Exclusion from public procurement after criminal convictions, tax irregularities or conflicts of interest: how to return to the market through “self-cleaning”

For an economic operator active on the public contracts market, the greatest risk is not necessarily losing a single tender, but being systematically excluded from procedures, based on criminal convictions, tax irregularities, negative performance reports or conflicts of interest. Such a label can block your access to contracts for years, with a direct impact on cash flow, relationships with financiers and even the survival of the business.

At the same time, contracting authorities/entities are caught between two pressures: on the one hand, the obligation to exclude operators that no longer offer guarantees of integrity; on the other hand, the obligation to respect the principles of proportionality and effective competition, including the possibility for an operator “fallen from grace” at one point to return to the market if it proves it has reformed. This is where the concept of “self-cleaning” (remedial measures taken by the operator) comes in, introduced by the EU directives and transposed into Romanian law through Law no. 98/2016 and Law no. 99/2016.

In what follows, we will look at:

• the exclusion grounds related to criminal convictions, tax irregularities and integrity problems;
• the role of negative performance reports and their link to exclusion;
• how self-cleaning is regulated in Directives 2014/24/EU and 2014/25/EU and in Law no. 98/2016 on public procurement and Law no. 99/2016 on sectoral procurement;
• what concrete package of measures you can present to prove your credibility again;
• how contracting authorities should approach the assessment of these measures in order to avoid both formalism and arbitrariness.

1. General framework: from EU directives to Law no. 98/2016 and Law no. 99/2016

1.1. Directives 2014/24/EU and 2014/25/EU – exclusion grounds and self-cleaning

The current regime on exclusion grounds originates in Directive 2014/24/EU on public procurement (classical sector) and Directive 2014/25/EU (utilities sectors – water, energy, transport, postal services). Article 57 of Directive 2014/24/EU and Article 80 of Directive 2014/25/EU lay down:

• mandatory exclusion grounds (e.g. convictions for corruption, fraud, money laundering, terrorist offences, human trafficking and other serious crimes);
• optional exclusion grounds (serious professional misconduct, significant deficiencies in the performance of a prior contract, distortion of competition, unresolved conflicts of interest, tax and social security irregularities, etc.);
• the principle that an operator in an exclusion situation may present remedial measures (“self-cleaning”), and if these measures are sufficient, the operator may not be excluded for that reason.

According to Article 57(6) of Directive 2014/24/EU, the operator has the right to present evidence that:

• it has paid or undertaken to pay compensation for any damage caused by the criminal offence or misconduct;
• it has clarified the facts and circumstances in a comprehensive manner, by actively cooperating with the investigating authorities;
• it has implemented technical, organisational and personnel measures appropriate to prevent further offences or misconduct (e.g. replacing managers involved, compliance procedures, internal audit, control mechanisms, etc.).

The Court of Justice of the European Union (CJEU) developed this concept in its case-law, particularly in Case C-124/17 Vossloh Laeis, where it examined the operator’s duty to cooperate, the role of the contracting authority in assessing self-cleaning measures and the maximum duration of exclusion periods.

1.2. Transposition into Romanian law: Law no. 98/2016 and Law no. 99/2016

In Romania, the directives were transposed by:

• Law no. 98/2016 on public procurement – for classical contracting authorities;
• Law no. 99/2016 on sectoral procurement – for entities operating in regulated sectors (utilities).

Under Law no. 98/2016:

• Article 164 regulates exclusion grounds related to criminal convictions (corresponding to Article 57(1) of Directive 2014/24/EU);
• Article 165 covers breaches of tax and social security obligations;
• Article 167 sets out optional exclusion grounds, including serious professional misconduct, unresolved conflicts of interest, distortion of competition, prior contract terminations for non-performance, etc.;
• Article 171 expressly provides for the self-cleaning mechanism, allowing an operator in an exclusion situation to present remedial measures to prove its credibility, with the consequence that it is not excluded if those measures are found to be sufficient.

Law no. 99/2016 contains similar mechanisms, with its own provisions on exclusion grounds and the possibility for sectoral entities to accept remedial measures (self-cleaning).

2. Exclusion grounds: criminal convictions, tax irregularities, conflicts of interest and professional misconduct

2.1. Criminal convictions – when a criminal judgment removes you from tenders

Under Article 164 of Law no. 98/2016, the contracting authority must exclude economic operators (or members of their administrative, management or supervisory bodies, or persons with powers of representation, decision or control) convicted by final criminal judgment for offences such as:

• participation in a criminal organisation;
• corruption or corruption-related offences;
• fraud affecting the financial interests of the European Union;
• money laundering or terrorist financing;
• terrorist offences or offences linked to terrorist activities;
• trafficking in human beings or other serious offences relating to labour law and fundamental rights.

