A construction contractor missed out on a tender because of past failures ©Getty Images
A construction contractor missed out on a tender because of past failures ©Getty Images

European Court finds contract exclusion justified

The first ruling relating to Article 57(4) of the 2014 EU procurement regulations where a contractor was prevented from bidding for a public contract because of poor past performance provides useful guidance, says Liz Fletcher, senior associate at law firm Bevan Brittan.

In 2014, construction and engineering contractor Delta had entered into a contract with a municipality in Romania for restoration of a leisure facility, and sub-contracted some of its obligations without prior consent. As a result, in 2017 the municipality terminated the contract for breach and published a report online.

Under Article 57(4) of the EU public procurement regulations a bidder can be excluded from a procurement process if there is “a significant or persistent deficiency in performance” under a prior public contract. So when Delta bid as part of a consortium in 2017 for a national road widening contract it found itself excluded.

Delta contested the exclusion, arguing that the termination with the municipality had been over a “minor irregularity”. 

The European Court of Justice (ECJ) was recently asked to rule on whether this means that a contracting authority can exclude a bidder from a procurement process on the grounds of poor performance in a previous public contract.

The ECJ ruled that unauthorised use of a sub-contractor was a significant deficiency, although the authority running the subsequent tender should allow the bidder an opportunity to outline any corrective measures it had since taken.  

However, as Delta did not declare the termination during the procurement process or provide a response highlighting that it was not material, its exclusion from the process had been justified, explains Fletcher.

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