ECJ puts brakes on public sector collaboration arrangements
In 2009, the European Court of Justice held (in the "Hamburg Waste" case, case no C-480/06) that cooperation between local authorities with the aim of ensuring that a public task that they all have to perform is carried out, is not subject to the public procurement regime provided that no private services provider is placed in a position of advantage.
In that case, the local authorities had made mutual commitments to each other in order to fulfil their responsibilities in relation to waste disposal.
However, the scope of this exception has been confined by the ECJ's recent decision in Piepenbrock Dienstleistungen GmbH -v- Kreis Duren (case no. C386/ 11). In that case, one authority transferred the responsibility for cleaning its buildings to another authority and agreed to pay compensation for the costs on a non-profit basis. The ECJ held that this was a public contract which should have been tendered in accordance with the public procurement regime. The main reasons for this decision were that:
- there was no "co-operation" between the authorities in the sense of mutually performing their public tasks; it simply amounted to an arrangement by one authority to pay the other; and
- the second authority proposed to use its existing cleaning contractor to service the requirement, therefore a private contractor would receive an advantage as against its competitors.
Therefore, collaborative arrangements between authorities which do not involve genuine co-operation, but just payment for services (even if this is on a not for profit basis), will not be exempt from the procurement regime, particularly if, as a result of such arrangements, an advantage is conferred on a private contractor.