Discretionary Exclusion Grounds

Discretionary exclusion grounds give contracting authorities flexibility to exclude suppliers whose past conduct raises concerns about reliability or integrity, even where no criminal conviction has been recorded. Unlike mandatory exclusion grounds, discretionary grounds require a proportionality judgment: the authority must weigh the seriousness of the failing against the supplier's circumstances and any remedial action taken.

What are Discretionary Exclusion Grounds?

Article 57(4) of Directive 2014/24/EU lists the circumstances in which a contracting authority may exclude a supplier. The key grounds are:

Bankruptcy, insolvency, or winding-up. A supplier subject to insolvency proceedings, whose assets are being administered by a liquidator, or that has entered into an arrangement with creditors may be excluded. Courts in some member states allow insolvent suppliers to continue operating and bidding for public contracts; the authority must assess whether the insolvency genuinely impairs the supplier's ability to perform.

Grave professional misconduct. This is deliberately broad and covers behaviour that renders the supplier's integrity questionable, including regulatory sanctions, disciplinary findings, breach of professional codes, and anti-competitive conduct. The authority must have sufficient evidence before relying on this ground.

Significant or persistent deficiencies in a prior public contract. Where a supplier failed to deliver, delivered late, or otherwise materially underperformed on an earlier contract (with any contracting authority in any EU member state), the authority may exclude it. Evidence must be documented and the findings must be final or legally confirmed.

Distortion of competition. If the supplier's prior involvement in preparing the procurement (market engagement, drafting specifications) creates an unfair advantage that cannot be corrected by other means, exclusion is permitted. This is a narrowly applied ground given the risk of chilling legitimate market engagement.

Conflict of interest. Where a conflict cannot be effectively remedied by less intrusive means, exclusion may follow.

Misrepresentation. Providing false information in the ESPD or during the procedure, or withholding required information, is a discretionary exclusion ground and is sometimes elevated to mandatory in national transpositions.

Grave violations of environmental, social, or labour law. Infringements of obligations in the fields established by EU law, ILO conventions, or applicable national rules may justify exclusion.

The maximum exclusion period for discretionary grounds is three years from the date of the relevant event.

Why Discretionary Exclusion Grounds Matter for Bidders

Discretionary grounds create unpredictability. A poor performance record on a prior contract, even one that the supplier contests, can be raised as a discretionary exclusion ground in a later competition. Suppliers should maintain clear contemporaneous records of contract performance disputes, particularly in cases where the contracting authority's account of events differs from their own. Self-cleaning evidence is also relevant here: if a supplier identifies that a discretionary ground may be invoked, submitting proactive self-cleaning evidence can pre-empt exclusion.

Example

A Dutch cleaning services firm had a social care contract terminated by a regional authority two years ago following persistent complaints about service quality. When bidding for a new municipal services contract, the new authority reviews this record and considers invoking Article 57(4)(g) of Directive 2014/24/EU (significant deficiencies in a prior public contract). The firm submits evidence that it has replaced its management team, invested in training, and obtained ISO 9001 certification since the termination. The authority must decide whether this self-cleaning evidence is sufficient before making an exclusion decision.

Frequently Asked Questions

Must a contracting authority exclude a supplier if a discretionary ground applies?

No. The word "may" in Article 57(4) means discretionary grounds are optional. The authority must assess proportionality. Excluding a supplier on a minor or historic ground when the supplier has since demonstrated rehabilitation would itself be challengeable.

Can a supplier challenge a discretionary exclusion decision?

Yes. Discretionary exclusion decisions are subject to judicial review or administrative appeal in all EU member states. A supplier that believes the exclusion was disproportionate, based on insufficient evidence, or procedurally flawed can bring proceedings. In the UK, challenges are brought during or shortly after the standstill period.

Do discretionary grounds from other EU member states count?

Yes. Article 57 applies across the single market. A significant contract failure in France is a valid basis for discretionary exclusion in a Finnish procurement. Authorities should use available information sources to check, though in practice cross-border verification remains difficult.