October 20 1999
Details of the Berlin-Brandenburg-International (BBI) Airport project are currently abuzz among the German press. The privatization of Berlin Brandenburg Airport Holding GmbH (BBF), as well as the building construction works and the service of the BBI, are subject to a public building award procedure.
The Higher Regional Court of the Federal State of Brandenburg reached a judgement about several aspects of the project (ref.no.: 6 Verg 1/99, August 3 1999). The applicant, a rejected tender, claimed that the procedure leading to the selection of the preferred bidder discriminated against him on certain points and was therefore illegal. The court affirmed, holding that one main principle of the provisions on the award of public building contracts, the equal treatment of all bidders, had been violated (§ 97 para. 2 of the Restraint of Competition Act). The award procedure must now be redone.
Applicability of the Award Provisions
The court adjudged that the award provisions are applicable. It considered the BBI agreement as a building concession agreement and declared that the award provisions are applicable for that kind of agreement.
A building concession agreement provides the right to operate the built object in exchange for the construction works performed. It is used in order to relieve the public authorities. The BBI concession agreement contains elements of building as well as of service commissions. As far as whether it can be considered as a building concession agreement, the court cited the European Court of Justice: if the building part is of only subordinate importance, then it is not considered to be a building concession agreement. The Higher Regional Court held that since the building part of the BBI project is the precondition for the realization of the service part, it cannot be regarded as merely subordinate. Furthermore, any circumvention of the award provisions needs to be avoided. Thus, the BBI agreement is a building concession agreement.
The award provisions are applicable on building commissions, (§ 99 para. 3 of the Restraint of Competition Act). The corresponding European Union (EU) Directives declare building concessions as a kind of building commissions. The court concludes that since the national provision is to be interpreted in conformity with the directive, the award provisions are also applicable on building concessions.
A person can be a member of several boards of directors. In the BBI award procedure, several persons were on both the award office's board of directors as well as that of a member company of a bidder consortium. This situation was not deemed a problem in the past. Now the court adjudged that it leads to the unequal treatment of the tenders. Whether discrimination of the other bidders actually occurred - that is to say, whether the award office's decision would have been any different had there been no overlap - is of no importance, so the court held. The mere appearance of partiality must be prevented.
Contacts with the Principal's Side
A similar problem came up because one bidder, trying to negotiate a contract, had contacted an engineer's office which worked for the award office. The award office never thoroughly examined those contacts and therefore did not draw the necessary conclusions. The court adjudged that in any case of a (pre)contractual relationship between the bidder's and the principal's side, the equal treatment of all tenders is not ensured. Again, proof of the actual discrimination of the other bidders is not necessary.
Minimum Technical Requirements (TMA)
The award office had set minimum technical requirements in the request for proposal received by the prequalified bidders. However, when selecting the preferred bidder, the award office did not base their decision clearly upon the requirements stated. The court held that the award office's scope for judgement evaluation is limited insofar as only a bidder who fulfils the set preconditions may be chosen. If any requirements are unclear, they must be specified by the public principal. The bidders must then be given additional time to adjust their bids.
Documentation of the Award
The award procedure needs to be documented properly in order to keep it transparent. This has gained importance since the latest EU Directives have been transformed into national law in 1999, which improved the legal protection for bidders in award procedures valued above certain EU threshold sums. In order to grant that legal protection, the review instances must be able to reconstruct the award office's decisions leading to the choice or the rejection of a bidder. In the present case, the lack of documentation in the above matters made it difficult for the court to understand how the relevant decisions of the award office were made. Therefore the court ruled that the bidders are entitled to proper documentation during the whole award procedure.
The above court decision implies changes in future award procedures in all the above matters. The ruling on the double mandates will particularly compel public principals to check any possible conflict of interests very carefully in the future. In case of doubt, the person concerned will have to quit one board of directors. Further details are to be expected in upcoming decisions.
For further information on this topic please contact Eckart Putzier or Lutz Horn at Clifford Chance Pünder by telephone (+49 30 25465-800) or by fax (+49 30 25465-900) or by e-mail (email@example.com or firstname.lastname@example.org).
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