Satisfaction of qualification criteria within a holding group

Czech Republic: The satisfaction of qualification criteria in tenders may be proven by invoking the references of an affiliate, without the latter acquiring subcontractor status.

In line with the decision-making practice of the Czech Office for the Protection of Competition, which makes reference to the case law of the European Court of Justice, bidders for a public contract may demonstrate their compliance with the qualification criteria by pointing to the references of another company which together with the bidder forms a group; doing so does not mean that the two group entities would have to establish or prove a principal-subcontractor relationship within the meaning of Sec. 51 (4) of the Public Procurement Act.

A bidder for a public contract who decides to go down the route of group company references necessarily has to demonstrate its authority to freely dispose of the resources of the group company which provided the references. The primary proof of such power to freely dispose of the resources of another group company is a contract. However, if the bidder for the public contract is the controlling undertaking, and if it demonstrates satisfaction of the qualification criteria by way of the references of the company which it controls, presentation of such a contract is not strictly necessary: in such a case, it is assumed that – because of the relationship of control and subordination – the controlling undertaking may without further ado dispose of the resources of the undertaking which it controls.

The interconnection between the bidder and the person who provides the references (and, as the case may be, the relationship of control and subordination between them) is best shown by an extract from the Commercial Register or from other, similar public records.

Producing references from within a group of companies has one undeniable advantage: it substantially lightens the administrative burden on the bidder. Compared to a subcontractor relationship, the bidder need not, in such a case, produce (i) an extract from the Commercial register for the company that provided references, or (ii) proof that the said company is not on the blacklist of undertakings which are prohibited from performing under public contracts. As long as the bidder is the controlling undertaking, one need not even submit a collaboration agreement.

Source: Decision S594/2012 of the Office for the Protection of Competition; Judgment C-389/92 of the European Court of Justice – Ballast Nedam Groep NV vs. Belgian State

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