The Supreme Administrative Court of Sweden (Högsta förvaltningsdomstolen) has referred a new case to the Court of Justice of the European Union – Case C-282/24, Swedish Police Authority (Polismyndigheten) v Swedish Competition Authority (Konkurrensverket) – in which it seeks clarity on the conditions under which a minor modification to a previously procured framework agreement necessitates a new procurement procedure due to a change in the agreement’s overall character. This question arose in a case involving a procurement penalty.
Background and facts
The case began when the Swedish Police Authority (Polismyndigheten) conducted a procurement process for towing services in 2020, resulting in two framework agreements.
However, in mid-2021, the Swedish Police Authority and the suppliers agreed to amend the compensation terms, extending the radius within which a fixed price applied and adjusting the ‘per kilometer’ rates. The Swedish Police Authority justified these changes as necessary to balance internal cost distribution across different police regions. Despite these changes, the total contract value remained largely unchanged.
The Swedish Competition Authority (Konkurrensverket) argued that these amendments should have been preceded by a new procurement process and sought a procurement penalty.
The Swedish Police Authority, however, contended that the changes were not substantial, and thus did not require a new procurement process.
Lower instance judicial proceedings
At first instance, the Administrative Court of Stockholm (Förvaltningsrätten i Stockholm) sided with the Swedish Competition Authority, imposing a penalty on the Swedish Police Authority. It found that the changes were significant enough to potentially alter the outcome of the original procurement process, thus violating the principles of equal treatment and transparency.
On appeal, at second instance before the Administrative Court of Appeal, Stockholm (Kammarrätten i Stockholm) in Case No. 7456-22 (Mål nr. 7456-22), lodged by the Swedish Police Authority, the Court of Appeal upheld the decision of the first instance court. It agreed that the changes were substantial, and altered the overall character of the framework agreement.
The Supreme Administrative Court and the question referred
The Swedish Police Authority appealed again, this time to the Supreme Administrative Court of Sweden, the national court of final instance. The Supreme Administrative Court, in a case known nationally as Mål nr. 2752-23, has decided to make a reference for a preliminary ruling.
Article 72(1) of the Public Procurement Directive allows contracts and framework agreements to be modified without a new procurement procedure in a number of situations. However, the referring national court is looking for interpretation of Article 72(2) of the Directive 2014/24 on public procurement, and whether a change in the compensation model, which shifts the balance between fixed and variable pricing constitutes a change in the overall character of the framework agreement under Article 72.
The referring national court seeks, in effect, clarification on whether such changes, even if minor in value, require a new procurement process if they could have influenced the outcome of the original procurement. Or put another way, it deals with contract modifications during their term.
The question is as follows:
‘Can a modification of the remuneration model in a framework agreement originally awarded on the basis of the award criterion of the lowest price offered, whereby the balance between fixed and variable prices is altered and the price levels are adjusted to such an extent that the total contract value does not change to more than a marginal degree, mean that the overall nature of the framework agreement is to be considered to have been altered within the meaning of Article 72(2) of the Public Procurement Directive?‘
Analysis
The case highlights the complexities of public procurement law, particularly regarding the permissible scope of contract modifications without triggering a new procurement process. The eventual judgment will theoretically clarify the conditions, in the future, under which such modifications require a new procurement process, including for determining the threshold for what constitutes a substantial change, requiring a new procurement process.
This case serves as a critical test of the boundaries of permissible contract modifications under EU public procurement law, and the balance between flexibility in contract management and the need to uphold the principles of transparency and equal treatment.
Read the referral
The reference for a preliminary ruling from the Supreme Administrative Court of Sweden (Högsta förvaltningsdomstolen) to the Court of Justice of the European Union in Case C-282/24, Swedish Police Authority (Polismyndigheten) v Swedish Competition Authority (Konkurrensverket), can be read here.