27/11/2018
Contracting authorities more often than not, specify their requirements in specification documents by reference to isolated functioning and characteristic requirements. However, the recent case of C-413/17 Roche Lietuva UAB ("Roche") v Kauno Dainavos poliklinika VsI ("Polyclinic")[1] examined the extent to which contracting authorities may specify their requirements by reference to the results of functioning requirements.
This case primarily considered the application of Article 42 of the Directive[2], which is transposed in UK, in Regulation 42 of the Public Contracts Regulations 2015 (as amended) ("PCR"). PCR 42 covers the scope, formulation and application of technical specifications.
Facts
The case involved a public procurement exercise run by Polyclinic in Lithuania for the rental of laboratory diagnostic equipment for human health care and related materials and associated services.
Roche, an unsuccessful bidder, complained to Polyclinic alleging that the technical specifications unreasonably restricted competition among suppliers. They claimed that the high level of specificity meant that the requirements corresponded to products of specific manufacturers and, as a result excluded others. As a result of this complaint Polyclinic amended certain provisions of its technical specifications.
Dissatisfied with the amendments made to the technical specifications, Roche brought an application before the national courts on the basis that the documents were still too precise and distorted competition.
The case was eventually considered by the Court of Justice of the European Union ("CJEU") after referral from the Supreme Court of Lithuania. In summary, the question raised considered whether a contracting authority is permitted to define, as a functional requirement, the result of that functioning, i.e. speed or reliability of the tests and methods used rather than simply setting out isolated functional requirements and characteristics of the equipment or, a requirement.
Legislative requirement
Article 42(3) of the Directive (PCR 42(11)) sets certain limits that contracting authorities must comply with where technical specifications are concerned. Within those provisions it is clear that technical specifications can be defined by reference to the required characteristics in a number of different ways, either in terms of performance or functional requirements or by reference to technical specifications or using various standards.
Noting the above, the CJEU considered that the wording in Article 42(3) does not exclude the ability of specifications in a procurement procedure regarding medical suppliers intended to carry out medical examination, to refer to the individual operational and use-related characteristics of the materials. However, in drawing up technical specifications, contacting authorities are required, in accordance with Article 42(2) of the Directive (PCR 42(10)) to afford equal access to suppliers to the procurement procedure so that they do not have the effect of creating unjustified obstacles to the opening up of the opportunity to competition.
Comment
The Directive and PCR both set out the principles of equal treatment, non-discrimination and transparency, all of which are of crucial importance to technical specifications given the risk of discrimination related to the choice of specification or its formulation.
Whilst contracting authorities have a broad discretion in formulating their technical specifications they will need to be careful to ensure that they only incorporate a level of detail in such documents that is necessary to achieve the desired objectives.
It is worth noting that the CJEU acknowledged in this case, that the principle of proportionality is applied in a particular manner in the sensitive area of public health. This suggests that the CJEU may take a different view where contracts falling outside this sector are concerned, and contracting authorities should therefore exercise caution in the formulation of their technical specifications.
References
[1] C-413/17 Roche Lietuva UAB v Kauno Dainavos poliklinika VsI dated 25 October 2018
[2] Directive 2014/24/EU of the European Parliament and of the Council of 26 February 2014
