A. Irregularities: Exclusion

1.	Can candidates, tenderers or applicants be excluded from the participation in call for tenders or call for proposals financed by the EU general budget?

On the basis of Articles 96(1) lit. b, 114(4) Financial Regulation (FR) the Contracting Authority can exclude candidates, tenderers or applicants, who were declared in serious breach of contract for failure to comply with their contractual obligations, from participation in future public procurement or grant award procedures. 

The various reasons are mentioned in Articles 93(1) FR to which Article 114(3) FR is referring to.

In addition, for a specific ongoing award procedure, a contract may not be awarded to a company which is subject to a conflict of interest or which fails to provide the required information during that specific award procedure (Art 94 and 114 FR).

Article 93(1) FR contains the list of cases where candidates, tenderers or applicants should be obligatory excluded. Amongst these cases, one should pay particular attention to those of “grave professional misconduct” and “serious breach of contract”, cf. Article 93(1) lit. (c) and Articles 93(1) lit. (f), 96(1) lit. (b) FR.  While for the other cases of Article 93(1) an immediate exclusion may be decided, for cases provided for under letters (c) and (f) in connection with 96(1)(b) FR these need to be certified as such through a formalised procedure where the candidate, tenderer or applicant is declared to be in serious breach of contract after having been given the opportunity to present his views in a so-called adversarial procedure. These proceedings are to be launched at the level of the Authorising Officer by delegation. The exclusion decision according to Article 96 (1) lit (b) FR is taken by the College.

Once excluded, the candidates, tenderers and applicants who are in one of the situations described in article 93(1) FR, are flagged in the Early Warning System (EWS) under level W5.

The authorising officer responsible has to check the EWS when assessing exclusion criteria in any procurement or grant award procedure and before entering any individual budgetary commitment.

Cf. Articles 93, 96 and 114 of the Financial Regulation, Articles 133 and 133 bis of Implementing Rules and Commission Decision of 3 February 2004 on the Early Warning System (C(2004) 193/3).

B. Litigation: Subcontract

2.	What is the Contracting Authority’s role in case of a dispute between the contractor and one of its subcontractors?

The Contracting Authority has no contractual relations with the subcontractor(s) or the experts to whom the Contractor has entrusted the performance of a part of the assignment.  Therefore, the Contracting Authority is not responsible for the rights and obligations which arise out of these subcontracts.  The Contracting Authority fulfils its contractual obligations towards the Contractor through its payments to the Contractor for the services performed.

The Contracting Authority is in no position to assess the claims made in disputes between the Contractor and one of his subcontractors. Consequently, the Contracting Authority is not party to such disputes either. There is no difference when the European Commission is the Contracting Authority or acts merely as donor for decentralised EC-financed or EDF contracts.