ECJ stresses flexibility for subcontracting and teaming in the 2014 EU Public Procurement Package (C-298/15)

In its Judgment of 5 April 2017 in Borta, C-298/15, EU:C:2017:266, the European Court of Justice (ECJ) largely followed the Opinion of AG Sharpston (commented here) and ruled on the incompatibility with EU law of a national rule that partially prohibited subcontracting by establishing that, where subcontractors are relied on for the performance of a public works contract, the tenderer is required to perform itself the main works, as defined by the contracting entity.

The ECJ also established that, even if there can be good reasons to ensure a correspondence between the parts of the works to be carried out by the members of a joint bid and their individual professional, technical and economic standing, EU procurement law is not compatible with a rule that imposes an arithmetic correspondence between the contribution of each of the tenderers and the share of the works that that tenderer undertakes to perform if the contract is awarded.

This is an interesting Judgment because it assesses issues around subcontracting and reliance on third party capacities in the area of utilities procurement and by reference to general free movement provisions in the TFEU. In my view, the line of reasoning followed by the ECJ in Borta offers good indications of the way in which subcontracting and teaming provisions in the 2014 EU Public Procurement Package will be interpreted.

The following is a summary of the reasons provided by the ECJ to determine the incompatibility with EU law of rules prohibiting subcontracting the main works involved in any project (a), as well as those requiring arithmetic correspondence between share of professional, technical (and economic) capacity and share of works to be carried out by members of a joint tender (b). A few common trends and future challenges are identified by way of conclusion (c).

It is worth noting that the ECJ also assessed issues concerning the modification of the tender documents after their publication in the light of the fundamental rules and general principles of the TFEU, among which are the principles of non-discrimination and equal treatment and the obligation of transparency which derive, in particular, from Articles 49 and 56 TFEU (see paras 62-77). However, those issues are not discussed in this post.

(a) Flexibility for subcontracting

The ECJ assessed the compatibility with Arts 49 and 56 TFEU of a national procurement rule prohibiting the subcontracting of the 'main works' in a project, as defined by the contracting authority. The ECJ determined that such a measure " is liable to prohibit, impede or render less attractive the participation of economic operators established in other Member States in the award procedure or the performance of a public contract..., since it prevents them either from subcontracting to third parties all or part of the works identified as the ‘main works’ by the contracting entity, or from proposing their services as subcontractors for that part of the works" (para 49).

Once the restriction on free movement was established, the ECJ proceeded to assess its possible justification. To that end, the ECJ considered the reasons given for the adoption of this rule, which mainly intended to "ensure that the works are properly executed" and was, more specifically, aimed at "preventing a current practice which consists in a tenderer claiming to have professional capacities solely in order to win the contract concerned, not with the intention of performing the works itself, but of entrusting all or most of those works to subcontractors, a practice which affects the quality of the works and their proper performance. Second, by limiting the reliance on subcontractors to works identified as ‘subsidiary’, [the rule aimed] to encourage the participation of small and medium-sized undertakings in public contracts as joint-tenderers in a group of economic operators rather than as subcontractors" (para 52). The ECJ dealt with these are three grounds for justification.

  1. The ECJ accepted that aiming to ensure the proper execution of the works is a legitimate goal, but considered the measure disproportionate. Both because it "applies whatever the economic sector concerned by the contract at issue, the nature of the works and the qualifications of the subcontractors. Furthermore, such a general prohibition does not allow for any assessment on a case-by-case basis by that entity" (para 55); and because it prohibits subcontracting "in situations in which the contracting entity is able to verify the capacities of the subcontractors concerned and to take the view, after that verification, that such a prohibition is unnecessary for the proper execution of the works having regard, in particular, to the nature of the tasks that the tenderer plans to delegate to those subcontractors" (para 56). The existence of less restrictive measures also contributed to this finding of disproportion (para 57).
  2. The ECJ did not make an explicit finding on the legitimacy of aiming to prevent 'front tendering' and subsequent subcontracting of most of the contract (which can be assumed to be a legitimate goal), but established that the measure is not suited and/or disproportionate to that goal because "it prohibits the tenderer from delegating the performance of all the works identified as the ‘main’ works by the contracting entity, including the tasks which represent, proportionally, only a small part of those works. Therefore, that provision goes beyond what is necessary to prevent the abovementioned practice" (para 58).

