This article is an excerpt from The Art of Tendering: A Global Due Diligence Guide, which is available for purchase.
In its September 2018 decision in Montte SL v. Musikene, the European Court of Justice upheld the use of minimum scoring thresholds as a means of short-listing competing bidders prior to price evaluations, even if only one bidder is then eligible to proceed to the price evaluation stage. The Court also recognized the right to screen and limit the number of proponents that can proceed to later evaluation stages due to the practicality of not being able to conduct dialogue sessions with too many bidders.
The dispute dealt with a Spanish tendering process for the award of a public contract for the supply of furniture, signage, and musical and recording equipment with an estimated value of €1,157,430. The complainant challenged the use of a minimum technical scoring threshold that short-listed the number of bidders eligible to proceed to the price evaluation stage, arguing that this practice nullified the impact of the pricing in the ultimate award decisions:
Montte argues that the condition which states that it is necessary to reach a minimum score threshold at the end of the technical stage in order to continue to participate in the selection process must be annulled, because it restricts tenderers’ access to the economic stage of the procurement procedure and renders the joint weighting of the technical and economic criteria laid down in those procurement documents entirely meaningless in practice. Montte submits that, unlike the price criterion, which is applied automatically by using a formula, the technical criteria, which are assessed by means of a less objective qualitative evaluation, are, in practice, assigned a weighting of 100% of the total points. Therefore, according to Montte, by applying such criteria, tenderers may not be judged equally depending on the price of their tender and Musikene may accordingly be unaware of the most advantageous tender after weighing all the criteria.
The purchasing institution disagreed, arguing that it was an acceptable practice to establish minimum technical requirements to better ensure quality service prior to proceeding to the evaluation of eligible price offers. The Court agreed, finding that the European Directive did not prohibit the pre-screening of technical factors prior to proceeding with price evaluations so long as evaluation criteria and procedures are transparent and consistently applied:
For its part, Article 67(1) of Directive 2014/24 states that contracting authorities are to base the award of public contracts on the most economically advantageous tender. Article 67(2) of that directive provides that the most economically advantageous tender from the point of view of the contracting authority is to be identified on the basis of the price or cost and may include the best price-quality ratio, which is to be assessed on the basis of criteria which comprise, inter alia, qualitative aspects such as quality, including technical merit.
It should be added that those criteria must, as can be seen from recital 90 of that directive and Article 67(4) thereof, ensure compliance with the principles of transparency, non-discrimination and equal treatment, so as to guarantee an objective comparison of the relative merits of the tenders and, accordingly, effective competition. That would not be the case for criteria having the effect of conferring on the contracting authority an unrestricted freedom of choice (see, by analogy, as regards Directive 2004/18/EC of the European Parliament and of the Council of 31 March 2004 on the coordination of procedures for the award of public works contracts, public supply contracts and public service contracts (OJ 2004 L 134, p. 114), judgment of 10 May 2012, Commission v Netherlands, C-368/10, EU:C:2012:284, paragraph 87).
Consequently, contracting authorities are to be free, provided that they comply with the requirements set out in [the] paragraph above, to determine, according to their needs, the level of, inter alia, technical merit that the submitted tenders must provide depending on the characteristics and the subject matter of the contract in question and to establish a minimum threshold which those tenders must comply with from a technical point of view. To that end, as was argued by the Commission in its written observations, Article 67 of Directive 2014/24 does not preclude the possibility, at the contract award stage, of excluding, as a first step, submitted tenders which do not reach a predetermined minimum score threshold as regards the technical evaluation. In that regard, it appears that a tender which does not reach such a threshold does not correspond, in principle, to the needs of the contracting authority and must not be taken into account for the determination of the most economically advantageous tender. The contracting authority is thus not required, in such a case, to determine whether the price of such a tender is lower than the prices of tenders not eliminated which reach that threshold and thus correspond to the needs of the contracting authority.
In that context, it should also be specified that if the contract is awarded after the technical evaluation, the contracting authority will necessarily have to take account of the price of tenders which reach the minimum threshold from a technical point of view.
Furthermore, the Court concluded that these technical screening procedures were permissible even if it resulted in only one eligible bidder proceeding to the price evaluation stage.
As this case illustrates, purchasing institutions are permitted considerable latitude in how they structure their evaluation criteria and procedures, providing that they are not adopting unnecessarily restrictive practices and are conducting their evaluations in a fair and transparent manner.
