Xpand Consortium and Others v Commission (Public service contracts - Tendering procedure - Judgment) [2024] EUECJ T-281/22 (23 October 2024)

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( Public service contracts - Tendering procedure - Development, implementation, maintenance/operations, advice and consultancy services in accounting/finance and financial IT systems - Cancellation of the procurement procedure - Article 171 of Regulation (EU, Euratom) 2018/1046 - Obligation to state reasons )

European Commission, represented by L. André and M. Ilkova, acting as Agents,

Arhs developments SA, established in Belvaux (Luxembourg), represented by P. Teerlinck, M.-R. Gherghinaru, L. Panepinto, Z. Irusta Ortega and M. Nuytten, lawyers,

composed of M.J. Costeira, President, U. Öberg and P. Zilgalvis (Rapporteur), Judges,

having regard to the order of 21 September 2022, Xpand Consortium and Others v Commission (T-281/22 R, not published, EU:T:2022:569),

1 By their action under Article 263 TFEU, the applicants, Xpand Consortium, NTT Data Belgique, Sopra Steria Benelux and Fujitsu Technology Solutions, seek the annulment of decision Ares(2022) 1579941 of the Commission of 3 March 2022 by which it cancelled the procurement procedure relating to call for tenders BUDG 19/PO/04, in so far as it concerns Lot No 2 (‘the contested decision’), in accordance with Article 171 of Regulation (EU, Euratom) 2018/1046 of the European Parliament and of the Council of 18 July 2018 on the financial rules applicable to the general budget of the Union, amending Regulations (EU) No 1296/2013, (EU) No 1301/2013, (EU) No 1303/2013, (EU) No 1304/2013, (EU) No 1309/2013, (EU) No 1316/2013, (EU) No 223/2014, (EU) No 283/2014, and Decision No 541/2014/EU and repealing Regulation (EU, Euratom) No 966/2012 (OJ 2018 L 193, p. 1, ‘the Financial Regulation’).

2 On 25 November 2020, by a contract notice published in the supplement to the Official Journal of the European Union (OJ 2020/S, 230-565743), the European Commission issued the call for tenders bearing the reference BUDG 19/PO/04 relating to the provision of ‘development, implementation, maintenance/operations, advice and consultancy services in accounting/finance and financial IT systems’.

3 The call for tenders was divided into two lots. Lot No 2, entitled ‘IT SAP’, pertained to the delivery of services in the areas of the development and operations of financial and/or accounting information technology systems to the contracting authorities in various IT technologies. The value of Lot No 2 was estimated at EUR 545 million excluding value added tax (VAT) over four years.

4 The call for tenders for Lot No 2 sought to conclude multiple, separate but identical framework service contracts, in a ‘cascade’ fashion, with a maximum of three economic operators.

5 NTT Data Belgique, Sopra Steria Benelux and Fujitsu Technology Solutions are companies operating in the accounting and financial IT systems services sector.

6 The consortium called Xpand Consortium, an applicant in the same way as those three companies of which it is composed, had submitted a tender for Lot No 2 on 26 January 2021.

7 On 11 February 2022, by the notification letter bearing the reference Ares(2022) 1027331, the Commission informed the applicants that their tender had been accepted.

8 On 3 March 2022, by the contested decision, the Commission cancelled the procurement procedure relating to the call for tenders BUDG 19/PO/04, for both Lot No 1 and Lot No 2, under Article 171 of the Financial Regulation, on account of the non-compliance of some selection criteria with that regulation.

9 By letter of the same date bearing the reference Ares(2022) 1582755, the Commission informed the applicants that, following comments made by an unsuccessful tenderer, the contracting authority had identified errors in the procurement documents and, notably, the non-compliance of some selection criteria with the Financial Regulation and that, consequently, it had decided to cancel the procurement procedure for both lots.

10 By letter dated 8 March 2022, the applicants requested additional information concerning, inter alia, the facts which led to the cancellation of the procurement procedure in question.