  3. The ECJ finally accepted that, as a matter of principle, it is conceivable that "the encouragement of small and medium-sized undertakings to participate in a contract as tenderers rather than subcontractors" can, "in certain circumstances and under certain conditions, constitute a legitimate objective" (para 59). However, it found no evidence that this was the case in the specific situation.

Therefore, having rejected all possible justifications, the ECJ determined that "Articles 49 and 56 TFEU must be interpreted as precluding a provision of national law ... which provides that, where subcontractors are relied on for the performance of a public works contract, the tenderer is required to carry out the main works itself, as defined by the contracting entity" (para 61).

(b) Flexibility for (asymmetrical) joint tendering

The ECJ assessed a second substantive issue concerning joint tendering and, in particular, the imposition of the requirement that "in circumstances in which a common tender is submitted by several tenderers, ... the contribution of each of them in order to satisfy the requirements applicable with regard to professional capacities corresponds proportionally to the share of the works they will actually carry out if the relevant contract is awarded to them" (para 78).

It is interesting to note that, despite the inapplicability of the 2004 Utilities Directive to the award of the contract (which was below thresholds), the ECJ assessed the compatibility of such requirements with the Directive because the domestic law had made "those provisions have ... applicable ... in a direct and unconditional way" and did that "in order to ensure that internal situations and situations governed by EU law are treated in the same way" (see paras 33-34). Therefore, the ECJ's analysis was carried out "in the light of Article 54(6) of Directive 2004/17" (para 84) and is thus relevant for the future interpretation of Art 78 of Directive 2014/25--as well as, I would argue, Art 58(4) of Directive 2014/24.

I also find it interesting to note that the ECJ sets out the general framework for assessment by reference to the recent Judgment in PARTNER Apelski Dariusz, C-324/14, EU:C:2016:214 (for discussion, see here) and in the following terms (paras 85-86): 

  • EU public procurement law "recognises the right of every economic operator, where the contracting entity lays down a qualitative selection criterion consisting of requirements relating to technical or professional abilities, to rely for a particular contract upon the capacities of other entities, regardless of the nature of the links which it has with them, provided that it proves to the contracting authority that it will have at its disposal the resources necessary for the performance of the contract"
  • "that right extends to groups of economic operators submitting a common tender, which may, under the same conditions, rely on the capacities of their participants or of other entities."
  • EU public procurement law "does not preclude the exercise of the right ... from being limited in exceptional circumstances".

The ECJ recognises that restrictions on the possibility to rely on third party capacities could be justified on the need to "avoid the situation in which, in order to win the contract, a tenderer relies on capacities that he does not intend to use or, conversely, that a tenderer may be awarded a contract and perform part of the works without having the capacities and resources necessary for the proper performance of those works" (para 90).

However, , the ECJ ends up concluding that (paras 92-94):

  • the clause that requires "an arithmetic correspondence between the contribution of each of the tenderers concerned to satisfy the requirements applicable with regard to professional capacity and the share of the works that that tenderer undertakes to perform and that it will in fact perform if the contract is awarded", however, "does not take account of the nature of the tasks to be carried out or to the technical capacities specific to each of them" and, consequently, "does not prevent one of the tenderers concerned from carrying out specific tasks for which it does not in fact have the experience or capacities required".
  • Furthermore, if subcontracting of some ('subsidiary') works is possible and the professional capacities of the subcontractors are not verified (which is for the referring court to ascertain), then the requirement "does not guarantee that the tenderers will actually use the capacities that they have declared in the procurement procedure and which were taken into consideration" by the contracting authority; and "it does not prevent works defined as ‘subsidiary’ from being carried out by subcontractors without the professional capacities required".
  • Ultimately, then, the requirement is not appropriate to ensure the attainment of the objectives pursued.

(c) Common trends and future challenges

Taken together with previous case law in the area of exclusion, qualitative selection and subcontracting--such as Ostas celtnieks, Partner Apelski Dariusz and Wrocław — Miasto na prawach powiatu, the Borta Judgment seems to reaffirm an approach whereby the ECJ is pushing against general rules excluding or restricting teaming and subcontracting, as well as aiming to ensure that, where the contracting authority engages in a case-by-case analysis of the economic operators' capabilities, this is guided by a (strict?) proportionality assessment. In general, this should be a welcome (pro-competitive) direction of development of the case law.

