The 2004 Grossmann judgment has had a major impact on the Dutch public procurement practice these last few years. In roughly half of the cases brought before a preliminary relief judge, contracting authorities rely on what is known as the “Grossmann defence”. And often successfully. The contracting authority then argues that the complaining tenderer in question should have complained or acted sooner, at a time when the contracting authority could still correct possible errors or ambiguities, also if the tenderer did not yet have reason to act at that time. A recent judgment of the Court of Midden-Nederland appears to limit the scope of that defence. This blog addresses the prevailing trend in case law regarding the Grossmann defence. It then examines whether this judgment of the Court of Midden-Nederland is a turning point in Dutch case law and, of course, the practical significance of this judgment: should tenderers be proactive in procurement procedures or not?
The Grossmann defence in Dutch case law
In the Grossmann judgment, the European Court of Justice found that a potential tenderer may be expected to proactively raise objections to a procurement procedure. It must make its objections known and raise them at the earliest possible stage, to allow the contracting authority to correct any irregularities with a minimal impact on the further course of the procurement procedure.
In Dutch case law, the application of this judgment has gone overboard. If a potential tenderer becomes aware of defects in the tender documents and fails to take immediate action, it forfeits the right to complain about possible defects in the procurement procedure. In almost all cases in which a tenderer complains about the procurement procedure, contracting authorities rely on this “Grossmann defence”. In previous years, citing Grossmann often proved to be a magic bullet. The defence failed only in the case of obvious violations of provisions of the Public Procurement Act. In 2018, the Court of Midden-Nederland even found that a tenderer who had complained during the procurement procedure but had not gone to court before tendering could not put forward its objections after tendering:
“4.3.2. In the Court’s preliminary opinion, there is a lot to be said for Connexxion's position that GVS’s decision to opt for a Negotiated Procedure without Prior Publication contravenes the relevant statutory regulations. However, Connexxion did not opt to institute preliminary relief proceedings, although that would have made sense, given its fundamental objections to the Negotiated Procedure. Instead, Connexxion tendered for the contract and declared, by signing form K of the Tender Document, that it agreed to GVS's contracting procedure. GVS therefore had the legitimate expectation that Connexxion would accept the procedure that GVS wished to follow and would not raise objections in preliminary relief proceedings after the provisional award decision had been taken. GVS’s reliance on forfeiture of rights – by analogy with the Grossmann case law – was therefore successful.”
Turning point?
In a recent judgment, the Court of Midden-Nederland appears to have reconsidered its lenient attitude regarding the Grossmann defence. The case centred on a procurement procedure of the Municipality of Utrecht for the supply of road sweepers, for which two parties, Ravo and Aebi Schmidt, had tendered. When Aebi Schmidt emerged as the winner, Ravo requested the court to order the withdrawal of the provisional award decision. As usual, the Municipality of Utrecht argued that a Grossmann situation was involved. This time, however, the court did not follow suit. In the court’s opinion, a potential tenderer’s proactive approach does not go beyond “having to notice obvious and conspicuous defects and immediately reporting them”. Moreover, it is not up to the potential tenderer to check whether the procurement procedure complies with the rules and principles of public procurement law. The Municipality of Utrecht’s argument that Ravo agreed to the terms and conditions of the procurement procedure by submitting a tender, and thereby forfeited its right to challenge the procurement procedure, also failed. The court found that it is not possible to agree to something whose meaning you are unaware of or cannot fathom. This is not the first time that the Court of Midden-Nederland has rejected reliance on the Grossmann defence. In 2019, for instance, it already ruled that if an incorrect procurement procedure has been followed, reliance on forfeiture of rights is unacceptable by standards of reasonableness and fairness. Also, in the court’s opinion, it cannot be deduced from the Grossmann defence that a proactive tenderer may be expected to immediately institute preliminary relief proceedings as soon as it becomes clear to it that the contracting authority rejects its objections.
Practical tips
The cautious conclusion can be drawn from these judgments of the Court of Midden-Nederland that cracks have appeared in the Grossmann defence: reliance on that judgment by a contracting authority will no longer automatically succeed. A contracting authority has a duty of care that cannot by definition be passed on to tenderers by relying on the Grossmann defence.
Nevertheless, it cannot be deduced from the judgments that a tenderer can play dumb. Although the court has made it clear that a contracting authority can no longer simply rely on the Grossmann defence, that does not mean that the trend in Dutch case law that is disadvantageous for tenderers losing relevance. In other words, tenderers should remain proactive when they identify errors in a procurement procedure. They should ask questions, raise objections and, depending on the subject, institute preliminary relief proceedings before tendering. They otherwise run the risk of a court not getting around to a substantive assessment of the objections.
