Project selection criteria – Constitutional Tribunal takes a position (SK 50/13)

Less than a month ago – 10.02.2015. – the Constitutional Tribunal once again had the opportunity to express its opinion on the system of distribution of European funds. On that day, a judgment was passed (ref. SK 50/13), inter alia, on the compliance of the provisions of Article 26(1)(3) and (4) of the Act on the Principles of Development Policy (’PDP’) with the Polish Constitution. The case was examined as a result of a constitutional complaint filed by one of the applicants who had applied for funding under the Regional Operational Programme. The applicant alleged that the indicated provisions violate, inter alia, Article 87 of the Constitution of the Republic of Poland (closed catalogue of universally binding law sources) by allowing the adoption of project selection criteria and the selection of projects on the basis of acts that are not of universally binding nature. For the sake of order, it should be recalled that the indicated provisions on the day of drawing up the complaint (29.03.2011) had the following wording:
Art. 26 par. 1 of the Public Procurement Act: The tasks of the Managing Authority include in particular: (…) 3) preparation and submission to the Monitoring Committee for approval of the proposal of criteria for selection of projects; 4) selection, on the basis of the criteria referred to in point 3, of projects to be co-financed under the operational programme.

As it results from the announcement published on the website of the Constitutional Tribunal, the Tribunal stated that the aforementioned provisions are compliant with Article 87 and Article 94 of the Constitution of the Republic of Poland. According to the Tribunal, there are two arguments in favour of the compliance of these regulations with the aforementioned standards of control:
Firstly: the provisions of the acts forming the criteria for selection of projects selected in the competition procedure are not of an abstract nature, but are concrete. The provisions contained in the acts formulating the selection criteria for projects are applied in connection with the implementation of individual competitions. Therefore, acts containing selection criteria do not have the features allowing for treating them as normative acts.
Secondly: the competence of the managing authority and the monitoring committee to determine criteria for the competitive selection of projects to be co-financed under operational projects results directly from the EU regulations. Therefore, it is not required that such acts meet the requirements provided for sources of universally binding law.