However, the evil is in the detail and there are emerging issues that will require further fine tuning, such as:

  • the extent to which the contracting authority can engage in a substantive assessment of the economic operators' teaming or subcontracting arrangements prior to the award of the contract (cf Partner Apelski Dariusz and Ostas celtnieks), as well as the consequences of disputes concerning post-award structuring of their legal or functional relationships; or
  • the technical reasons that can justify a prohibition to subcontract specific parts of the work or service (see Wrocław and Borta, but also Hörmann Reisen), in particular where the economic operators have assumed joint and several liability and/or have furnished extensive insurance to the contracting authority; or 
  • the extent (and practicalities) of the integration of competition law considerations in the assessment of teaming and subcontracting arrangements by the contracting authorities (eg to avoid situations such as those raised by MT Højgaard and Züblin.

Overall, it seems fair to say that the case law and new rules on exclusion, qualitative selection and subcontracting raise significant practical challenges and that contracting authorities will need to treat lightly (and document extensively) the reasons why they create restrictions on teaming or subcontracting, as well as be ready to provide reasons for these decisions with a view of their administrative or judicial review (specially after the Marina del Mediterráneo Judgment).

Some thoughts on recent ECJ case law at ERA's annual conference on European Procurement Law

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One more year, it has been a pleasure to participate in ERA's Annual Conference on European Public Procurement Law, and to exchange views with practitioners and policy-makers about recent developments and future challenges in this important area of EU economic law. It has also been an honour to contribute to the celebrations of ERA's 25 years of good work towards improving our knowledge of EU law.

This year, I was invited to provide some critical remarks on recent case law of the ECJ in some areas of practical relevance and, in particular, on case law concerning:

  1. the rules on subcontracting and teaming or consortium bidding,
  2. the rules on contract modification and termination; and
  3. the scope of the concessions Directive.

My main remarks concentrated on

  1. the difficulties of keeping the right balance between preserving the maximum possible procedural flexibility to ensure participation in tenders by groupings of economic operators (loosely defined) and allowing the contracting authority to scrutinise the technical and economic standing of joint bidders--while ensuring that competition rules are respected and the supreme and directly effective provisions of the TFEU (notably Art 101) are enforced at all levels of procurement activity;
  2. the challenges in adapting a commercially-oriented approach to the adjudication of disputes at execution phase where the risks of discriminatory or anti-competitive procurement are largely absent; and
  3. the limited advances made so far in fine tuning the definition of a concession contract, in particular in cases not involving relatively straightforward instances of improper use of the label 'concession' (such as using it to refer to licences or authorisations), or not involving the need to differentiate the scope of application of the rules in what is now Dir 2014/23 and competing frameworks, such as the Services Directive or the Transport Regulation.

The slides I used appear below. The presentation was recorded and will soon be available (keep an eye on @how2crackanut for details).

ECJ CLARIFIES COORDINATION BETWEEN TRANSPORT AND GENERAL PROCUREMENT RULES, BUT WILL THIS HELP IN FUTURE? (C-292/15)

In its Judgment of 27 October 2016 in Hörmann Reisen, C-292/15, EU:C:2016:817, the European Court of Justice (ECJ) addressed an issue of growing importance regarding subcontracting arrangements in public procurement, as well as contracting authorities' ability not only to monitor them, but also exclude them.

In Hörmann Reisen, the ECJ was required to assess the compatibility with EU law of a requirement that the main contractor performed a major part of a public passenger transport services itself--or, in other words, a limitation on the acceptable volume of subcontracting for the execution of a given public services contract to 30% of its total value. This was challenged both on the grounds that the limitation itself was illegal and that, in any case, a quantitative restriction of subcontracting was not adequate to ensure that the main contractor performed a major part of the services itself.

It is worth stressing that, as a starting point, the analysis of the ECJ was carried out on the basis of the special procurement rules for the transport sector in Regulation 1370/2007/EC, which Art 4(7) establishes that

Tender documents and public service contracts shall indicate, in a transparent manner, whether, and if so to what extent, subcontracting may be considered. If subcontracting takes place, the operator entrusted with the administration and performance of public passenger transport services in accordance with this Regulation shall be required to perform a major part of the public passenger transport services itself.

As Advocate General Sharpston indicated in her Opinion (C-292/15, EU:C:2016:480), this would seem to cover a straightforward (value) limitation of the subcontractable services. However, the case was complicated by the fact that it was for the provision of bus services, to which Reg 1370/2007 does not entirely apply. Under its Article 5(1),

Public service contracts shall be awarded in accordance with the rules laid down in this Regulation. However, service contracts or public service contracts as defined in Directives 2004/17/EC or 2004/18/EC for public passenger transport services by bus or tram shall be awarded in accordance with the procedures provided for under those Directives where such contracts do not take the form of service concessions contracts as defined in those Directives. Where contracts are to be awarded in accordance with Directives 2004/17/EC or 2004/18/EC, the provisions of paragraphs 2 to 6 of this Article shall not apply.