These categories mirror the list of offences in Article 57(1) of Directive 2014/24/EU, and exclusion is, as a rule, mandatory, subject to the self-cleaning mechanism and the maximum exclusion periods laid down by law.

2.2. Tax and social security irregularities – Article 165 of Law no. 98/2016

Article 165 requires the exclusion of operators that have breached obligations relating to the payment of taxes or social security contributions, where that breach:

• is established by a final decision or judgment (e.g. a final tax assessment decision); or
• is demonstrated by the contracting authority by any appropriate means, including information from the tax authorities.

In practice, the main evidence is the certificate issued by the tax authority (ANAF) regarding outstanding obligations. Romanian legislation and guidelines issued by the National Agency for Public Procurement (ANAP) emphasise that exclusion is not justified where the operator:

• has obtained a rescheduling or another form of lawful restructuring of the tax debt; or
• has paid in full the outstanding obligations by the deadline for the submission of tenders.

In such cases, the exception provided for by national law applies, in line with Directive 2014/24/EU.

2.3. Conflicts of interest, distortion of competition and serious professional misconduct – Article 60 and Article 167

Other frequent exclusion grounds (both in practice and in case-law of the National Council for Solving Complaints – CNSC – and administrative courts) are:

• conflicts of interest, mainly regulated by Article 60 of Law no. 98/2016 – for instance, situations where persons in the contracting authority’s management have personal or economic links with the tenderer;
• serious professional misconduct: conduct that raises serious doubts as to the operator’s integrity (including participation in anticompetitive agreements, sanctioned by the Competition Council or other authorities);
• distortion of competition through multiple tenders submitted by linked undertakings, collusive behaviour (bid-rigging), or exchange of sensitive information;
• prior contract terminations, payment of substantial penalties, non-performance of contractual obligations, reflected in negative performance reports – triggering Article 167(1)(g) of Law no. 98/2016.

2.4. Negative performance reports: “administrative stigma” and their exclusion effect

The performance report is the instrument by which the contracting authority certifies whether a public contract was properly performed. When it finds serious or repeated breaches (e.g. major delays, failure to achieve quality standards, termination for contractor’s fault), the contracting authority may issue a negative performance report and upload it in SEAP.

ANAP has issued an official notice on Article 167(1)(g), emphasising that negative performance reports may be a ground for exclusion from other procedures, but only if the conditions of seriousness, repetition and correlation with the subject-matter of the new contracts are met.

Legal scholarship and Romanian case-law have warned that such reports can become a real “administrative stigma” if they are issued or used abusively. Therefore:

• the operator has the right to challenge the negative performance report before the administrative courts;
• the authority invoking it as a ground for exclusion must carry out an effective assessment of the facts, the link with the new procedure and the remedial measures already taken by the operator.

Studies published in specialised journals and numerous CNSC decisions show that the mere existence of a negative performance report is not sufficient for exclusion; the authority must assess the operator’s fault, the existence of damage and the relevance of those facts to the new contract.

3. How exclusion works in practice: ESPD, checks, exclusion periods

3.1. ESPD and the duty of disclosure

In any procurement procedure, the economic operator fills in the European Single Procurement Document (ESPD/DUAE), declaring whether it is in any exclusion situation. Subsequently, for the tenderer ranked first (or pre-selected candidates), the contracting authority requests supporting documents (tax certificates, criminal records, copies of criminal judgments, performance reports, etc.).

Failure to disclose an exclusion situation may itself constitute an exclusion ground (misrepresentation or withholding of information) and, in certain circumstances, may trigger criminal liability (false statements, use of forged documents).

3.2. Maximum exclusion periods and the link with self-cleaning

Article 171 of Law no. 98/2016 provides that:

• if an operator has been prohibited by a court judgment from participating in public procurement procedures, the self-cleaning mechanism is not available during the prohibition;
• in the absence of such a prohibition, the exclusion grounds under Article 164 (criminal convictions) and Article 167 (professional misconduct etc.) no longer apply where:
  • more than 5 years have elapsed since the date of the final criminal conviction (for Article 164);
  • more than 3 years have elapsed since the relevant event (for Article 167).

In addition, if the operator adopts self-cleaning measures before the expiry of these periods and the contracting authority considers them sufficient, exclusion should not apply at all. This mechanism directly transposes Article 57(6)–(7) of Directive 2014/24/EU, which requires Member States to set maximum exclusion periods and to allow the rehabilitation of operators which demonstrate reliability.

