Brussels, 09/05/2014 (Agence Europe) - “Horizontal internal operations” - in this case, a supply contract between two public entities (the TUUH, the Polytechnic University of Hamburg, and HIS, a public management software company) with no control links to each other, but both subject to the control of the same public body (the city of Hamburg) and carrying out most of their activities on behalf of this body - continues to be subject to the tendering procedures laid down by the public procurement directive (2004/18/EC).
This was the decision returned by the Court of Justice of the EU (Case C-15/13), overturning the verdict of Advocate General Paolo Mengozzi in his conclusions on the case (see EUROPE 11004). He felt that the direct allocation (without applying the tendering procedures laid down by the directive) by TUUH to HIS of a contract for the supply of an IT management system for higher education could constitute a form of “cooperation between two public entities” for the execution of a task in the public interest, and could therefore be granted a derogation to the obligation to abide by the public procurement tendering procedures laid down by the directive. Mengozzi took the view that the work carried out by HIS as part of this contract (helping higher education establishments to execute their higher education missions) is specifically complementary to the research and teaching mission devolved upon TUHH.
The Court did not see things this way. In its judgment, it concluded that the contract in question should have been subject to the tendering rules in the directive, in view of the fact that the cooperation in place between TUUH and HIS is not designed to fulfil a common public service mission in the sense of the case-law (Judgments C-480-06 and C-159/11) and that it could consequently not be granted the exception on the grounds of “cooperation between two public enterprises”.
It also ruled out the possibility of applying its case-law to this case (a “horizontal internal operation”) exempting “vertical internal operations” (contracts allocated directly by the awarder with “directive and exclusive control over the tenderer which carries out most of its activities with it”) from the rules on public procurement tendering, as: - there is no control relationship between TUUH and HIS, as the former does not have any direct stakeholding in the latter; - the city of Hamburg's control over TUUH extends only to its acquisition activities and not the fields of teaching and research, in which TUUH is largely autonomous. (FG)