In short, then, contracts for the provision of bus and tram services that do not constitute services concessions are to be awarded in compliance with the general procurement rules. In the Hörmann Reisen case, due to the fact that the tender took place in 2015, it still had to be carried under Directive 2004/18/EC--but the issues raised by the case are relevant because, since 18 April 2016, these contracts must now be awarded under Directive 2014/24/EU (regardless of domestic transposition or lack thereof). It is also important to stress that, a contrario, concessions for the provision of bus and tram services are solely subjected to the rules of Reg 1370/2007 and explicitly excluded from the scope of application of Directive 2014/23/EU (see Art 10(3) thereof).

The first clarification required from the ECJ in the Hörmann Reisen Judgment concerned whether Art 5(1) Reg 1370/2007 excluded the application of Art 4(7) of the same regulation to the award of bus and tram service contracts due to their subjection to Directive 2004/18. In that regard, the ECJ clearly indicated that

41 ... for the purposes of the award of a contract for public passenger transport services by bus ... solely the provisions of Article 5(2) to (6) of Regulation No 1370/2007 are not to be applied, whereas the other provisions of that regulation remain applicable.
42 ... Article 4(7) of Regulation No 1370/2007 applies in the event of the award of a contract for public passenger transport services by bus coming within the scope of Article 5(1) of that regulation (C-292/15, paras 41-42, emphasis added).

That is important because the approach to subcontracting in Reg 1370/2007 and in the general procurement rules was diametrically opposed. While Reg 1370/2007 aims to restrict or even completely exclude the possibility to subcontract, the scant rules in Art 25 Dir 2004/18 were, if anything, facilitative of subcontracting. It must be borne in mind that the ECJ had itself pushed for such facilitation in Siemens and ARGE Telekom (C-314/01, EU:C:2004:159), where it indicated that the general procurement rules did

... not preclude a prohibition or a restriction on the use of subcontracting for the performance of essential parts of the contract precisely in the case where the contracting authority has not been in a position to verify the technical and economic capacities of the subcontractors when examining the tenders ... (C-314/01, para 45).

It, however, declared that a complete ban on subcontracting would not be compatible with the general EU procurement rules inasmuch as it prevented a service provider from relying on the resources of entities or undertakings with which it is directly or indirectly linked; or, in other words, "[a] tenderer claiming to have at its disposal the technical and economic capacities of third parties on which it intends to rely if the contract is awarded to it may be excluded only if it fails to demonstrate that those capacities are in fact available to it" (C-314/01, para 46). Therefore, the prohibition on subcontracting was limited to a prohibition on post-award (unchecked) subcontracting, but did not allow for the exclusion of service providers on the basis that they would not carry out the entirety of the contract themselves.

In Hörmann Reisen, the ECJ saves the open incompatibility of approaches between Reg 1370/2007 and Dir 2004/18 as follows:

46 ... it should be noted that Directive 2004/18 ... is of general application, whereas Regulation No 1370/2007 applies only to public passenger transport services by rail and road.
47      In so far as both Article 4(7) of that regulation and Article 25 of Directive 2004/18 ... contain rules on subcontracting, the view must be taken that the first provision constitutes a special rule with respect to the rules laid down in the second provision, and, as a lex specialis, takes precedence over the latter (C-292/15, paras 46-47, emphasis added).

This simplified things under Dir 2004/18. However, the relevant question now is whether the same lex specialis derogat generalis approach is desirable or indeed suitable for the coordination of the rules of Reg 1370/2007 with Dir 2014/24, which is required since 18 April 2016. There are a few important points to note concerning the new rules on subcontracting in Dir 2014/24.

Firstly, the ARGE case law concerning the illegality of a prohibition of subcontracting on the basis that it deprived the rules on reliance on third party capacities from effectiveness has now been partially modified in Art 63(2) Dir 2014/24. According to this rule,

In the case of works contracts, service contracts and siting or installation operations in the context of a supply contract, contracting authorities may require that certain critical tasks be performed directly by the tenderer itself or, where the tender is submitted by a group of economic operators as referred to in Article 19(2), by a participant in that group.