11 On 8 April 2022, by letter bearing the reference Ares(2022) 2750601, the Commission communicated the contested decision to the applicants and provided them with additional explanations as to the reasons for the cancellation of the procurement procedure in question. In that letter, the Commission stated that the contracting authority had reassessed the technical specifications and had reached the conclusion that the service level agreement could not be classified as a minimum selection criterion concerning the tenderers’ technical and professional capacity, within the meaning of point 20 of Annex I to the Financial Regulation; this was because the information requested from the tenderers in the service level agreement was, for some parts, covered by the technical tender and should, therefore, have been evaluated in the light of the technical award criteria and, for other parts, corresponded to the conditions for the performance of the contract, which were not linked to any minimum level of capacity under the selection criteria.

12 By application lodged with the Court Registry on 13 May 2022, the applicants brought an action seeking the annulment of the contested decision.

14 The Commission, supported by the intervener, Arhs developments SA, contends that the Court should:

15 The Commission, supported by the intervener, claims that the action is inadmissible as the applicants have no interest in seeking the annulment of the contested decision.

16 According to the Commission, even if the cancellation decision were to be annulled, it would not give any advantage for the applicants, as the contract could not be signed.

17 The intervener further states that the present action cannot have the effect of preventing the Commission from signing other framework contracts for the same services with competitors.

19 In that regard, it should be recalled that, according to settled case-law, an action for annulment brought by a natural or legal person is admissible only in so far as the applicant has an interest in the annulment of the contested measure. Thus, an applicant’s interest in bringing proceedings must, in the light of the purpose of the action, exist at the stage of lodging the action, failing which the action will be inadmissible. That purpose must, like the interest in bringing proceedings, continue until the final decision, failing which there will be no need to adjudicate, which presupposes that the action must be liable, if successful, to procure an advantage for the party bringing it (see judgment of 28 May 2013, Abdulrahim v Council and Commission, C-239/12 P, EU:C:2013:331, paragraph 61 and the case-law cited).

20 Furthermore, by virtue of the retroactive effect of judgments by which measures are annulled, the finding of illegality takes effect from the date on which the annulled measure entered into force (judgments of 26 April 1988, Asteris and Others v Commission, 97/86, 99/86, 193/86 and 215/86, EU:C:1988:199, paragraph 30, and of 29 November 2007, Italy v Commission, C-417/06 P, not published, EU:C:2007:733, paragraph 51). The author of the act must therefore have reference to the date on which it adopted that act (see, to that effect, judgments of 5 September 2014, Éditions Odile Jacob v Commission, T-471/11, EU:T:2014:739, paragraph 58, and of 26 September 2018, EAEPC v Commission, T-574/14, EU:T:2018:605, paragraph 52).

21 Accordingly, if the contested decision were annulled, the contracting authority would have to have reference to the date on which it was adopted and resume the procurement procedure in question (see, to that effect, order of 7 December 2020, Militos Symvouleftiki v Commission, T-536/19, not published, EU:T:2020:588, paragraph 30).

22 In the present case, since the contested decision led to the annulment of the procurement procedure in question and, consequently, the annulment of the decision to award the contract, the annulment by the Court of the contested decision would have the effect of reinstating that procedure and, consequently, the decision to award the contract.

23 It follows that, contrary to what the Commission maintains, the action is liable, if successful, to procure an advantage for the applicants by reinstating the decision to award the contract adopted in their favour.

24 First, as regards the Commission’s argument that, even if the cancellation decision were to be annulled, it would not procure any advantage for the applicants given that the contract could not be signed because of the unlawful nature of the call for tenders and the award decision, it should be noted that the question of the possible illegality of that call for tenders and of that decision, which is the reason for the contested decision, is a question of substance which is the subject of the first plea in law.

25 The applicants’ interest in bringing proceedings cannot depend on whether their complaint is well founded (judgment of 4 July 2017, European Dynamics Luxembourg and Others v European Union Agency for Railways, T-392/15, EU:T:2017:462, paragraph 41).

