Update on contracting authorities co-operating together
An Advocate General’s opinion in ISE v Stadt Koln Case C-796/18 has provided guidance on the circumstances in which contracting authorities can co-operate with other contracting authorities without needing to procure the arrangement.
Article 12(4) of Directive 2014/24/EU, from which the UK’s Public Contracts Regulations 2015 derive, provides that contracts for the joint provision of public services between contracting authorities are not subject to procurement provided that: (1) they are concluded exclusively between the contracting authorities with the aim of ensuring that public services they have to perform are provided with a view of achieving objectives they have in common; (2) that the implementation of that co-operation is governed solely by considerations relating to the public interest; and (3) that the participating contracting authorities perform on the open market less than 20% of the activities concerned by the co-operation.
The dispute arose from a situation whereby Land Berlin transferred to the City of Cologne software for managing interventions by its fire service, which was accompanied by a co-operation agreement. This transfer was free of charge and for an indefinite period and the co-operation between the contracting authorities was in relation to the computerised management of the incident control centre. ISE, which develops and sells software, applied to the Rhineland Public Procurement Board for a review of the co-operation agreement, claiming it should be terminated on the basis that it was an above threshold public supply contract which should have been procured. The Rhineland Public Procurement Board rejected this argument and ISE appealed to the Higher Regional Court, who asked for a preliminary ruling from the Advocate General.
The Advocate General stated that:
1) The transfer of software agreed in writing between two contracting authorities and linked to a co-operation agreement was not a “public contract” but rather it constituted a “contract” within the meaning of Article 12(4) of Directive 2014/24/EU, despite the apparent lack of pecuniary interest; and
2) Co-operation between contracting authorities does not necessarily have to relate to the actual public services that have to be provided to citizens. Therefore, it did not matter that the public fire service was not be delivered jointly by the two contracting authorities. Co-operation which relates to activities in support of the public service is sufficient where the ancillary activity is of such fundamental importance to the public service that the public service could not be performed without it.
What does this mean for contracting authorities looking to co-operate with other contracting authorities in the UK?
Whilst the UK has now left the EU, it remains subject to EU law (including EU case law) during the transition period and this decision will remain informative for both our domestic interpretation of Article 12(4) of Directive 2014/24/EU and the provisions of Regulation 12(7) of the Public Contracts Regulations 2015.