This does not deactivate the ARGE case law entirely and the scope of the provision will crucially rest on the future interpretation of what are 'critical tasks', which I consider needs to be subjected to a restrictive interpretation and a strict proportionality analysis. I have criticised this rule elsewhere and for other reasons [A Sanchez-Graells, Public procurement and the EU competition rules, 2nd edn (Oxford, Hart, 2015) 315 and ff] but, in terms of coordination between Reg 1370/2007 and Dir 2014/24, Art 63(2) Dir 2014/24 seems to offer the perfect fit for the requirement in Art 4(7) Reg 1370/2007 to be imposed without restrictions. In other words, had the Hörmann Reisen case been subjected to Dir 2014/24, I think the ECJ would have no need whatsoever to create a lex specialis argument, which makes me wonder if this was the best approach overall (at least from a strategic point of view).

Secondly, it should be borne in mind that the limited rules of Art 25 Dir 2004/18 have been significantly expanded in Art 71 Dir 2014/24 on subcontracting, mainly with the purpose of both strengthening the contracting authorities' power to assess subcontracting arrangements where these are allowed and planned to take place, as well as to improve the legal position of subcontractors vis-a-vis the contracting authority (which now could, in specific circumstances, bypass the main contractor in order to ensure compliance with relevant obligations--notably, direct payments). Here, an incompatibility of the additional rules with Art 4(7) Reg 1370/2007 seems difficult to identify.

Thus, in my view, the Hörmann Reisen Judgment needs to be read in a minimalist fashion and construed to simply indicate that the general procurement rules cannot prevent a contracting authority that awards (non-concession) contracts for the provision of bus and tram services from prohibiting subcontracting or, in other words, requiring the transport operator from discharging all contractual obligations directly and in full--that is, they may come to deactivate a strict interpretation of Art 63(2) Dir 2014/24 in the transport sector only. Similarly, the Hörmann Reisen Judgment can be seen to dictate that general procurement rules  cannot alter the way in which a contracting authority in the transport sector that allows for subcontracting imposes restrictions so as to ensure that the operator entrusted with the administration and performance of public passenger transport services performs a major part of the public passenger transport services itself. However, I would not consider it a proper reading to exclude the applicability of the remainder of the rules in Art 71 of Dir 2014/24, notably because they do not seem incompatible with Art 4(7) Reg 1370/2007.

 

Restrictions on subcontracting under EU public procurement rules: à-propos the Opinion of AG Sharpston (C-406/14)

(c) Gregory Fox
In her Opinion of 17 November 2015 in Wrocław - Miasto na prawach powiatu, C-406/14, EU:C:2015:761, Advocate General Sharpston assessed to what extent contracting authorities tendering contracts under the EU public procurement rules can limit the percentage of the contract that the winning tenderer can subcontract to third parties. The Judgment in this case will be important because it addresses an area of EU public procurement law bound to be of growing relevance, particularly if Member States develop the supply-chain related tools that Directive 2014/24 has created in Art 71 (see here). It will also be important because it technically deviates from previous cases on reliance on third party capacities (comments here).

In the case at hand, the contracting authority imposed a requirement whereby '[t]he economic operator is required to perform at least 25% of the works covered by the contract using its own resources'. In her Opinion, AG Sharpston proposes that the Court of Justice of the European Union (CJEU) declares that such requirement runs contrary to EU public procurement law--ie that Directive 2004/18 on public procurement precluded a contracting authority from stipulating in the tender specifications of a public works contract that the successful tenderer is required to perform part of the works covered by that contract, specified in abstract terms as a percentage (in that case, 25%), using its own resources.

