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The EU Court provides guidance on the use of framework agreements by contracting authorities

  • United Kingdom
  • Competition, EU and Trade
  • Litigation and dispute management
  • Public procurement

11-02-2019

Case C-216/17, Autorità Garante della Concorrenza e del Mercato – Antiturst, Coopservice Soc. coop. arl

In its judgment of 19 December 2018 (the “Judgment”), the Court of Justice of the European Union (the “Court”) provided some useful guidance on two important issues pertaining to the use of framework agreements, namely: (i) whether contracting authorities which are not “direct parties” (i.e. signatories) to a framework agreement may use them; and (ii) the extent to which contracting authorities wishing to use a framework agreement need to specify in advance the quantity of services they may require under that framework1.

Relevant facts

The Judgment deals with a request for a preliminary ruling made by the Italian Council of State (Consiglio di Stato) in the context of two actions relating to the use of a framework agreement2 for waste collection services by the regional health authority of Valcamonica3. The framework agreement in question had been concluded by a different body, the regional health authority of Lake Garda, in 2012.

Italian regional health authorities are contracting authorities subject to procurement legislation. Under Italian law they are also obliged to purchase goods and services collectively through central purchasing bodies.

The regional health authority of Valcamonica was not a signatory to the framework agreement in question. However, the original tender specifications included a clause which provided for the possibility of extending that agreement to a number of regional health authorities identified in that clause, including the regional health authority of Valcamonica (the “extension clause”). In 2015, the regional health authority of Valcamonica sought to rely on the extension clause and use the framework agreement for the purpose of meeting its waste collection services requirements, rather than initiate a new public procurement process for the award of a services contract.

This decision to call-off a contract under the framework was challenged in the local courts and ultimately led to an appeal to the Council of State against the first instance court’s decision to dismiss the challenge. The Council of State stayed the proceedings and made a reference to the CJEU essentially asking it to consider:

(a) whether EU procurement legislation allowed a contracting authority to conclude a framework agreement not only on its own behalf but also on behalf of other contracting authorities which were not direct parties (signatories) to that agreement but which were specified as potential users of that framework; and

(b) assuming that the answer to (a) was positive, whether EU procurement legislation required contracting authorities which were not direct parties to a framework agreement to specify in advance the quantity of services that they may require under that framework, and whether this could be done by reference to their ‘usual requirements’.

The Court’s decision

In its decision, the Court confirmed that, in order to be able to call off contracts under a framework, a contracting authority did not have to be a direct signatory to the relevant framework agreement. Instead, it was sufficient for it to:

appear as a potential beneficiary of that framework agreement from the date on which it is concluded by being clearly identified in the tender documents with an explicit reference that makes both the ‘secondary’ contracting authority itself and any interested operator aware of that possibility. That reference can appear either in the framework agreement itself or in another document, such as an extension clause in the tender specifications, as long as the requirements as to advertising and legal certainty and, consequently, those relating to transparency are complied with.”4 (emphasis added)

The Court also concluded that, although contracting authorities were only subject to a requirement to use best endeavours to stipulate in advance the value and frequency of each call-off contract likely to be awarded under a framework agreement, it was imperative that they state the total quantity of services which the subsequent call-off contracts might comprise.

According to the Court, the principles of transparency and equal treatment of economic operators with an interest in the conclusion of a framework agreement would be affected if the contracting authority that established a framework agreement did not set out the total quantity of services which the agreement covered. Ensuring compliance with the transparency obligation in this manner was particularly important given that contracting authorities did not have an obligation to publish a notice of the results of the award procedure for each call-off contract.

Equally, without an obligation to indicate at the outset of the process the quantity and maximum value of services that would be covered by that agreement, there would be an increased risk that framework agreements could be used improperly or in such a way as to prevent, restrict or distort competition.

In reaching these conclusions, the Court considered it relevant that EU legislation provided that where a framework agreement was concluded with a single supplier, call-off contracts had to be awarded within the limits of the terms laid down in that agreement. It followed that the commitments made by the original contracting authority, on its own behalf or on behalf of the contracting authorities that were specified as potential users of that agreement, could only be up to a certain quantity of supplies or services and once that limit had been reached the agreement would no longer have any effect.

Finally, the Court did not consider that it would be sufficient to define the requirements of contracting authorities that had been specified as potential framework users merely by reference to their “usual requirements”. This was because, even if it could be assumed that this reference might be sufficiently clear for national suppliers, it could not be assumed that this would also be the case for suppliers in other Member States. Indeed, if the total quantity of supplies or services that those usual requirements represent was common knowledge, it should not be difficult to refer to it in the framework agreement itself or in another published document, such as the tender specifications, so as to ensure full compliance with the principles of transparency and equal treatment.

Comments

Although these issues were considered in the context of Directive 2004/18, which was applicable at the time, the Court’s conclusions are equally relevant to framework agreements established under Directive 2014/24 (the “Public Contracts Directive”)5 currently in force, which contains provisions on framework contracts which are substantively similar to those in Directive 2004/18.

