Blog on public procurement law by Kerstin Holzinger

Kerstin Holzinger gave her view on the recent ECJ decision “Gate 2” in the procurement law blog auftrag.at.

The ruling of the ECJ (C-537/19) deals with the question of whether the city of Vienna violated the applicable EU public procurement law when Wiener Wohnen signed a long-term lease contract for the Gate 2 office building.

The European Commission had previously initiated infringement proceedings against Austria, in which it accused Austria of having carried out a direct award without a competitive process and publication.

According to the commission, the building was built only after Wiener Wohnen had signed the lease contract and was therefore designed in such a way that it met the needs of Wiener Wohnen.

Put simply, Wiener Wohnen reportedly signed the lease contract and then had the office building built according to their ideas and wishes. Furthermore, Wiener Wohnen also supervised its construction. Accordingly, Wiener Wohnen would have been the builder, which leads to the fact that a construction contract is subject to tendering. However, Wiener Wohnen reportedly concluded the contract with the landowner without prior tendering and without public announcement. In doing so, Wiener Wohnen is said to have violated EU public procurement law. That is the accusation of the European Commission.

By contrast, the ECJ ruled that the Republic of Austria (or the City of Vienna) did not violate the procurement directive and rejected the infringement proceedings against Austria carried out by the European Commission. The reason given was that the commission had not proven that Wiener Wohnen had a decisive influence on the planning of the office building.

Assessment by Kerstin Holzinger

Kerstin Holzinger considers the decision of the ECJ to be very remarkable, as it provides very precise guidelines for when a “decisive influence” of a contracting authority on the construction of a building is to be assumed.

Concerning the allegations of the European Commission, the ECJ stated that the construction of the office building had been planned as an option even before Wiener Wohnen was involved.

On the basis of this decision, the ECJ has given very precise instructions on what may be agreed upon between a private entrepreneur as a tenant and a contracting authority in a lease contract so that a notifiable project does not arise when the contract is concluded.

“In this respect, the present ruling undoubtedly brings legal security to a certain extent for the frequently asked question of how far contracting authorities are allowed to influence the (re-)design of the rental property in lease contracts without coming into conflict with public procurement law,” says Holzinger.

You can read an abstract of the ECJ ruling (Rs C-537/19) as well as Ms. Kerstin Holzinger’s assessment here.

 

1. May 2021

 

---

Go back to News