Given that the specific circumstances of the case did not allow for an assessment of the subcontracting requirement at the stage of qualitative selection (which was the approach followed by previous case law, see paras 36-37), AG Sharpston's analysis rests heavily on Art 25 of Directive 2004/18, according to which
In the contract documents, the contracting authority may ask ... the tenderer to indicate in his tender any share of the contract he may intend to subcontract to third parties and any proposed subcontractors. This indication shall be without prejudice to the question of the principal economic operator's liability.
The reasoning of AG Sharpston would apply equally to Directive 2014/24, which Art  71 reiterates the same rules in paras 2 and 4. In that regard, it is interesting to stress how, in AG Sharpston's view,
30 Directive 2004/18 is designed not only to avoid obstacles to freedom to provide services in the award of public service contracts or public works contracts but also to guarantee the opening-up of public procurement to competition. Recital 32 in the preamble to that directive states that the possibility of subcontracting is liable to encourage small and medium-sized undertakings to get involved in the public contracts procurement market. Subcontracting enables such undertakings to participate in tendering procedures and to be awarded public contracts regardless of the size of those contracts. Subcontracting thus contributes to achieving the directive’s objectives by increasing the number of potential candidates for the award of public contracts.
31. Accordingly, Article 25 of Directive 2004/18 not only envisages that a tenderer may subcontract part of the contract but also sets no limit in that regard. Indeed, Directive 2004/18 confirms explicitly that an economic operator may, where appropriate and for a particular contract, rely on the economic, financial, technical and/or professional capacities of other entities, regardless of the legal nature of the links which it has with them. Consequently, a party may not be eliminated from a procedure for the award of a public service contract solely because it proposes, in order to carry out the contract, to use resources which are not its own but belong to one or more other entities. 
32. That said, contracting authorities do have a legitimate interest in ensuring that the contract will be effectively and properly carried out. Where an economic operator intends to rely on capacities of other economic operators in a tendering procedure, it must therefore establish that it actually will have at its disposal the resources of those operators which it does not itself own and whose participation is necessary to perform the contract. A tenderer claiming to have at its disposal the technical and economic capacities of third parties on which it intends to rely if it obtains the contract may be excluded by the contracting authority only if it fails to meet that requirement. 
33. The contracting authority may not always be in a position to verify the technical and economic capacities of the subcontractors when examining the tenders and selecting the lowest tenderer. The Court has held that in such cases Directive 2004/18 does not preclude a prohibition or a restriction on subcontracting the performance of essential parts of the contract. Such a prohibition or restriction is justified by the contracting authority’s legitimate interest in ensuring that the public contract will be effectively and properly carried out. Directive 2004/18 does not require a contracting authority to accept performance of essential parts of the public contract by entities whose capacities and qualities it has been unable to assess during the contract award procedure.
34. In my view, considering the essential role subcontracting plays in promoting the objectives of Directive 2004/18, no other prohibition or restriction is permissible. It is true that, in Swm Costruzioni 2 and Mannocchi Luigino, the Court considered that there may be works with special requirements necessitating a certain capacity which cannot be obtained by combining the capacities of more than one operator which individually would be unable to perform that work. In those specific circumstances, the Court has held that the contracting authority is justified in requiring that the minimum capacity level concerned be achieved by a single economic operator or, where appropriate, by relying on a limited number of economic operators ... as long as that requirement is related and proportionate to the subject-matter of the contract at issue. However, that is not a specific ground for prohibiting or restricting subcontracting as such. Nothing precludes that ‘single economic operator’ or ‘limited number of economic operators’ from being a subcontractor or subcontractors of the successful tenderer(s).
35. It follows that a stipulation such as that in issue in the main proceedings [ie that the economic operator is required to perform at least 25% of the works covered by the contract using its own resources] is clearly not consistent with Directive 2004/18 (Opinion in C-406/14, paras 30-35, references omitted and emphasis added).
In my view, this proposed interpretation should be generally welcome, not least because the imposition of this sort of requirements could neutralise the open-ended character of the qualitative selection phase through the back door. I developed some thoughts regarding subcontracting in Public Procurement and the EU Competition Rules, 2nd edn (Oxford, Hart, 2015) 353-355, where I reached the complementary and compatible conclusion that 'contracting authorities should refrain from mandating or inducing subcontracting (in particular, by using the percentage of subcontracted work as an award criterion)'. A contrario, as AG Sharpston proposed, contracting authorities should also be prohibited from imposing a 'ceiling' on the amount of work to be subcontracted.


More generally, I would submit that contracting authorities generally do not have much to say about the distribution of works between a contractor and its subcontractors. They can insist on mechanisms that ensure proper expertise, actual availability of means, proper mechanisms of liability (of the prime contractor and any subcontractors). They can also implement measures to monitor the supply-chain, particularly as legal compliance is concerned (provided they have the expertise and resources to do so). However, they seem not to be in a good position to intervene in the market by choosing some productive structure (of minimum or maximum vertical integration) over others. 

Thus, the CJEU would do well in following AG Sharpston's advice and, more generally, in clarifying the limited role of rules on subcontracting for the purposes of imposing specific productive structures (if they can have any role in that regard at all).