Major changes in the exclusion system of tenderers from procurement procedures: the butterfly effect of recent developments in the case-law of the Court of Justice of the European Union

In a nutshell, the amendments pursue two objectives:

• On the one hand, they aim at clarifying the procedure allowing the tenderer, falling within the scope of a ground for exclusion, to avoid being excluded from a procurement procedure (so-called self-cleaning procedure) to implement the judgment of Court of Justice of the European Union n°C-387/19 of 14 January 2021, RTS infra BVBA, Aannemingsbedrijf Norré-Behaegel, BVBA c. Vlaams Gewest, EU:C:2021:13;
• On the other hand, they revise the starting point of the exclusion period in order to take into account the judgment of the Court of Justice of the European Union C-124/17 of 24 October 2018, Vossloh Laeis, EU:C:2018:855).

1. Clarification of the self-cleaning procedure

Under Belgian Law, a distinction exists between mandatory and optional grounds for exclusion. In principle, a contracting authority must exclude a tenderer who falls under a mandatory exclusion ground (e.g. conviction of a criminal offence for participation in a criminal organisation, corruption or fraud, etc.). On the other hand, the contracting authority may exclude a tenderer who falls under an optional exclusion ground if it explicitly provides it in the procurement documents.

In both cases, however, a tenderer who finds himself in one of the situations of exclusion may provide evidence showing that it has taken corrective measures to avoid the repetition of the excluding situation. In particular, the tenderer must demonstrate that:

• it has paid or undertaken to pay compensation for any damage caused by the offence or misconduct;
• it has fully clarified the facts and circumstances by actively collaborating with the investigating authorities;
• it has taken concrete technical, organisational and personnel measures to prevent a further offence or misconduct.

Prior to the entry into force of the Belgian Law of 18 May 2022, a tenderer affected by a ground for exclusion had to report it in its initial offer. More concretely, it had to first state, in the offer, that it fell within the scope of a ground for exclusion and then prove on its own initiative that it had complied with the conditions for avoiding exclusion.

The Belgian Law of 18 May 2022 fundamentally changes this system. In particular, it makes the following fundamental distinction:

• For mandatory grounds for exclusion, tenderers must be proactive. They must state, in their offer (and in the DUME) that they fall within the scope of a ground for exclusion and detail the corrective measures taken.
  The Law specifies that the contracting authority must indicate in the contract documents that this obligation applies. However, the tenderer must report on its own initiative the corrective measures it has adopted as required by the Law. The mere fact that the contracting authority has not specified this in the procurement documents does not relieve the tenderers of this obligation. Accordingly, the tenderer must be proactive in its offer.
• As far as optional exclusion grounds, in case the contracting authority considers that a tenderer falls within the scope of one of the exclusion grounds, it must invite during the procurement procedure the tenderer to submit corrective measures. This also applies to a tenderer who has not made reference to the remedies in its DUME (required in procedures above the European thresholds). As a matter of principle, the tenderer may therefore retain a reactive approach and wait for a question from the contracting authority.
  However, the contracting authority may require candidates or tenderers to be proactive and present the corrective measures in their offer. The procurement documents must however be very specific, in the sense that they must identify the optional grounds for exclusion for which the tenderers or candidates are required to act proactively by reporting their exclusion situation and detailing the corrective measures taken.

2. Duration of exclusion for some optional grounds for exclusion

The Belgian Law provides that exclusions from participation in public contracts apply only for a period of three years from the date of the event concerned or, in the case of a continuing infringement, from the end of the infringement.

It specifies that, for certain grounds for optional exclusion which have been sanctioned by an administrative or judicial decision taken in the context of a procedure governed by Union or national law, the three-year period must however be calculated from the date of that decision. This new rule is only applicable to a limited number of exclusion grounds, including (i) the failure to comply with applicable obligations in the fields of environmental, social and labour law; (ii) serious professional misconduct or (iii) anti-competitive agreements between tenderers.

However, the contracting authority may take an exclusion decision before the administrative or judicial decision is taken, provided that all the conditions are met.

The second aspect will raise many questions in practice. Indeed, at the level of the European institutions, the possibility for an institution to take an exclusion decision before an administrative or judicial decision is strictly framed by the Financial Regulation[1], and must be based on a preliminary classification in law of a conduct done by a Panel[2]. This option is also subject to a specific adversarial procedure allowing the tenderer to challenge the panel's assessment and avoid exclusion. In the system set up in Belgium, there remain uncertainties both as to the elements that the contracting authority may take into account to exclude the tenderer and as to the procedure to be followed in this particular case. It is therefore possible that the Belgian legislator will have to clarify the latter point. Pending these clarifications, and as far as the anti-competitive agreements, one may want to consider the Commission Notice of 18 March 2021[3], which provides some guidelines to contracting authorities to assess the existence of the ground for exclusion and to appreciate the sanction to be applicable.

[1] Article 136(2) of the Regulation 2018/1046 of 18 July 2018 on the financial rules applicable to the general budget of the Union.

[2] The Panel is composed of a standing high-level independent chair appointed by the Commission, two permanent representatives of the Commission as the owner of the early-detection and exclusion system, who shall express a joint position; and one representative of the requesting contracting authority.

[3] https://eur-lex.europa.eu/legal-content/EN/TXT/PDF/?uri=CELEX:52021XC0318(01)&from=EN