raw materials in case of furniture. 

The distinction between performance conditions and other requirements – in this case selection criteria – is important, since it is only as regards selection criteria that the directives allow rejection in case of non-compliance. After all, any shortcoming in contract performance will typically only appear way past the tender submission stage once the awarded contract is being implemented.

The question concerning distinction between different requirements arose in a  ECJ decision some months ago, C-295/20, Sanresa. This preliminary ruling concerned a complaint from the company Sanresa against the rejection of its  bid in a tender concerning managing of hazardous waste in Lithuania. The reason for the rejection was that Sanresa had  not obtained the permit required under an EU Regulation on international shipment of waste. The ECJ was asked by the national court  to decide whether the requirements for  possession of such a permit could be a selection criterion. This would allow rejection of a bid as non-compliant in the absence of such a permit. The line of thinking of the contracting authority is likely to have been that the permit could be perceived as a “blue-stamp” confirming that the holder  possessed sufficient skills and experience.

In its ruling, ECJ firstly concluded that  permit could not be compared to a professional authorisation or a registration as general condition for accessing a certain activity. ECJ does not elaborate further on this point,  presumably since the permit is issued in connection with each concrete shipment and can therefore never be of a permanent nature.  

As regards technical capacity the ECJ made the point that proving such capacity is essentially a matter of documenting sufficient experience and skills by means of references from previous assignments. Specifically as regards management of hazardous waste, the references to previous assignments equivalent to the new contract would amply prove capacity to manage the new contract. Any risk that the winner might not be granted the permit could be mitigated by further targeting of selection criteria, for example by giving weight to previous experience specifically in the shipment of hazardous waste. The conclusion was therefore all in all that the permit was a performance condition and not a selection criterion.

The national court also wished to have clarified whether it could be required that   contract performance conditions should be fulfilled at the time of bid submission. On this point, the ECJ pointed out that the EU directives must be understood as not allowing any requirements beyond the selection criteria as condition for participation. Therefore, as ECJ observes: “…. the tenderer can wait until it is awarded the contract before supplying proof that it fulfils the conditions of performance of the contract”. This is in other words a key difference between selection criteria and performance requirements.

 The ECJ furthermore observed that “ to oblige tenderers to satisfy all the conditions of performance of the contract at the time of submission of their tenders would be to impose an excessive requirement – one which might therefore dissuade economic operators from participating in procurement procedures – and would thus infringe the principles of proportionality and transparency guaranteed by Article 18(1) of the directive”. The permit requirement is in other words a somewhat roundabout and essentially unnecessary way of approaching selection criteria.   

A-priori compliance would, as the ECJ also points out,  in any case not be possible when the amounts and types of hazardous waste was not precisely known at the time of bid submission.

In this connection the ECJ also made the point that where performance conditions must normally be included in the tender documents this does not apply when the condition is prescribed in EU legislation applicable to the contract in question and where the relevance of the condition depends on how bidder choses to implement the contract, i.e. will shipment of the waste become necessary at all? This partly settles a question discussed in many jurisdictions concerning the need for including legislatively prescribed conditions in tender material. However, whereas the directly applicable EU regulations can be presumed to be known by all bidders, the situation might well be different as regards conditions prescribed in national law including for that matter transposed EU requirements. The ECJ does however not seem to draw any distinction between directly applicable EU legislation and other EU legislation.

[1]  The EU public procurement directives codified over time this ECJ case law by  provisions explicitly allowing such performance conditions, which provides the basis for using public procurement as a means for implementing especially social and environmental policies. Over time, both policy areas are for obvious reasons becoming increasingly important as elements in public procurement strategies not just within EU but globally.