CJEU Judgments in the Cases C-652/22 | Kolin Inşaat Turizm Sanayi ve Ticaret and C-266/22 | CRRC Qingdao Sifang and others – Incentive for excluding third countries’ tenders from the award procedures?

By Teodora KOLETSIS, Partner, and Florin DOGARU, Senior Associate

EU public procurement market – the imbalance between EU economic operators and third countries’ economic operators

A thorny issue that has long affected the EU public procurement market is the fact that economic operators tendering goods, services and works from the EU (“EU Tenders”) are, most of the time, at a disadvantage compared to economic operators from third countries or tendering goods, services and works originating from third countries with which the European Union has not concluded any agreement on public procurement (“Third-country Tenders”), due to the fact that contracting authorities allow the latter to participate in award procedures without any restrictions. In practice, we often see Third-country Tenders, with much lower prices than EU Tenders, being awarded EU procedures, and this mainly due to the fact that operators, goods, services and works from third countries are not always subject to an obligation to comply with environmental, social or labour standards similar or equivalent to those applicable at EU level. Similarly, third-country bidders are not subject to strict State aid rules similar to those applicable in the EU.

All these aspects have given rise to major imbalances in the EU public procurement market and to the need to take combative measures to ensure fair competition between EU Tenders and Third-country Tenders.

Measures taken at EU level to ensure fair competition between EU and Third-country Tenders. Their impact locally

Considering the above, at the level of the European Union, ensuring fair competition conditions between EU and non-EU bidders in the award procedures has become a major objective.

Thus, several regulatory acts have been adopted at Community level, all aimed, mainly, at raising awareness, especially among the contracting authorities, of the fact that the access to EU public procurement procedures is not secured for the economic operators from third countries that have not concluded any agreement with the EU on public procurement, or whose goods, services and works are not covered by such an agreement, and, therefore, they may be excluded from these procedures.

A first step towards highlighting this option of the contracting authorities was taken by the European Commission when issuing a Communication on Guidelines on the access of tenderers and goods from third countries to the EU public procurement market (2019/C 271/02), enshrining, for the first time, the per a contrario interpretation of the provisions of Article 25 of Directive No. 2014/24/EU and, respectively, of Article 43 of Directive No. 2014/25/EU, according to which “economic operators from third countries, which do not have an agreement providing for the opening of the EU public procurement market or whose products, services and works are not covered by such an agreement, do not have secure access to EU procurement procedures and may be excluded.”

However, since the European Commission Guidelines were not binding, the reluctance of contracting authorities across the EU to exclude Third-country Tenders from award procedures persisted to some extent even after their issuance, as it was thought that, theoretically, there still was a risk for them to be held liable for breach of the principle of equal treatment and non-discrimination if they excluded such offers from award procedures.

This so-called legal uncertainty was, however, completely removed with the entry into force of Regulation (EU) No. 2022/1031 of the European Parliament and of the Council of 23 June 2022 on the access of economic operators, goods and services from third countries to public procurement and concession markets in the Union and the procedures to support negotiations regarding the access of economic operators, goods and services from the Union to public procurement and concession markets in third countries (International Procurement Instrument – IPI) (“Regulation (EU) No. 1031/2022”).

Under the IPI became mandatory, for the first time, the per a contrario interpretation of the provisions of Article 25 of Directive No. 2014/24/EU and, respectively, of Article 43 of Directive No. 2014/25/EU, originally enshrined by the European Commission via the Communication on Guidelines on the access of tenderers and goods from third countries to the EU public procurement market.

However, all the efforts made at the European level were rather misunderstood locally, in Romania, where the competent authorities, instead of taking steps towards raising awareness among contracting authorities of the fact that they have the possibility to exclude from the award procedures Third-country Tenders, have amended, through the Government Emergency Ordinance No. 25/2021 for amending and supplementing certain normative acts in the field of public procurement ("GEO No. 25/2021"), the public procurement legislation in the sense that they established an obligation (and not possibility) for contracting authorities to exclude from the award procedures economic operators from third countries with which the EU has no agreements on public procurement.

As we shall further show, this interference by the Romanian authorities in the field of the common commercial policy was sanctioned by the CJEU through the Judgment rendered in Case C-266/22 | CRRC Qingdao Sifang and others.

Essential Clarifications brought by the CJEU Judgments in Cases C-652/22 | Kolin Inşaat Turizm Sanayi ve Ticaret and C-266/22 | CRRC Qingdao Sifang and others

In our view, by the Judgments rendered in the Cases C-652/22 | Kolin Inşaat Turizm Sanayi ve Ticaret and C-266/22 | CRRC Qingdao Sifang and others (“the CJEU Judgments”), the CJEU managed to provide EU contracting authorities with all the necessary tools to restore balance on the EU public procurement market and, thus, ensure conditions of fair competition between EU Tenders and Third-country Tenders.

Thus, through the CJEU Judgments, it was explicitly established, among other things, that:

• Directive 2014/24/EU (the same reasoning also applies to Directive 2014/25/EU) must be understood as meaning that there is no secured access to EU procurement procedures for economic operators from third countries with which the European Union has not concluded an international agreement guaranteeing equal and reciprocal access to public procurement markets. In other words, such operators may either be excluded or accepted in these procedures, without however being entitled to equal treatment of their tenders relative to those submitted by tenderers from Member States and tenderers from third countries with which the EU has concluded agreements on public procurement;
• Only the EU is competent to adopt an act of general application concerning the access, within its territory, to procedures for the award of public procurement contracts, of economic operators from a third country which has not concluded an international agreement with the Union securing equal and reciprocal access to public procurement markets, by establishing either a system of guaranteed access to those procedures for those economic operators or a system which excludes them or provides for an adjustment of the result arising from a comparison of their tenders with those submitted by other economic operators. In this regard, in the Judgment rendered in Case C-266/22 | CRRC Qingdao Sifang and others, the CJEU held that the provisions of the GEO no. 25/2021, by which the Romanian authorities imposed on the contracting authorities an obligation (and not a possibility) to exclude such economic operators from award procedures cannot be applied, since only a provision of Union law can impose such an obligation of exclusion;
• Only the contracting authorities have the power to decide whether or not to admit in public procurement procedures economic operators from third countries having not concluded an international agreement with the EU guaranteeing equal and reciprocal access to public procurement markets to participate in the award procedures they organised, and if it decides in favor of such admission, whether it is necessary to provide for an adjustment of the score resulting from the comparison of the offers made by these operators with those submitted by other operators from the EU. Also, by the Judgment rendered in Case C-652/22 | Kolin Inşaat Turizm Sanayi ve Ticaret, the CJEU expressly held that contracting authorities may set out in the procurement documents arrangements for treatment intended to reflect the objective difference between the legal situation of the operators from third countries with which the EU has not concluded agreements on public procurement and that of economic operators from the EU.

In light of the above, we consider that, de lege ferenda, steps must be taken by the competent authorities in Romania to inform and raise awareness among the contracting authorities of the fact that they are allowed, under the law, to include in the procurement documents criteria for the exclusion from the award procedures of Third-country Tenders or an adjustment of the score resulting from comparing the latter with EU Tenders – as a means to ensure fair competition between bidders tendering EU originating goods, works and services (where the prices reflect compliance with all existing standards and requirements at European level regarding the quality of the products, works and services tendered) and those tendering goods, works and services originating from third countries with which the EU has not concluded an international agreement on public procurement (where the prices are set without needing to abide by the same requirements and standards for goods, services and works as the EU economic operators).