Obligation of the contracting authority to substantiate the grounds for exclusion from the procedure

According to the prevailing case law, when the contracting authority applies the sanction of excluding a supplier from a tender procedure pursuant to Article 109(1) of the Public Procurement Law (PPL) during the procurement process, it is obliged to prove that all the conditions justifying such exclusion have been met. The above provision reflects the principle of onus probandi deriving from Article 6 of the Civil Code.

If the contracting authority has provided for a particular ground for exclusion in the contract notice or the contract documents, the fulfilment of the conditions listed in the provision obliges the contracting authority to apply the exclusion sanction against the contractor. However, because of the burden of proof on the contracting authority, the contracting authority may not rely solely on its suspicions or unsubstantiated information when excluding a contractor. According to established doctrine, any decision by a contracting authority to apply an exclusion sanction must be supported by evidence and the contracting authority should give precise reasons for the steps it has taken.

Below is an overview of the case law on the contracting authority’s obligation to prove that the precondition for exclusion has been met.

• KIO judgment of 23.02.2023, ref. KIO 287/23

“On the other hand, contrary to what the appellant claims, the burden of proof of a culpable and serious breach of professional obligations lies with the contracting authority and not with the contractor. And on this point the doctrine is consistent.”

• KIO judgment of 31.03.2023, ref. KIO 719/23

“The contracting authority must prove that the termination of the contract is due to the non-performance or improper performance of the public contract by the contractor. This means that the contracting authority must prove what the contractor has specifically failed to do or what obligation under the earlier contract it has failed to fulfil.”

• KIO judgment of 20.04.2023, ref. KIO 974/23

“The Chamber noted at the outset that the burden of proving the disputed facts rested on the contracting authority, as the party which derived the legal effect from those facts, in the form of the need to reject the appellant’s tender as being subject to exclusion from the public procurement procedure, in accordance with Article 6 of the Civil Code in conjunction with Article 8(1) of the PPL. It should also be recalled that, in accordance with the provision of Article 534(1) of the PPL, the parties and participants in appeal proceedings are obliged to produce evidence to prove the facts from which they derive legal effects.”

• KIO judgment of 24.07.2023, KIO 2010/23

“The grounds for exclusion cannot be presumed, all the more so as they have significant consequences for the contractor, since they refer to a period which may be one or two years. If the contracting authority had intended to exclude the contractor also on the basis of Article 109(1)(8) of the Act, it would have been necessary to point out that the information found to be untrue was additional in the sense that the contractor had also demonstrated other experience, which was not disputed during the tender procedure. The contracting authority merely signalled that the statements also made in the list of persons confirming the fulfilment of the condition of participation in the procedure were of importance for the decisions taken in the procedure, without clearly prejudging that issue by indicating what that influence consisted of and, in particular, how it was relevant for the assessment of the fulfilment of the condition of participation in the procedure.”

• KIO judgment of 21.11.2023, KIO 3293/23

“Therefore, when excluding a contractor, the contracting authority may not rely solely on the fact that a previous contract concluded with the contractor has been terminated. The contracting authority must also prove that the termination of the contract (or the award of damages) was due to the non-performance or improper performance of the contract by the contractor. This means that the contracting authority must show what specifically the contractor has failed to do or what obligation under the earlier contract it has failed to perform.”

In summary, it should be noted that the contracting authority’s decision to exclude should be taken only after it has gathered all the material confirming the existence of grounds for excluding a particular contractor. Otherwise, if the contracting authority excludes the contractor without having evidence to support its action, even assuming that a basis for exclusion actually existed, the excluded contractor may successfully seek clarification of these circumstances by way of an appeal procedure.

Such measures will help to eliminate cases where contracting authorities base their exclusion decisions on a supposition of grounds for exclusion.