3.3. CJEU case-law: Vossloh Laeis, Meca and Delta

In Case C-124/17 Vossloh Laeis, the CJEU clarified that:

• Member States may set exclusion periods but these must be proportionate and comply with the limits laid down in the directive;
• an operator relying on self-cleaning must demonstrate genuine cooperation and effective remedial measures, not just formal changes on paper;
• the contracting authority has the right (and the duty) to assess these measures concretely.

In Case C-41/18 Meca, the Court emphasised that the contracting authority is not required to wait for all judicial proceedings concerning past misconduct to be completed before excluding an operator, if it already has sufficient evidence to conclude that the operator has behaved unlawfully in previous contracts.

In Case C-267/18 Delta Antrepriză de Construcţii şi Montaj 93, the Court reiterated the Member States’ obligation to set a maximum exclusion period and to allow self-cleaning, in accordance with the principles of proportionality and legal certainty.

4. Self-cleaning under Law no. 98/2016: what Article 171 says

4.1. The legal text – basic conditions

Article 171(1)–(3) of Law no. 98/2016 largely copies the model in Directive 2014/24/EU. In short:

• an operator in an exclusion situation (under Articles 164 or 167) may provide evidence that it has taken sufficient measures to demonstrate its reliability;
• if the contracting authority considers this evidence sufficient, the operator is not excluded;
• the evidence may concern:
  • payment or firm undertaking to pay compensation for damage caused;
  • full clarification of the facts through cooperation with investigating authorities;
  • technical, organisational and personnel measures: severing ties with persons responsible for the misconduct, internal reorganisation, systems of control and reporting, internal audit, rules on responsibility and payment of compensation, etc.

The contracting authority must take into account the gravity and particular circumstances of the misconduct (para. (3¹)), and if it rejects the self-cleaning measures it must give reasons for its decision (para. (3²)).

4.2. Article 171 versus negative performance reports

ANAP’s notice on Article 167(1)(g) and the self-cleaning mechanism stresses that:

• exclusion based on a negative performance report cannot be automatic;
• the authority must analyse the operator’s fault, the seriousness of the breach, the existence of any damage and the remedial measures already taken;
• in the light of Article 171, where the operator has paid penalties, improved internal procedures and cooperated with the authority, exclusion may be disproportionate.

CNSC case-law confirms this approach: in numerous decisions, the Council has annulled exclusions based solely on the existence of a negative performance report, without an individualised assessment of remedial measures.

5. What self-cleaning means in practice: the package of measures you can present

5.1. The three pillars of self-cleaning (EU + national law)

Both Directive 2014/24/EU, Article 171 of Law no. 98/2016 and the European Commission’s guidance on exclusion and selection criteria identify three main pillars of self-cleaning:

1. Repairing the damage – paying or firmly committing to pay compensation (including contractual penalties, damages, tax liabilities);
2. Clarifying the facts – genuine cooperation with authorities (criminal, competition, tax, public procurement authorities);
3. Preventing recurrence – implementing a real compliance and internal control system.

5.2. Typical self-cleaning measures for economic operators

Depending on the nature of the misconduct, a self-cleaning package may include, for example:

(a) Criminal convictions and serious professional misconduct

• replacing the persons convicted or directly involved (shareholders, directors, senior managers);
• adopting a code of ethics and integrity and an anti-corruption/anti-fraud policy;
• implementing a compliance system – written procedures, integrity checks on partners, contractual due diligence;
• organising regular training sessions for staff on criminal law, competition, public procurement rules;
• setting up an internal whistleblowing and investigation mechanism for suspicions of wrongdoing;
• revising or terminating cooperation with partners involved in misconduct (cartels, fraud, etc.).

(b) Tax irregularities

• full payment of outstanding tax liabilities or entering into a rescheduling agreement with ANAF;
• reviewing internal invoicing and tax reporting procedures;
• implementing a system of internal accounting control (compliance checks, periodic audits);
• replacing high-risk suppliers (e.g. phantom firms) and properly documenting transactions.

(c) Negative performance reports and contract non-performance

• where appropriate, providing additional compensation to the contracting authority;
• reviewing project management and procurement processes (realistic planning, robust subcontracting contracts);
• introducing internal performance indicators and monitoring mechanisms;
• obtaining relevant certifications (for example, quality and compliance standards) where these address the root causes of the misconduct.