The lack of an explanatory memorandum to the judgment (which should be drafted within a month of its promulgation) precludes at this stage its wider analysis. Nevertheless, the very operative part of the verdict, as well as a short commentary to the verdict posted on the Court’s website, allow for several reflections. Firstly, the latest judgment of the Constitutional Tribunal is yet another judgment in which the Tribunal addresses the issue of the nature of acts of so-called competition law. The previous judgment in this respect, handed down in December 2011 (ref. P 1/11) stated the unconstitutionality of Art. 5(11) of the Public Procurement Office by the fact that this provision allowed for the regulation of the rights and obligations of participants in competitions (in particular as regards the appeal procedure) in the so-called implementation system, which does not have the character of universally binding law.
(implementation system – rules and procedures applicable to institutions participating in the implementation of development strategies and programmes, including management, monitoring, evaluation, control and reporting, as well as the method of coordination of the activities of these institutions; the implementation system also defines the remedies to which the applicant is entitled during the call for projects)
The above judgment forced the legislator to revise the provisions of the UZP, unfortunately not completely. In fact, the rights and obligations of the participants of competitions under the appeal procedure were regulated at the level of the Act, while the remaining regulations of the competition law were left in their previous form (i.e. outside the system of universally binding law), containing regulations shaping the legal situation of the participants of competitions, including, inter alia, regulations of competitions, guidelines and guides.
The latest judgment refers to a section of the competition procedure – but the most important section – the project selection criteria. It is their fulfilment that determines whether a grant will be awarded. The development of criteria for competitions is a complex process in which the objectives of the funds and the programme concerned play an overriding role, and the basis for the setting of criteria can be found in Regulation 1083/2006. This Regulation makes the Monitoring Committee, established for the purposes of a programme or several operational programmes, responsible for analysing and approving criteria (Article 65a of the Regulation). In contrast, the monitoring committee (set up pursuant to Article 63 of Regulation 1083/2006) does not have any independent standing, nor does it have any power to enact generally applicable legislation (it acts on the basis of rules of procedure drawn up in accordance with the institutional, legal and financial legal order of the Member State concerned – Article 63(2) of Regulation 1083/2006). In the new perspective, the competences related to the establishment of project selection criteria were distributed between the managing authority responsible for the preparation of the criteria (and their application – Article 125(3)(a) of Regulation 1303/2013) and the monitoring committee responsible for their approval (Article 110(2)(a) of Regulation 1303/2013). Therefore, in my opinion, the Court was right to conclude that the EU regulations as the basis for the adoption of the criteria do not prescribe their regulation in generally applicable acts. In fact, my colleague Rafał Poździk and I formulated the above view some time ago in our article „Assessment and selection of projects for co-financing from EU funds in Poland – comments against the background of the ECJ judgment of 12.12.2011. (P 1/11)”
The second of the Court’s arguments, namely the view that the provisions establishing the criteria for selection of projects are not of an abstract nature, but are concrete, is debatable. Interestingly, the judge-rapporteur in the present case, Professor Stanisław Biernat, formulated the view even before the publication of the commented judgment that:
project selection criteria are of a substantive nature and refer to individual projects. Therefore, it should not be required, and would not even be possible, to include the criteria for selection of projects under the competition procedure in laws or other normative acts universally binding (S. Biernat [in:] System prawa administracyjnego. T. III, Europeization of administrative law, Warsaw 2014, p. 598).
In my opinion, however, the project selection criteria are of an abstract nature, as they are addressed to an unspecified group of addressees, i.e. participants of a given competition, for whom the relevant feature is, as a rule, only participation in the same competition. Significantly, such a group of addressees becomes more specific only at the stage of closure of the competition. The fact that the criteria refer to individual projects cannot be denied, however, in my opinion, the lack of abstractness of the criteria should not be seen in this fact – the criteria will be abstract as long as they refer to an unspecified addressee, and undoubtedly it is the unspecified participants of competitions who are the unspecified addressee of the criteria, not the projects themselves. The criteria establish certain requirements not only for the projects themselves (subjective criteria), but also for the applicants as entities (criteria subjective), requiring certain characteristics or features from them (e.g. having a certain status, experience, length of activity or a certain legal form). The view that project selection criteria are not, in principle, of an abstract nature therefore seems too far-reaching. Of course, I do not claim that my view is the only correct one and I will be curious to read the justification of the judgment and the arguments of the Constitutional Tribunal. However, it is worth noting that the fact that the issue in question is not unambiguous is confirmed by the fact that a member of the adjudicating panel, Professor Andrzej Wróbel, decided to submit a dissenting opinion from the judgment under comment.

As it results from the announcement from the website of the Tribunal, apart from the statement referring to the compliance of the above mentioned regulations with the Constitution of the Republic of Poland, the Tribunal also formulated a general directive according to which the statement on the location of criteria for project selection and acts containing these criteria outside the system of universally binding law does not cause the evaluation of the adopted criteria to escape any control. The Court clearly indicated that:
it is necessary that the criteria for project evaluation are in compliance with the norms of generally applicable law, with the provisions ordering the managing authorities and the monitoring committees to comply with certain requirements and thus indirectly determining the content of the selection criteria, being contained in the EU regulations and in the Public Procurement Office and – with regard to new projects – in the Act of 11.07.2014 on the principles of implementation of programmes in the area of cohesion policy financed in the financial perspective 2014-2020.
The above directive should be regarded as extremely valuable both for the institutions preparing the criteria and for the applicants themselves. It can be deduced from it that the criteria, just like other rules of the competition, may be confronted with regulations, and their faulty formulation may justify the charge of improper project assessment – in a situation in which, although the assessment itself is carried out correctly, the criterion on the basis of which it was carried out violates universally applicable regulations, such as the principle of proportionality or transparency. An important indication as to what requirements the criteria should meet is in particular the provision of Article 125(3)(a) of Regulation 1303/2013 according to which the criteria: (i) ensure that the operations will contribute to the achievement of the specific objectives and results of the relevant priorities; (ii) be non-discriminatory and transparent; (iii) take into account the general principles laid down in Articles 7 and 8 of the Regulation (principles of non-discrimination and sustainable development).