The Federal Supreme Court, Microsoft and a Christmas surprise

Justitia Ret

A few sentences on the freehand awarding of IT services and the moment when a swear word means something positive. Have you ever used a swear word out of joyful surprise? A formative event in my candidature as President of the District Court of Aarau in 2004 was an absolutely unvarnished letter to the editor. The letter in the Aargauer Zeitung presented the initial situation before the election with a clarity that I assumed nobody would have the courage to put on paper

Sitting in Café Brändli in Aarau, my reaction was accordingly a loud curse of positive surprise, which caused all the restaurant’s guests to turn towards us – which was understandably extremely embarrassing for my son’s mother, who later became his mother

A fortnight ago, the Federal Supreme Court decision 2C_50/2022 of 6 November 2023, which was scheduled for official publication, had the same reaction[1] triggered the same reaction. The decision concerned the direct award of a contract and the IT requirements of the road traffic office of the canton of Vaud. The following is a brief appetiser to explain why an enthusiastic expletive is in order here

Perpetual customer relationships and their compatibility with the competition objective of public procurement law

It is obvious that the significantly more frequent direct award of IT services and supplies compared to construction contracts, for example, is an issue relevant to procurement law. And the fact that IT software is constantly being further developed and, unlike a car, can therefore perhaps live almost forever and be expanded with additional functionalities without the need to demolish a building, inevitably leads to the question of whether and, if so, under what conditions “perpetual” customer relationships are compatible with the competitive objectives of public procurement law

At the time of the famous Microsoft award(BGE 137 II 313; BVGE 2012/13 and BVGE 2009/19), for example, SharePoint was integrated as a new functionality. The same aspect is also impressively described in the judgement of the Administrative Court of the Canton of Vaud of 14 December 2021 (facts of the case letter B), only to then immediately conclude that apparently an “end of life” (“la fin de son cycle opérationnel”) of the previous IT application had been reached, which is why a new award had become necessary for the needs of the Road Traffic Office of the Canton of Vaud

The Microsoft case

We recall the Microsoft case, which was not substantively assessed by the courts on the grounds that the complainants lacked the legitimacy to challenge the direct award regarding the extension of licences, maintenance and support for the standardised federal workplace and applications based on it(BVGE 2012/13). In the NZZ of 7 July 2010, under the title “Dispute over federal contract with Microsoft in limbo”, it was reported that the speaker – i.e. the author of these lines – had been outvoted in public consultation. An appeal against this decision to the Federal Supreme Court was unsuccessful(BGE 137 II 313)

In this context, the Federal Supreme Court stated in particular that the burden of proof for the existence of the requirements for a direct award in the context of the legitimacy check lies with the appellant(BVGE 137 II 313 E. 3.5.2). This is despite the fact that the burden of proof in the context of the substantive examination of the direct award should lie with the awarding authority (at least according to the previously applicable view) (interim decision of the Federal Administrative Court B-3402/2009 of 2 July 2009 E. 4.2)

The Federal Administrative Court has distanced itself from the “Microsoft case law” of the Federal Supreme Court with regard to the distribution of the burden of proof (most recently judgement B-3580/2021 of 9 May 2022 E. 1.6.1 in conjunction with E. 2.1 with references). E. 2.1 with references). After the Federal Supreme Court’s interpretation of the law had also been criticised in doctrine and cantonal case law, the case that would give the Federal Supreme Court the opportunity to deal with a comparable situation once again was naturally eagerly awaited

The case “IT for the Road Traffic Office of the Canton of Vaud”

And now it is here: in the form of the IT application for the Road Traffic Office of the Canton of Vaud. On 28 April 2021, the contracting authority awarded the contract for a new version of the application already in use to the previous provider by private treaty (extension of the cooperation for the years 2022-2034; contract value 46 million), without initially giving a reason for a private treaty award. Following the intervention of a competitor, the reasons for the direct award were described to the competitor. The competitor then contested the award before the Administrative Court of the Canton of Vaud

Very important: Read not only the decision of the Federal Supreme Court of 6 November 2023, but also the decision of the Administrative Court of the Canton of Vaud MPU.2021.0017 of 14 December 2021. The informed public will of course immediately notice with pleasure that Etienne Poltier, a scientifically proven public procurement lawyer, was involved in this decision. And as if that were not enough, the appellant was represented by Benoît Merkt, who is also known in the scene as a scientifically recognised specialist. That in itself promises a five-course feast

The decision of the administrative court

On the question of legitimacy, the Administrative Court first determined that the bidder had made it sufficiently credible (“a rendu suffisamment vraisemblable”) that it was in a position to offer an alternative solution comparable to the successful tenderer’s product (recital 2b with reference to the ruling of the Federal Administrative Court B-1570/2015 of 7 October 2015, recitals 1.5.4 ff.)