5.3. The importance of documentation: without paperwork there is no self-cleaning

In public procurement procedures, it is not enough to say you have taken measures. You must prove them by:

• court judgments, administrative decisions or certificates showing that damage has been repaired;
• employment contracts, general meeting resolutions, updated organisational charts – for management changes;
• internal regulations, written procedures, internal or external audit reports;
• evidence of trainings (programmes, lists of participants, tests);
• correspondence with investigating authorities, cooperation notes, official statements.

EU-level best practice guides and legal scholarship stress that self-cleaning is always assessed on a case-by-case basis; there is no exhaustive “magic list” of measures. The key is whether, in the concrete circumstances, the operator can credibly show that the risk of recurrence is significantly reduced.

6. The self-cleaning file in a tender: practical steps for operators

6.1. Step 1 – Risk mapping and history review

Before thinking about how to come back to the market, you need your own internal “due diligence”:

• review all criminal convictions of key persons in the company;
• analyse the tax situation and any final tax assessment decisions;
• list all negative performance reports issued in recent years and the status of related litigation;
• identify any pending proceedings (criminal, competition, tax) that may trigger exclusion grounds.

6.2. Step 2 – Integrated remediation strategy (criminal, tax, procurement)

In practice, an effective self-cleaning plan involves an integrated approach:

• criminal dimension: strategy in criminal cases, possible plea bargains or cooperation with prosecutors;
• tax dimension: challenging tax assessment decisions, rescheduling, amending returns where necessary;
• public procurement dimension: challenging abusive negative performance reports, recalibrating the relationship with contracting authorities, preparing the self-cleaning documentation.

At this stage, cooperation between a lawyer specialising in public procurement, administrative and tax litigation and a compliance/Risk Management professional is crucial to avoid contradictions between positions taken in different proceedings.

6.3. Step 3 – Effective implementation of measures

The self-cleaning plan cannot remain on paper. It must be:

• formally adopted (internal decisions, regulations, procedures);
• communicated to staff and effectively implemented;
• documented on an ongoing basis (minutes, reports, compliance registers).

6.4. Step 4 – Presenting measures in the procurement procedure

In practice, the most common scenario is:

1. in the ESPD, the operator acknowledges the existence of an exclusion situation (for example, a negative performance report);
2. in the specific section, the operator describes the remedial measures adopted;
3. upon request by the contracting authority (or proactively, if the documentation so requires), the operator submits a self-cleaning file with supporting documents;
4. the authority assesses the file and decides whether to accept the operator in the procedure. If it rejects the self-cleaning measures, it must provide reasons, in the light of Article 171.

Across the EU, including in Romania, there is a visible trend towards professionalising this assessment, with guidance and assessment models being developed for contracting authorities.

7. Strategies for economic operators: how to maximise your chances to stay (or return) on the market

7.1. Acknowledge problems and act proactively

Trying to sweep criminal convictions, tax problems or negative performance reports under the rug almost always makes things worse. A more effective strategy is to:

• acknowledge openly the relevant situations (in the ESPD and in correspondence with authorities);
• show that you have drawn the right lessons from the past and have taken steps to prevent recurrence;
• demonstrate a genuine change in corporate culture, not just nicely drafted documents.

7.2. Build a standard self-cleaning package

For firms that regularly participate in public procurement, it is worth preparing a “standard” self-cleaning package, including:

• a short compliance memorandum (1–2 pages) explaining:
  • what happened;
  • what damage has been repaired;
  • what measures have been implemented;
  • why the risk of recurrence is low;
• annexes with documents: judgments, administrative decisions, contracts, internal rules, organisational charts, etc.;
• references to case-law and official guidance (EU, ANAP) that support the proposed approach.

7.3. Aligning with parallel litigation and procedures

If the company is simultaneously challenging:

• a negative performance report;
• competition authority decisions;
• or ANAF tax assessment decisions;

the procedural stance must be calibrated so that:

• it does not completely deny facts already admitted in other proceedings;
• it does not undermine the criminal or tax defence;
• it still allows for credible remedial measures to be presented in the public procurement arena.

7.4. Internal links and an integrated approach to risk

Because exclusion from public procurement is closely linked to administrative and tax litigation and to integrity issues, the approach must be integrated. For a broader view on strategies for challenging administrative and tax acts and on integrity mechanisms, you can also consult:

• my articles on administrative litigation and public procurement;
• analyses on tax disputes and relations with ANAF;
• materials on corporate integrity and compliance.

