Compensation for candidates unfairly excluded from public contracts

Published on 05 february 2024


Employment & Labour Law

In its ruling in Commune de Saint-Cyr-sur-Mer of 28 November 2023 (no. 468867, Leb. T.), the Conseil d'État clarified the conditions for compensating a candidate who has been unlawfully eliminated from a public contract award procedure.

The case concerns a procedure launched by the municipality of Saint-Cyr-sur-Mer for the award of a public service delegation contract for the operation of the Lecques beach. 

La Royale Plage considered that it had been unlawfully excluded from this procedure and brought an action before the administrative courts seeking compensation for its loss. 

Following the rejection of its claim by the Toulon Administrative Court, the company appealed to the Marseille Administrative Court of Appeal.

Contrary to the ruling of the court of first instance, the court held that the company had been unlawfully excluded from the award procedure, and that the municipality of Saint-Cyr-sur-Mer should be ordered to compensate it for its loss of earnings. 

After hearing the municipality's appeal, the Conseil d'État began by recalling the conditions for compensating a candidate who has been unlawfully excluded from the procedure for awarding a public contract, as set out in the ETPO Guadeloupe judgment of 18 June 2003 (no. 249630, Leb. T.) :

  • either the candidate had no chance of winning the contract and is not entitled to any compensation ; 
  • or it did not have a serious chance of winning the contract and is entitled to reimbursement of the costs incurred in submitting its bid; 
  • or it had a serious chance of winning the contract and, in this case only, is entitled to compensation for its loss of profit, which necessarily includes the costs of submitting the bid, since they were included in its expenses (CE, 8 February 2010, Commune de la Rochelle, no. 314075, Leb.).

Although the determination of the candidate's chances of winning the contract appears to be a matter for the sovereign discretion of the lower courts, the Conseil d'Etat nevertheless reviews the assessment method used, on the grounds of error of law (CE, 28 February 2020, Société Régal des Iles, no. 426162, Leb. T., concl. Gilles Pellissier). 

It is on this basis that the decision of the Marseille Administrative Court of Appeal was censured.

The Conseil d'Etat criticised the court for holding that La Royale Plage had a serious chance of winning the contract on the grounds that "the investigation did not show that the company's final bid was inferior to those of the other three candidates admitted to negotiate".

In so doing, the Conseil d'Etat followed the position of the public rapporteur, Nicolas Labrune, who in his conclusions considered that "in order to establish that a candidate had a serious chance of obtaining the contract, it is not sufficient to establish that his bid would have had as much chance as the others of winning in the absence of any fault".

The Conseil d'Etat went on to explain that it was up to the court to determine whether the company "would have had a serious chance of winning the contract, unlike all the other candidates". 

In practice, therefore, in order to obtain compensation for loss of earnings, the unlawfully eliminated candidate must demonstrate to the court that it was the only candidate to have been deprived of a serious chance of winning the contract.

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