Separately, it is arguable that the Court’s conclusions are equally applicable to the award of framework contracts under Directive 2014/25, which regulates the award of contracts by certain utilities (the “Utilities Directive”)6. This is because although the provisions relating to framework agreements in the Utilities Directive are less detailed than those provided under the Public Contracts Directive, and in some respects also different, the Court’s conclusions were based substantively on the need for compliance with the underlying principles of transparency, equality of treatment and non-discrimination. These principles are equally relevant and applicable to the Utilities Directive.

In light of the Court’s decision, it would now seem clear that the procurement documents that are made available at the start of a procurement process for the award of a framework agreement should specify:

(i) the contracting authorities that are potential users of the framework agreement; and

(ii) an estimate of the total quantity and maximum amount of purchases to be covered by call-off contracts awarded under the framework agreement.

Whilst the Court’s decision does not address directly the question of whether the contracting authorities which are identified as potential users of a framework agreement should have provided (a) their express consent for being identified as such in the procurement documents, and (b) a reasonable estimate of the likely volume of purchases to be made during the term of the agreement, these would seem to be the necessary implications of the Court’s judgement.

This is on the basis that the obligation to specify at the outset of a procurement process the total quantity and maximum amount of purchases likely to be covered by call-off contracts awarded under a framework, would seem to require that the potential users of a proposed framework consider specifically the possibility of making use of that framework. If they were to conclude that they intend to make use of the proposed framework it would seem logical that they would then need to communicate this information to the contracting authority carrying out the procurement process together with their (reasonable) estimates as to the volumes of purchases they are likely to make under the framework agreement. Without that information, the contracting authority carrying out the procurement process would not be able to set out in the contract notice, or some other procurement document made available at the start of the process, a meaningful estimate as to the total quantity and maximum amount of purchases to be carried out under the framework agreement.

The Advocate General’s Opinion also seems to be supportive of this conclusion. For example, according to that Opinion, for a contracting authority to acquire “party” status to a framework, it is sufficient for it to have agreed to be bound by the terms and conditions of the agreement either by way of signature of the agreement, or by signature of any other legal act expressing such consent, provided that act is referred to and incorporated into the framework agreement7.

Equally, according to the Advocate General:

“the decisive point is that contracting authorities other than the contracting authority which signed the framework agreement should be identified as ‘potential beneficiaries’ at the time the agreement was entered into and were aware of its contents. If the conclusion of the framework agreement is preceded by a collective decision, in which a number of contracting authorities agree to make group purchases of certain goods or services, that prior collective decision can be used as the basis for a framework agreement signed by just one of those authorities on behalf (or with the consent) of them all”.8

“if the indication of the (estimated) total quantity of services is not included or the bases for calculating those services are hypothetical, it will be difficult for candidates to assess whether it is worth their while taking part in the tendering process.9

Although the Advocate General’s Opinion is not binding on the Court, these points seem consistent with the Court’s conclusions and indeed, the basis on which those conclusions were reached.

An obvious implication of the need to provide a reasonable estimate of the total quantity and maximum amount of purchases under a framework is that the provision of a wide range of possible values is unlikely to be deemed, in most circumstances, to comply with the requirements of transparency and non-discrimination. That is likely to be the case, for example, where such a range has not been determined following consultation with the contracting authorities identified as potential users of the framework, but instead, it is purely hypothetical.

Finally, it is worth noting the Court’s conclusion that a framework agreement which has been concluded with a single supplier cannot be used beyond the maximum value of purchasers specified in the framework agreement at the start of the process. Whilst this conclusion is reached specifically by references to the provisions of the legislation as regards single-party framework agreements, in reality the same conclusion may be reached by reference to the underlying principles of transparency and non-discrimination. On that basis, therefore, the same principle is likely to apply in relation to multi-party frameworks, whether these are covered by the Public Contracts Directive or the Utilities Directive.


  1. Judgment of 19 December 2018, Autorità Garante della Concorrenza e del Mercato – Antiturst, Coopservice Soc. coop. arl, C-216/17, EU:C:2018:1034
  2. There was dispute among the parties to the action as to whether or not the original arrangements that had been concluded by the regional health authority of Lake Garda constituted a framework agreement. Given that this issue was not part of the reference to the CJEU the latter gave judgment on the basis that the original arrangements constituted a framework agreement.
  3. Azienda Socio-Sanitaria Territoriale della Vallecamonica
  4. At [56].
  5. Directive 2014/24/EU of the European Parliament and of the Council of 26 February 2014 on public procurement and repealing Directive 2004/18/EC, OJ L 94, 28.3.2014, p. 65–242.
  6. Directive 2014/25/EU of the European Parliament and of the Council of 26 February 2014 on procurement by entities operating in the water, energy, transport and postal services sectors and repealing Directive 2004/17/EC, OJ L 94, 28.3.2014, p. 243–374.
  7. Advocate General’s Opinion, at [67].
  8. Ibid., at [68].
  9. Ibid., at [78].

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