You are here:
07 June 2021 / news

CJEU mild for tenderers who relied on third parties that are subject to exclusion grounds

In public tender procedures, tenderers can rely on the capacity of a third entity to fulfill the selection criteria. There is, however, a lack of clarity on the flexibility that a tenderer has to replace such entity during the public tender procedure. In its judgment of 3 June 2021 (C-210/20), the Court of Justice of the European Union (CJEU) clarified under which conditions such a replacement is allowed.


Third entity reliance

A tenderer may not in itself fulfil all selection criteria in relation to financial standing and technical capacity. The EU Public Procurement Directive 2014/24 allows a tenderer to rely on the capacity of third parties to fulfill these criteria. However, such third parties may not be caught by a mandatory or facultative exclusion ground.

If a contracting authority finds that such third entity is caught by a mandatory exclusion ground, it must require the tenderer to replace it. If the entity is caught by a facultative exclusion ground, Member States may decide whether requiring such replacement is mandatory or optional for contracting authorities. Belgian rules provide that this is optional without further clarification on when contracting authorities can allow replacement.

Corrective measures

In its judgment, the CJEU reaffirmed that the rules on corrective measures also apply to third parties on which the tenderer relies. Consequently, when a contracting authority finds that such third entity is caught by an exclusion ground, it must in principle first give the tenderer the opportunity to prove that the third party adopted corrective measures (also known as self-cleaning measures). This would exceptionally not be the case if tenderers were explicitly required to already submit this proof in their request to participate or tender.

Proportionality is key

The CJEU subsequently clarified that contracting authorities must respect the proportionality principle when they decide not to allow the replacement of a third entity. In the case at hand, the contracting authority excluded a tenderer because the third entity had provided a false declaration that its owner had no previous criminal convictions. The CJEU found that it would be disproportionate not to allow the tenderer to replace this entity in so far that the tenderer had no means to verify that declaration (which was left to the referring court to determine).

No substantial change of tender

Nevertheless, the CJEU also pointed out that the principles of equal treatment and transparency prevent tenderers from replacing a third party if this would result in a substantial change of their tender. It did unfortunately not explain when this would be the case and whether this rule would then prevail over the proportionality principle.

In practice

This judgment shows that tenderers should carefully examine by any available means whether the entities they rely on are caught by any exclusion grounds. If such entity is caught by an exclusion ground and the tenderer should have been aware of it, the contracting authority could decide to exclude it without giving a possibility to replace that entity. Special attention should be paid to past performance which could qualify as grave professional misconduct and any infringements (such as violations of environmental, social, labour and competition law).

Do not hesitate to contact us if you have further questions on reliance on third parties for the purposes of a public tender procedure.



CJEU clarifies distinction between selection criteria and performance conditions

On July 8, 2021, the Court of Justice of the European Union (CJEU) ruled in case C-295/20 (Sanresa) that a waste shipment permit cannot be imposed as a selection... read more
Kevaka bypass

Loyens & Loeff congratulates TIIC, ACB & Binders on reaching financial close on the first large PPP project in Latvia, the Kekava Bypass

On 16 July 2021, the consortium signed the PPP contract with the Latvian Ministry of Transport and secured funding by the European Investment Bank and the Nordic... read more
Lexology 2021

Government Relations 2021 - European Union

Lexology Getting The Deal Through provides international expert analysis in key areas of law, practice and regulation for corporate counsel, cross-border legal... read more
Stay informed

Don't miss out. Stay up to date about our latest news and events.

Stay informed