26 Second, as regards the Commission’s argument that the contracting authority cannot remove or amend a selection criterion during the tendering procedure so that the alleged defect in that procedure and the award decision cannot be remedied if the contested decision were annulled, it must be held that that argument also depends on the lawfulness of the grounds of the contested decision.

27 Third, it must be pointed out that the present case must be distinguished from the case which gave rise to the order of 7 December 2020, Militos Symvouleftiki v Commission (T-536/19, not published, EU:T:2020:588), relied on by the Commission, in which the Court held, in essence, that a tenderer whose tender exceeded the maximum budget provided for in a call for tenders had no interest in seeking annulment of the decision cancelling that call for tenders.

28 In the case on which the Commission relies, the annulment of the decision at issue would have had the effect of reinstating the call for tenders in respect of which that tenderer could not have submitted an amended tender.

29 In the present case, the annulment of the contested decision would have the effect of reinstating the decision to award the contract to the applicants, with the result that it would procure an advantage for the applicants.

30 In the light of the foregoing, the plea of inadmissibility raised by the Commission must be rejected.

31 It must be borne in mind at the outset that, according to settled case-law, the statement of reasons required by Article 296 TFEU must disclose in a clear and unequivocal fashion the reasoning followed by the institution which adopted the measure in such a way as to enable the person concerned to ascertain the reasons for the measures taken and to enable the court having jurisdiction to exercise its power of review (see judgment of 22 April 2021, Council v PKK, C-46/19 P, EU:C:2021:316, paragraph 47 and the case-law cited). That requirement to state reasons is given specific expression in Article 171 of the Financial Regulation, which provides that the contracting authority may decide to cancel the procurement procedure before the contract is signed by a reasoned decision and brought to the attention of the candidates or tenderers as soon as possible.

32 Furthermore, the purpose of the obligation to state the reasons on which an act adversely affecting an individual is based, which is a corollary of the principle of respect for the rights of the defence, is, first, to provide the person concerned with sufficient information to make it possible to ascertain whether the act is well founded or whether it is vitiated by a defect which may permit its legality to be contested before the European Union judicature and, second, to enable that judicature to review the legality of that act (see judgment of 15 November 2012, Council v Bamba, C-417/11 P, EU:C:2012:718, paragraph 49 and the case-law cited).

33 It should also be borne in mind that, according to settled case-law, an absence of or inadequate statement of reasons constitutes an infringement of essential procedural requirements for the purposes of Article 263 TFEU and is a plea involving a matter of public policy which may, and even must, be raised by the EU judicature of its own motion (see judgment of 2 December 2009, Commission v Ireland and Others, C-89/08 P, EU:C:2009:742, paragraph 34 and the case-law cited).

34 In the present case, after hearing the parties by way of a measure of organisation of procedure, the Court considers it appropriate to raise of its own motion the plea alleging failure to state reasons for the contested decision.

35 In that regard, first, it must be borne in mind that the Commission sent the applicants a letter on 3 March 2022, which it considers in those pleadings to be the ‘notification of the cancellation’.

36 Second, the Commission sent the applicants a letter on 8 April 2022, together with the contested decision, which contains a more detailed statement of reasons and a reply to certain questions put by them.

37 With regard to those two letters, the Commission maintained in its plea of inadmissibility that ‘[the applicants] mistakenly indicate that the notification of the Cancellation Decision only occurred on 8 April 2022 (Application for annulment, [paragraph] 20)’, whereas, ‘they were notified of [that decision] on 3 March 2022, the day of its adoption’.

38 On that point, it should be noted that, as regards form, the letter of 3 March 2022 appears to be a letter addressed to the applicants, the subject of which is ‘Cancellation of Procurement procedure BUDG 19/PO/04’, with the letterhead of the Commission’s Directorate-General for Budget. That letter is worded definitively, in that it states that its author decided to cancel the procurement procedure in question and that the contracting authority intends to re-launch a new procedure for the provision of the services concerned.

