Public Procurement

DESIGN CONTESTS

In Case C‑888/24, an unsuccessful participant in a design contest run by Metro do Porto for a bridge design challenged its exclusion from the shortlist, arguing before the Portuguese Supreme Administrative Court that it should have had a right to be heard by the contest jury before the jury finalised its ranking of the submitted projects.

The referring court asked the CJEU whether Article 82(4) of Directive 2014/24 (which requires anonymity of candidates until the jury reaches its decision), read together with the jury’s limited power under Article 82(5) and (6) to seek clarification from candidates, and with Article 80(1)’s reference to the Directive’s Title I principles, prevents a mandatory prior hearing of candidates as a step in the procedure.

The CJEU held that Articles 80 and 82 prevent participants in a design contest from being able to require that they be heard by the jury before it finalises its ranking of the submitted plans or projects. It reasoned that no provision in the Directive’s design-contest rules confers a right to be heard on candidates. Recognising such a right would be incompatible with the requirement to observe transparency, equal treatment and, critically, the anonymity of candidates until the jury’s decision is made. The Court further found that candidates’ right to be heard is given practical effect only through the opportunity to submit a plan that meets the contracting authority’s stated expectations, not through a right to comment on the jury’s assessment before the final ranking is fixed.

DIRECT AWARDS UNDER Regulation (EC) 1370/2007 on public passenger transport services by rail and by road

In Case C‑856/24, a dispute arose after Italy's competent transport authority directly awarded a local bus network to its internal operator without a public tender, prompting the competing operator to challenge the award. The challenge centred on the argument that no “operating risk” had been transferred to the internal operator, and that this meant the direct award fell outside Article 5(2) of Regulation (EC) 1370/2007 on public passenger transport services by rail and by road (the “Regulation”), which governs the award of public service contracts. On that basis, the challenger argued, the enhanced reasoning requirements under the Italian Public Procurement Code (which require proof of market failure) should apply instead.

Following the competing operator’s appeal, the national court referred two questions to the CJEU. The first question asked whether Article 5(1) and (2) of the Regulation requires a transfer of operating risk before its rules on direct awards to internal operators can apply. The CJEU held that they do: for a competent authority to award a contract directly to an internal operator under Article 5 of the Regulation, the award must involve a transfer of operating risk to that operator. The Court explained that this requirement is not disapplied merely because the competent authority exercises “control similar to that exercised over its own departments” over the internal operator. Since the operator remains a “legally distinct entity”, a transfer of operating risk is still possible between the two, notwithstanding that one controls the other.

The second question was whether the Regulation (which permits direct awards to internal operators “unless prohibited by national law”) prevents national legislation, such as the provision in the Italian Public Procurement Code, that does not prohibit direct awards outright but restricts them to cases of proven market failure. The CJEU found that Articles 5(1) and (2) do not prevent such legislation. Member States may require the competent authority to demonstrate, before making a direct award of a public service contract to an internal operator: (i) that a market failure exists which the proposed form of award would remedy, and (ii) that the direct award would produce advantages for society at large that are specific to that method of award.

Foreign Subsidies Regulation

The Foreign Subsidies Regulation aims to prevent distortions in the internal market including in the context of public procurement procedures. It requires companies to notify contracting authorities/entities when the estimated value of the contract exceeds €250 million, and when the company has been granted at least €4 million in foreign financial contributions from a third country in the three years before the notification.

The European Commission has completed a first review of the Regulation, finding it fit for purpose but proposing targeted changes (including simplifications and clarifications in the forms used for notifications and declarations, as well as refinement around disclosures and confidential information). These are expected in 2027. A Q&A document lists the various guidance the Commission has published. Further information is available here: Review finds Foreign Subsidies Regulation fit for purpose.