Authors: Ondrej Čurilla, Adéla Havlová
The Court of Justice of the EU published a judgment that may be relevant for the framework agreement awarding practice. There is an established interpretation practice in the Czech Republic, and also established decision-making practice by the Office for the Protection of Competition, according to which a contracting authority is obliged to determine an envisaged value but is not required to publish it or specify it in the procurement documentation (i.e. the contracting authority may keep it as its internal information).
Moreover, the provisions of the Public Procurement Act (PPA) have not implied that when awarding the framework agreement (FA), the contracting authority should specify and notify the suppliers of the maximum quantity or value that it could purchase under the framework agreement.
The Court of Justice of the EU does not agree with this approach, which has also become an established practice in other states.
In case C-23/20, Simonsen & Weel A/S dated 17 June 2021, the CJEU held that the Directive (2014/24/EU on public procurement) had to be interpreted in such a manner that in the contract notice, the contracting authority must specify the envisaged quantity or value as well as the maximum quantity or value of products that are to be supplied under the framework agreement.
Even though the decision largely contradicts the substance of framework agreements (the contracting authorities are unable to define the required quantity in advance, which is why they use FAs to ensure flexibility), it is relevant for the interpretation of Czech regulations and we recommend adhering to it in future procurements.
To avoid facing issues in the future, contracting authorities should, in our opinion, observe the following practical approach:
We recommendspecifying and publishing the envisaged as well maximum unsurmountable value / quantity that can be purchased under the framework agreement. The envisaged value can be set at the upper limit of the estimated scope of supply. The maximum value or quantity may exceed the envisaged value by up to ten or more percent depending on the circumstances. The directive itself lays down 50% of the value of the original contract as the limit for insignificant changes, which could be a justifiable scope.
We recommend specifying the information on the envisaged and maximum value (quantity) in the contract notice but not necessarily laying it down as a binding condition (subsequent) in the framework agreement.
You can reserve an option or an amendment to the FA pursuant to Section 100(3) or Section 100(1) of the PPA, respectively, in the FA. According to the express wording of the PPA, the rules applicable to permitted amendments to contracts under Section 222 of the PPA can also be analogically applied to framework agreements.
Where possible, we recommend adding the information on the envisaged and maximum value of the framework agreement into the procurement documentation. This can be done by means of an explanation of the procurement documentation under Section 98 of the PPA and, in the event of the publication of the public contract in the Journal of Public Contracts, publishing this information also by means of the corrective form F14.
Where the contracting authority specified the envisaged value or another figure in the procurement documentation implying the estimated scope of supply, we recommend not exceeding this limit while performing the FA. These steps can also be recommended where the envisaged value has not been disclosed to the contractors. It will be possible to exceed this limit through possible options, or amendments reserved in the documentation or alterations in the contractual obligation under reasonable application of Section 222 of the PPA.
Should you need a more detailed consultation or legal analysis regarding this matter, please feel free to contact our team at any time. You can also contact us should you have any other questions or to request a legal analysis for your specific situation.
