This article is an excerpt from the 2021 edition of The Art of Tendering: A Global Due Diligence Guide, which is available for purchase.
In its November 2016 decision in Ciclat Soc. coop. v. Consip SpA, the European Court of Justice upheld a solicitation rule that required bidders to submit proof of their social security payments. The dispute dealt with an Italian tender call for cleaning and other maintenance services for the buildings, educational establishments, and training centres of public authorities. A supplier challenged the requirement, arguing that setting this as a bid submission requirement was a breach of European procurement rules:
By its question, the referring court asks, in essence, whether Article 45 of Directive 2004/18 and Articles 49 and 56 TFEU must be interpreted as precluding national legislation, such as that at issue in the main proceedings, which obliges a contracting authority to consider an infringement relating to the payment of social security contributions, recorded in a certificate requested by a contracting authority on its own initiative and issued by the social security institutions to be a ground for exclusion, where that infringement existed on the date of the participation in a tender procedure, even if it no longer existed on the date of the award or of the verification carried out on the contracting authority’s own initiative.
However, the Court disagreed, finding that the requirement imposed at the bid deadline was consistent with European procurement directive rules, which expressly recognized the right to impose restrictions relating to social security payments in a government procurement process:
It should be noted, first, that Article 45(2)(e) of Directive 2004/18 allows Member States to exclude any economic operator from participation in a public contract, where that operator fails to fulfil his obligations relating to the payment of social security contributions. Moreover, under Article 45(3) of Directive 2004/18, the contracting authorities accept as sufficient evidence that the economic operator is not in the situation referred to in Article 45(2)(e), a certificate issued by the competent authority in the Member State concerned and from which it is apparent that those requirements are satisfied. It in no way follows from the wording of those provisions that the competent authorities are prohibited from requesting the certificate required from the social security institutions on their own initiative.
Further, the Court also noted that since bidders were able to independently confirm with the government if they were up to date with their social security payments, it was acceptable for a specific purchasing institution to impose the requirement as a bid submission rule:
Secondly, it is of little consequence if an economic operator has not been warned of such an irregularity as long as he has the possibility to verify, at any time, the regularity of his situation with the competent authorities. If that is indeed the case, which it is for the national court to determine, an economic operator may not rely on a certificate issued by the social security institutions obtained before his tender was submitted and certifying that he complied with his obligations relating to the payment of social security contributions during a period before that tender was submitted, while being aware, as the case may be, after making enquiries with the competent authorities, that he no longer complies with such obligations on the date his tender was submitted.
In the second place, it is necessary to examine whether Article 45 of Directive 2004/18 precludes national legislation, such as that at issue in the main proceedings, which obliges the contracting authorities to consider an infringement relating to the payment of social security contributions, recorded in a certificate requested by a contracting authority on its own initiative and issued by the social security institutions, where that infringement existed on the date of the participation in a tender procedure, to be a ground for exclusion, thereby entirely excluding the contracting authorities’ discretion.
…
It follows that Article 45 of Directive 2004/18 does not preclude national legislation, such as that at issue in the main proceedings, which obliges the contracting authorities to consider an infringement relating to the payment of social security contributions, recorded in a certificate requested by a contracting authority on its own initiative and issued by the social security institutions, where that infringement existed on the date of the participation in a tender procedure, to be a ground for exclusion, thereby entirely excluding the contracting authorities’ discretion.
Finally, the Court concluded that the requirement was not discriminatory against foreign bidders since all bidders were allowed to submit self-declarations if the tendering deadlines did not allow them to obtain formal certificates from the relevant government body in a timely manner:
In the third and last place, it is necessary to examine the referring court’s questions concerning whether national legislation, such as that at issue in the main proceedings, introduces discrimination between undertakings established in Italy and those established in other Member States. In that context, the referring court notes that, for the latter, Article 38(4) and (5) of Legislative Decree No 163/2006 provides that the contracting authority must request those undertakings to supply themselves the supporting documents required and that, if the Member State concerned fails to issue that type of document or certificate, a sworn declaration or a solemn declaration is regarded as sufficient proof.
The social security certification requirement was therefore upheld as consistent with the European rules since the requirement was expressly permitted by the European procurement directive and was implemented in a manner that avoided unnecessary barriers to foreign bidders. As this case study illustrates, even where tendering requirements are formally recognized by the procurement rules, they remain subject to challenge based on how they are implemented. Purchasing institutions should therefore strive to enforce their requirements based on minimally intrusive means that avoid creating legally challengeable barriers to competition.