39 Therefore, as the Commission submits, the letter of 3 March 2022 must be regarded as being the notification of the contested decision to the applicants. Its purpose is to establish definitively the Commission’s position and cannot therefore be regarded as a provisional measure which is only one step in the procedure for the adoption of the contested decision (see, to that effect, judgment of 11 November 1981, IBM v Commission, 60/81, EU:C:1981:264, paragraph 10).

40 In its defence and in its reply to the question put by the Court, the Commission states that it is necessary to take into consideration, in order to assess whether it fulfilled its obligation to state reasons, both (i) the contested decision by which it cancelled the procurement procedure in question and the reasons explaining that cancellation and (ii) the letter of 8 April 2022 providing additional explanations, following a request made by the applicants, as to the underlying reasons for that cancellation.

41 In that regard, the Commission relies on the Court’s case-law according to which additional information provided in response to a request by an applicant for additional explanations concerning a decision may, under certain conditions, be taken into account where it is provided before an action is brought (judgments of 15 October 2013, Evropaïki Dynamiki v Commission, T-474/10, not published, EU:T:2013:528, paragraphs 78 and 79, and of 2 February 2017, European Dynamics Luxembourg and Evropaïki Dynamiki v Commission, T-74/15, not published, EU:T:2017:55, paragraphs 37 to 40).

42 However, that case-law was adopted by the Court pursuant to Article 113(2) of Regulation (EU, Euratom) No 966/2012 of the European Parliament and of the Council of 25 October 2012 on the financial rules applicable to the general budget of the Union and repealing Council Regulation (EC, Euratom) No 1605/2002 (OJ 2012 L 298, p. 1) and Article 100(2) of Council Regulation (EC, Euratom) No 1605/2002 of 25 June 2002 on the Financial Regulation applicable to the general budget of the European Communities (OJ 2002 L 248, p. 1), now Article 170 of the Financial Regulation.

43 As is apparent from the case-law, that article of the Financial Regulation imposes a two-stage obligation on the administration to provide a statement of reasons to tenderers who have presented an admissible tender and who make an express request in that regard (see, to that effect, judgments of 11 June 2014, Communicaid Group v Commission, T-4/13, not published, EU:T:2014:437, paragraph 22 and the case-law cited, and of 1 December 2021, Sopra Steria Benelux and Unisys Belgium v Commission, T-546/20, EU:T:2021:846, paragraphs 38 to 40).

44 It must be stated that the contested decision was not adopted pursuant to Article 170 of the Financial Regulation, but pursuant to Article 171 of that regulation, the second paragraph of which provides that decisions to cancel procurement procedures are to state the reasons on which they are based and are to be brought to the attention of candidates or tenderers as soon as possible.

45 It follows that the case-law on the statement of reasons for decisions awarding and rejecting tenders adopted on the basis of Article 170 of the Financial Regulation, relied on by the Commission, is not applicable to decisions to cancel procurement procedures adopted on the basis of the second paragraph of Article 171 of the Financial Regulation, such as the contested decision.

46 The case-law relied on by the Commission is based on specific provisions of the Financial Regulation and cannot be applied generally to all situations, in particular to a decision cancelling a public contract which, under the second paragraph of Article 171 of the Financial Regulation, must be reasoned and brought to the attention of the candidates as soon as possible.

47 Furthermore, in addition to the lack of a legal basis authorising an additional statement of reasons for decisions cancelling procurement procedures, there is no reason capable of justifying the application of the mechanism provided for in Article 170 of the Financial Regulation to those decisions which are based on Article 171 of that regulation.

48 That is all the more so where, as in the present case, the additional statement of reasons was notified to the applicants more than one month after the adoption of the contested decision, thereby reducing the time limit for preparing their action, as the applicants claim in support of their third plea in law.

