When the EU public procurement framework was revised five years ago, it brought good news for economic operators that no longer had the right to participate in public tenders due to past misconduct. Since then, these economic operators have been given the opportunity to take part in a tender procedure, provided they took appropriate measures to remedy the past misconduct that led to their exclusion and to prove their reliability, also known as self-cleaning actions.

The new exclusion grounds introduced back then sprang from the European legislator's attempt to clarify and qualify the previously existing exclusion grounds and to codify the European case law targeting their application. The previous exclusion ground to be subjected to noteworthy debate regarding the scope of its application was one referring to severe professional misconduct, defined in the famous Forposta case as covering "all wrongful acts which have an impact on the professional credibility of the economic operator".

Accordingly, the 2014 procurement rules mentioned the following new exclusion grounds: distortion of competition, significant or persistent deficiencies in the performance of previous public contracts, prior involvement of a bidder in the procurement preparation process and undue influence on the contracting authority. All of these are considered forms of severe professional misconduct.

A major innovation of the current procurement rules was the inclusion of provisions on "self-cleaning". These put an end to the protracted debates among practitioners and academics on whether self-cleaning was allowed as a defence against exclusion from public tenders, given the lack of guidance under the 2004 procurement regime.

How does self-cleaning work?

The self-cleaning provisions are applicable to both mandatory and discretionary exclusion grounds. They translate into the contracting authority's obligation to allow economic operators to provide evidence demonstrating their reliability, despite the existence of an exclusion ground.

What can such evidence include? Once again, the 2014 procurement rules shed light in this respect:

  • The payment of compensation by the economic operators for the harm caused;
  • Active cooperation with the investigating authorities and the contacting authority to explain the context of the misconduct;
  • Proper actions undertaken at the company level to prevent the occurrence of similar situations (e.g. personnel restructuring, implementation of internal/external auditing schemes, improved codes of conduct / compliance systems, whistleblower channels and training for employees to raise awareness of legal rules).

Notably, the measures taken also depend on the gravity of the misconduct. Internal measures may suffice in case of minor acts, but external actors for the delivery of dedicated trainings or the conduct of audits may be necessary in case of more serious wrongdoings.

A combination of the two categories of actions, coupled with active cooperation with the authorities, could serve as a safeguard for appropriate measures.

What is considered sufficient evidence of self-cleaning?

Taking the analysis one step further, the economic operator will be allowed to participate in the tender procedure only if the evidence provided is considered sufficient to prove its reliability.

The power to conduct this assessment is vested with the contracting authorities, which will decide on the merits of the evidence by considering the gravity of the misconduct as well as its circumstances. Guidance on how the public authorities should conduct their assessment is not available under the law. While the European Court of Justice has recently issued some decisions which could serve as guidance in this respect, contracting authorities still enjoy huge discretion in this matter.

Solutions for economic operators

Some scholars argue for the appointment of central bodies in each Member State charged with investigating the quality and sufficiency of the self-cleaning actions. In the absence of such authorities, economic operators unhappy with a decision by a contracting authority to reject their participation in a public tender despite their endeavours to prove their reliability will, for the time being, be able to challenge such decisions the classical way, in line with applicable legal provisions governing remedies in public procurement. In Romania, for instance, this means filing a complaint with either the National Council for Solving Complaints or with the competent court of law, subject to the payment of a bail.

It is also important to note that, when applicable, the duration of the exclusion is not unlimited and should end after no more than five years in case of mandatory exclusion grounds, and three years in case of discretionary exclusion grounds. However, the periods are calculated from the date of the final conviction for the misconduct, not from the date the misconduct occurred.

Use of self-cleaning in practice

Despite legal provisions allowing for and encouraging self-cleaning measures for a few years now, their practical use in Romania remains undocumented and best practices or key lessons cannot yet be derived. Given the scarcity of national case law on this matter, it is also rather unclear how contracting authorities would react to self-cleaning endeavours by economic operators, what would be considered as irrefutable proof of cleaning or what the chances of success would be. While it is true that case-by-case assessment is required, recourse to European case law remains the benchmark for guidance on how self-cleaning actions could be implemented, at least for the time being.