On March 15, 2012 the European Court of Justice (Third Chamber) passed a judgement on a
case concerning the award of several contracts for architectural services instead of one
contract over the threshold, as laid down in the directive 2004/18/EC (on the coordination of
procedures for the award of public works contracts, public supply contracts and public service
contracts) and without a previous call for tenders on the European level. The case concerned
the Federal Republic of Germany.
In October 2006 the municipality of Niedernhausen (Germany) as contracting authority
decided to renovate a multi-purpose hall, used for sports and concerts.
For this purpose the municipality hired a local architect office to draw up the estimation for
the costs of the renovation, stressing that this architecture office would also be responsible for
all stages of the renovation of the building, according to the German payroll of the architects
and engineers (German Honorarordnung für Architekten und Ingenieure).
According to the report of 4th October 2007 of this engineering firm, the whole costs of the
renovation works would take ci. 2,3 million euro gross. The fee for the design and supervision
of the works was included and it would take 325,000 euro gross.
Having received the report the municipality came to a decision to divide the procurement into
three independent parts. All the parts were provided with a budgetary plans of the
municipality for the years 2008-2010. The first renovation works should be carried out in
2008. The architect office was responsible for the choice of the specialized engineers and for
supervising their works. Under the contract signed on January 24, 2008 his fee shall take
104,000 euro. The next contract was signed in 2009 for the fee of 89,000 euro and the last one
in 2010 for 70,000 euros.
In May 2008 the European Commission complained about the way the procurement
procedure had been conducted. It claimed that the works should be carried out as a unity.
According to the statement of the Federal Republic of Germany the procurement was carried
out in several phases due to the budgetary reasons.
Notwithstanding the reply, the Commission sent a reminder letter on June 26, 2009 claiming
that the conclusions of the ECJ in the judgement of 5th October 2000 on the case C-16/98
Commission v. France are not relevant. The services (eg. design) can be conducted separately.
The authorities of Germany did not agree with such statement, so in 2010 the Commission
appealed to the Court of Justice. In the application, the Commission made a statement that all
the services undertaken and conducted with the renovation of the Autalhalle constitute a
united public works contract under the European procurement law. The services are accessory
to the works and therefore they should be treated as a unity.
The Court emphasized that it is against the art. 9 (3) of the directive 2004/18/EC to divide the
contract artificially only on budgetary grounds. The architectural services are in a close
physical, economic and functional relation because they are all serving the renovation of one
building. The Commission cannot find any reasonable reason for conducting these works
separately. As stated in the judgement of the Court on the case C-16/98 Commission v.
France, the ECJ showed there the functional approach, that the building works should be
considered as a one procurement. For the reasons mentioned above, the Commission claimed
to apply this judgement to a current case.
The judgement of March 15, 2012:
The European Court of Justice finds that the services are as well as public works and supplies
under the regulation of the directive 2004/18/EC. For this reason, while awarding the services,
the contracting authorities ought to act with a great respect to all the European rules and goals.
In accordance with the art. 9 (1)(3) of the directive 2004/18/EC the value of the contracts
cannot be underestimated to avoid applying the procurement directives.
The main doubt if the architectural services should be seen as part of a public works and not
as an individual, separate contract as it was dispelled. The ECJ agreed with the opinion of the
Commission that the functional approach must be used. Based on the procedure documents,
all these services were connected to each other and therefore seen as a unity. They are in close
economic and functional relation and an artificial dividing would not change this situation.
The Commission stressed as well, that under the Annex II A, Category 12 to the directive
2004/18/EC architectural services are priority services. Therefore, the contract value should
have been calculated, according to the total value of the architectural services provided in the
context of the construction. In that case, the contract value would have exceeded the threshold
laid down in Article 7B of Directive. Because of that the contracting authority should have
call for tenders on the European level. The ECJ agreed. That is why the Federal Republic of
Germany was declared to fail with fulfilling its obligations under the procurement directive
2004/18/EC by not by carrying out the renovation project in several steps and punished with
the costs of the procedure.
This judgement shows the continuity and consequence of the Court in the matter of estimation
of the value of the contract. It is forbidden to divide the contract into several phases to avoid
using the European directives for the saving reasons, because the rule of equal treatment of
the bidders and the non-discrimination rule are more important. The new directive
2014/24/EU (on public procurement and repealing Directive 2004/18/EC) specifies in article
5 the methods for calculating the estimated value of procurement to do it properly with
respect to the European procurement law.
I agree with the Court because the facts on which this judgement was based show clearly that
the services were connected to each other and there was no reason to divide the contract. It
was against the European rules of the freedom of services and to give the contract to a one
bidder without calling for tenders.
autor: Izabella Sobieraj