E-13/19 Hraðbraut ehf. v The Ministry of Education, Science and Culture & Others

EFTA-case

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Deadlines: Motivation ministry:          5 February 2020
Written observations:                          23 March 2020 (ultimate deadline)

Keywords : public procurement, service contracts, private institutions

Subject :

Directive 2014/24/EU of the European Parliament and of the Council of 26 February 2014 on public procurement and repealing Directive 2004/18/EC

Facts of the case:

on 19-12-2012 and on 23-01-2013, the Ministry of Education, Science and Culture entered into service contracts with the Commercial College of Iceland, the Technical College and the Borgarfjörður College covering instruction at the upper secondary level. It was furthermore stated that the contracts were covered by Article 30 of Act No 88/1997 on State Finances, and Regulation No 343/2006 on contracts on operational projects made between the Ministry and public bodies for periods of more than one year. The contracts implied that the college was to provide pupils and teachers with the necessary services and the facilities customary for instruction for the upper secondary school. The contract also provided that the state would make a contribution to the college for its operations on the basis of the allocation of funds determined by the Icelandic Parliament in each year’s budget legislation. It has been established that the Plaintiff requested, in its letter to the Defendant of 25-01-2017, discussions on a new service contract covering the operations of Menntaskólinn Hraðbraut. The Defendant replied that it had made an estimate of the trend in pupil numbers in Iceland’s upper secondary schools due to changes to the duration of upper secondary education and that the estimate indicated that there would be a certain reduction in the number of pupils in upper secondary schools during the years 2016-2020. A certain reduction in pupil numbers in all of Iceland’s upper secondary schools was therefore foreseeable and there was not considered to be any need to increase the number of upper secondary schools at the present time. In its letter of 07-04-2017, the Plaintiff requested information as to when these service contracts would be put out to tender. The Defendant responded that it was not planned to put the operations of upper secondary schools out to tender, and that if this were to change, such an invitation to tender would be advertised in accordance with law. The Plaintiff argues that contracts for the provision of instruction at the upper secondary school level should be put out to tender as provided for under Act No 120/2016 on Public Procurement. Reference is made to the fact that contracts with privately-operated upper secondary schools are not exempt from the scope of Articles 4 and 11 of the Public Procurement Act. The Defendant argues that the making of contributions to privately-operated upper secondary schools is not covered by Act No 120/2016 on Public Procurement. In support of this view, it points out that such funding is covered by the provisions of Act No 123/2015 on Public Finances and Regulations No 642/2018 on grants made by ministers and No 643/2018 on the preparation, conclusion and following up of work contracts or contracts on operating functions or other defined projects.

Request for an advisory opinion:

1) Is a contract into which a ministry enters with an entity that is licensed to operate as an upper secondary school, by which the entity in question undertakes to provide pupils and teachers with services and facilities that are customary at the upper secondary level, and in which allowance is made for financial contributions, to be considered as a public service contract in the sense of Directive 2014/24/EU (cf. in particular, Article 2(9))?

2) Do services of the type described in Question 1 constitute social services or other specific services in the sense of Article 74 of Directive 2014/24/EU, and if so, should the provisions of Chapter I of Title III of the Directive apply regarding the procurement regime?

3) Is it of significance, for the resolution of Questions 1 and 2, whether consideration for the services in question is determined in budget legislation from the Icelandic Parliament or in accordance with a decision by a minister on the basis of applicable domestic law and rules?

4) Is the Minister of Education, Science and Culture obliged to apply a procurement procedure based on Directive 2014/24/EU regarding the procurement of services covering the operation of schools and instruction at upper secondary level in return for financial contributions?

Cited (recent) case-law: /

Policy area: OCW, EZK