8. Recommendations for contracting authorities and entities

8.1. Avoid automatism: exclusion must be reasoned and proportionate

Both the EU directives and Law no. 98/2016 require a case-by-case assessment of exclusion situations. Contracting authorities should:

• avoid automatic exclusion solely on the basis of a negative performance report or a competition law sanction;
• identify the concrete link between the past misconduct and the contract to be awarded (subject-matter, value, specific risks);
• take into account the self-cleaning measures presented under Article 171;
• clearly document their reasoning (especially in the ESPD assessment and the award report).

8.2. Develop an internal model for assessing self-cleaning

To ensure consistent decisions, authorities can:

• develop internal assessment grids or procedures for self-cleaning measures (for example, scoring for damage repair, cooperation with authorities, management changes, etc.);
• seek advice from external experts (legal, compliance, risk management) in complex cases, particularly those involving criminal convictions or competition law sanctions;
• consult ANAP guidelines and CNSC/administrative court practice to align with current standards.

8.3. Transparency and predictability for the market

A clear and predictable regime of exclusion and self-cleaning:

• deters bad-faith operators, who know that the risks are real and quantifiable;
• at the same time, encourages serious operators to invest in compliance, knowing that a one-off breach does not mean a life-long ban, but can be remedied.

9. The lawyer’s role in exclusion and self-cleaning procedures

The involvement of a lawyer experienced in public procurement, administrative and tax litigation and business criminal law can make the difference between:

• an operator that is systematically excluded, loses tenders one after another and litigates endlessly; and
• an operator that takes responsibility for the past, restructures its practices and credibly returns to the market.

In practice, the lawyer helps:

• with risk mapping and identification of all potential exclusion situations;
• with challenging negative performance reports and exclusion decisions before CNSC and the administrative courts;
• with structuring the self-cleaning file and legal arguments, including reliance on CJEU case-law (Vossloh Laeis, Meca, Delta, etc.) and EU/ANAP guidance;
• with coordinating the defence in criminal, tax and competition proceedings, ensuring that positions are coherent.

10. Conclusions

Exclusion from public procurement is no longer, in the architecture of EU law and national legislation, a “life sentence”. It is, or should be, a measure that is:

• temporary;
• proportionate to the gravity of the facts;
• open to rehabilitation through self-cleaning.

For economic operators, the message is twofold:

• do not underestimate the seriousness of criminal convictions, tax irregularities or negative performance reports – they can close access to a significant part of the market;
• at the same time, do not give up: with a serious integrity package and a well-designed legal strategy, you can prove that your company is again a reliable partner for contracting authorities.

For contracting authorities, the key is to find the balance between protecting the public interest and proportionality, using exclusion where necessary but also giving a real chance to operators that demonstrate genuine change.

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Frequently Asked Questions (FAQ)

1. If I have a criminal conviction, can I still participate in tenders?

It depends on the type of conviction, the person convicted and the passage of time. For the offences listed in Article 164 of Law no. 98/2016, exclusion is, in principle, mandatory, but:

• if 5 years have passed since the date of the final judgment, the exclusion grounds no longer apply;
• even before the expiry of this period, you may rely on self-cleaning, presenting a package of remedial measures under Article 171.

2. Does a negative performance report automatically mean my exclusion from all future procedures?

No. A negative performance report is a strong indication, but:

• the contracting authority must concretely assess the facts, fault and damage;
• it must check the relevance of the past misconduct for the new procedure (subject-matter, complexity, risk level);
• it must take into account the self-cleaning measures adopted (payment of penalties, changes in procedures, reorganisation, etc.).

3. How do I prove cooperation with authorities for self-cleaning?

Generally, by:

• official letters through which you provide information or documents requested in investigations;
• minutes of hearings, written statements, comprehensive answers to requests for information;
• participation, where available, in leniency programmes or similar mechanisms.

The key is that the contracting authority can see that you did not obstruct investigations, but rather contributed to clarifying the facts.

4. What is ANAP’s role in self-cleaning matters?

ANAP does not directly decide on exclusion in a specific procedure, but:

• issues guidelines and notices on the interpretation of exclusion grounds (for example, Article 167(1)(g));
• publishes model documentation and good practice examples;
• through its control activity and official views, influences how contracting authorities apply the self-cleaning mechanism.

5. Is it worth investing in a compliance programme if my company already has a negative history?

Yes, provided that it is a real programme, not just a formal one. EU directives, national law and CJEU case-law all encourage operators to reform, and compliance measures – anti-corruption policies, training, internal audit, reporting channels – are essential in assessing self-cleaning and can make the difference between exclusion and acceptance in procurement procedures.