49 Moreover, it is also settled case-law that the reasons for a decision must appear in the actual body of the decision and that, save in exceptional circumstances, explanations given ex post facto by the Commission cannot be taken into account (see judgment of 15 June 2005, Corsica Ferries France v Commission, T-349/03, EU:T:2005:221, paragraph 287 and the case-law cited). In that regard, the case-law requires that the contracting authority inform tenderers, at the same time as informing them of the decision not to award the contract in question, of the reasons for that decision (see, to that effect, judgment of 8 May 2007, Citymo v Commission, T-271/04, EU:T:2007:128, paragraph 100, and order of 14 May 2008, Icuna.Com v Parliament, T-383/06 and T-71/07, EU:T:2008:148, paragraph 66).

50 Therefore, contrary to what the Commission maintains in its reply to the measure of organisation of procedure, it cannot be considered that there is a general principle that compliance with the obligation to state reasons must be assessed in the light of the information available to the applicants at the time when an action is brought.

51 Moreover, the obligation for the administration to give reasons for its decisions is not merely a general expression of the transparency of the administration’s actions, but is also intended to give the individuals the possibility of deciding, with a full knowledge of the relevant facts, whether there is any point in them applying to the courts. There is therefore a close connection between, on the one hand, the obligation to give reasons and, on the other, the fundamental right to effective legal protection and the right to an effective remedy guaranteed under Article 47 of the Charter of Fundamental Rights of the European Union. In other words, the obligation to state reasons helps to ensure effective judicial protection (judgment of 1 December 2021, Sopra Steria Benelux and Unisys Belgium v Commission, T-546/20, EU:T:2021:846, paragraph 35).

52 Consequently, in order to assess the legality of the contested decision, the Court can take into account only the statement of reasons for the contested decision as notified to the applicants in the letter of 3 March 2022.

53 In the contested decision, as notified in the letter of 3 March 2022, it was stated that ‘following comments made by an unsuccessful tenderer … the contracting authority identified errors in the procurement documents and, notably, the non-compliance of some selection criteria with [the Financial Regulation]’.

54 That statement of reasons, based on the non-compliance of some selection criteria with the Financial Regulation, does not make it possible to determine which criteria were not considered to be compliant, nor which provisions of that regulation were not complied with.

55 Nor can that information be inferred from the context in which the contested decision was adopted, since the applicants were not aware of the comments made by the unsuccessful tenderer.

56 Consequently, it cannot be held that the statement of reasons for the contested decision discloses in a clear and unequivocal fashion the reasoning followed by the institution which adopted the measure in question in such a way as to enable the persons concerned to ascertain the reasons for the measure and to enable the competent court to exercise its power of review.

57 The contested decision must therefore be annulled, in so far as it concerns Lot No 2 of the procurement procedure relating to call for tenders BUDG 19/PO/04, on the basis of the plea, raised of the Court’s own motion, alleging an inadequate statement of reasons, without there being any need to rule on the other pleas put forward by the applicants.

58 Under Article 134(1) of the Rules of Procedure of the General Court, the unsuccessful party is to be ordered to pay the costs if they have been applied for in the successful party’s pleadings. Since the Commission has been unsuccessful, it must be ordered to bear its own costs and to pay those incurred by the applicants, in accordance with the form of order sought by the latter.

59 In accordance with Article 138(3) of the Rules of Procedure, the Court has decided that the intervener must bear its own costs.

1. Annuls decision Ares(2022) 1579941 of the Commission of 3 March 2022 by which it cancelled the procurement procedure relating to call for tenders BUDG 19/PO/04, in so far as it concerns Lot No 2;

2. Orders the European Commission to bear its own costs and to pay those incurred by Xpand Consortium, NTT Data Belgique, Sopra Steria Benelux and Fujitsu Technology Solutions, including the costs relating to the interim proceedings;

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You are here: BAILII >> Databases >> Court of Justice of the European Communities (including Court of First Instance Decisions) >> Xpand Consortium and Others v Commission (Public service contracts - Tendering procedure - Judgment) [2024] EUECJ T-281/22 (23 October 2024) URL: http://www.bailii.org/eu/cases/EUECJ/2024/T28122.html Cite as: [2024] EUECJ T-281/22, EU:T:2024:724, ECLI:EU:T:2024:724

Court of Justice of the European Communities (including Court of First Instance Decisions)