In a recent Court of Justice case the North Transdanubia Environmental Protection and Water Management Directorate (the “Contracting Authority”) had launched a restricted procedure for awarding a public contract for transport infrastructure works worth approximately €23m.

At pre qualification stage the Contracting Authority required that all candidates show that there was no negative profit & loss item on their respective balance sheets for the last three completed financial years.

The claimant argued that this requirement was indirectly discriminatory because it disadvantaged candidates who were unable to fulfil it because they were subject to different accounting legislation in different member states.

The Court said that Article 47(1)(b)* of the Pubic Sector Directive should be interpreted to mean that a contracting authority may require a minimum level of economic and financial standing by reference to aspects of its balance sheet, as long as those aspects provide information the standing of an economic operator and that the threshold fixed is relevant to the size of the contract concerned.

Any financial thresholds should be designed to show the existence of a sufficient economic and financial basis for the performance the particular contract without going beyond what is reasonably necessary.

The requirement of a minimum level of economic and financial standing cannot be disregarded only because it relates to an aspect of the balance sheet regarding which there may be differences between the legislations of the different Member States.

* The equivalent provisions in the Public Contracts Regulations are in Regulation 24.

The case is Észak-dunántúli Környezetvédelmi és Vízügyi Igazgatóság v Hochtief Construction AG Magyarországi Fióktelepe and can be found here.