The cited Federal Administrative Court judgement is interesting because it clearly states in terms of substantive law that the burden of proof for the prerequisites for a direct award lies with the client, whereby it is made transparent that the Federal Supreme Court may see this differently in the “Microsoft decision” (see Martin Beyeler, Freihänder: BVGer schwenkt Warnlampe!, in: Baurecht 2016, p. 25 ff., with approving comments)

The Administrative Court of the Canton of Vaud now expresses the same view (recital 4a f.), inter alia with explicit reference to the cited decision of the Federal Administrative Court (recital 2.5). Since the Administrative Court of the Canton of Vaud comes to the conclusion that the negotiated procedure cannot be justified either by the argument that only one bidder is eligible or on the basis of the provision relating to subsequent procurements,[2] it cancels the award

In its reasoning, the Federal Supreme Court is therefore served the entire menu on a silver platter. But it also needs someone to transport this tray within the city of Lausanne.[3] While the awarding authority has not contested the decision, the successful tenderer has lodged both an appeal in public law matters and a subsidiary constitutional complaint

The Federal Supreme Court judgement

And now finally to the centrepiece, the Federal Supreme Court ruling itself. Firstly, it must be examined whether a legal question of fundamental importance is to be assessed. This must be affirmed, because in the present case there is clear criticism of the (officially published) previous case law of the Federal Supreme Court and deliberately divergent decisions by the lower courts (judgement 2C_50/2022, consideration 1.3.5)

The cognition is then determined. While cantonal law is normally not reviewed freely(BGE 138 I 143 E. 2), the Federal Supreme Court reviews freely if the matter concerns the requirements of the WTO Government Procurement Agreement under international law. This is the case with the catalogue of reasons for the direct award (judgement 2C_50/2022, consideration 3.3)

Finally, it was established that in principle there was no reason to deny the legitimacy of the competitor, which is also on the market with IT applications for the administration and in particular for road traffic authorities, in the cantonal appeal proceedings (recital 5.4)

And now comes the decisive act

The relevant arguments on the question of whether the “Microsoft case law” should be confirmed or not

The appellant before the Federal Supreme Court argues that the lower court incorrectly failed to follow the “Microsoft case law” when examining legitimacy with regard to the burden of proof. According to this case law, the cantonal administrative court should have demanded that the competitor lodging the complaint must prove that there is an equivalent alternative (and not the awarding authority the opposite). In this regard, the Federal Supreme Court first notes that the Federal Administrative Court (with the aforementioned ruling B-1570/2015 of 7 October 2015) and the Geneva Cour de justice (with ruling ATA/761/2020 of 18 August 2020) have already deviated from the “Microsoft case law” (recital 5.7.2)

Furthermore, the doctrine’s criticism of the Federal Supreme Court’s case law is justified (recital 5.9). In particular, the competitive objective of procurement law must be taken into account, as well as the fact that the competitors of the successful tenderer regularly do not have precise knowledge of what exactly is the subject of the public sector’s requirements (recital 5.9.1; on the latter, see the interim ruling of the FAC B-562/2015 of 23 June 2016 E. 4.4.1)

The Federal Supreme Court further states that nothing can be inferred from the legislative materials on the reform of public procurement law with regard to the burden of proof. This means, in particular, that the question at issue here has not been codified in the sense of the Federal Supreme Court’s case law and that this is not mentioned in favour of it (recital 5.9.2)

The “Microsoft case law” also contradicts the substantive law dogmatics to a certain extent, according to which only restrictive use should be made of the direct award in the sense of an exception to create competition (Recital 5.9.3, in particular with references to the case law of the ECJ)

The “Microsoft case law” is partially abandoned

The result: The “Microsoft case law” should be partially abandoned and in the present case the burden of proof should be placed on the awarding authority with regard to the question of whether there are valid alternatives to the successful tenderer’s product

This applies not only to the substantive examination of the direct award, but also to the examination of legitimisation. In this context, it is sufficient for the competitor (before the Administrative Court of the Canton of Vaud) to credibly demonstrate (“prétend de manière crédible et vraisemblable”) that it is a potential provider of the service in question (recital 5.10)

In terms of content, the Federal Supreme Court comes to the conclusion that the Administrative Court of the Canton of Vaud has established factually (binding for the Federal Supreme Court) that the awarding authority has not provided a sufficient analysis with regard to the existence of other suitable IT solutions (recital 6.3). The decision of 6 November is also intended for official publication

The pre-Christmas feast is thus magisterially celebrated. But rather than use an enthusiastic but nevertheless foul-mouthed expletive here, I would prefer to use the words of former Federal Councillor Ogi: “Joy reigns!

The most important facts in brief

In its ruling of 14 December 2021, the Administrative Court of the Canton of Vaud annulled a direct award concerning an IT application for the Road Traffic Office of the Canton of Vaud, upholding the complaint of a competitor. The successful tenderer in turn challenged this decision before the Federal Supreme Court, claiming that the Administrative Court of the Canton of Vaud had not correctly applied the “Microsoft case law” of the Federal Supreme Court. The Federal Supreme Court took this as an opportunity to partially abandon the “Microsoft case law” in judgement 2C-50/2022 of 6 November 2023. Keyword: burden of proof


Creative Commons Licence

AUTHOR: Marc Steiner

Marc Steiner has been a judge at the Swiss Federal Administrative Court since 2007, where he was jointly responsible for setting up the public procurement department. Since 2021, he has been working as a part-time lecturer at the Public Sector Transformation Institute.

Create PDF

Related Posts

0 replies

Leave a Reply

Want to join the discussion?
Feel free to contribute!

Leave a Reply

Your email address will not be published. Required fields are marked *