In a significant judgment delivered on 15 February 2016, the High Court has given guidance on the level of detail that must be included in standstill letters to disappointed tenderers in a procurement process. The judgment also provides clarity as to the level of further engagement that is required subsequent to the initial standstill letter, as well as the point at which the challenge period begins to run in circumstances where further reasons are provided.

Facts

This case concerned an above-threshold competition run by Kildare County Council (“KCC”) seeking engineering consultancy services in relation to the design and delivery of the new Athy southern distributor road.1 RPS Consulting Engineers Ltd (“RPS”) was unsuccessful, despite having tendered a price that was significantly lower than that of the successful tenderer. RPS engaged in correspondence with KCC in which it alleged that it had not been given sufficient reasons in the standstill letter as to why it had not been selected. KCC responded on two occasions to the effect that it had provided all of the information to which RPS was entitled, at which point RPS instituted proceedings against KCC. The proceedings were commenced after the standstill period and after the contract had already been signed, and the Court was asked only to determine whether sufficient reasons had been given to RPS.

The Court held that KCC had breached its obligation to provide sufficient reasons for its decision, and ordered that KCC provide such reasons within 15 days of the judgment. The Court held that the reasons given by KCC had been inadequate for a number of reasons. The judgment contains a number of interesting statements which will have an impact on how contracting authorities engage with disappointed tenderers going forward, pending any appeal which may be brought.

Practical Considerations and Takeaways

  • The judgment provides guidance as to the level of detail that must be included in a standstill letter. It is not enough to state that the successful tenderer’s response was superior to that of the addressee; rather the letter must contain reference to specific matters, respects, examples or facts which explain why the decision about relative advantage was made (eg matters which the winner’s response included, or the applicant’s response lacked, or vice versa), so that the bidder is aware of the matters of fact and law on the basis of which the decision to reject its tender was reached. In this case, the narrative in the letters to the disappointed bidders consisted only of a repetition of the criteria, a repetition of the score (but phrased in terms of “good”, “very good” etc rather than numerically) and a handful of additional words to indicate comparative quality as between the unsuccessful and successful tenderers. This was held not to be sufficiently precise as to the matters of fact and law that were relied upon by KCC in making its decision.
  • The provision of scores alone will not suffice for qualitatively assessed criteria but may suffice in respect of price. This is despite the provisions of Regulation 6(5) of the Irish Remedies Regulations, which suggest that scores alone suffice, and the Court suggested that the Remedies Regulations be amended to clarify this point.
  • The reasons provided to a disappointed tenderer must be bespoke to the tenderer in question; it is in breach of the obligation to give reasons to copy and paste generic reasons that could apply to any tenderer. The Court was severely critical of the fact that formulaic reasons were included in all of the letters to unsuccessful tenderers, with the only variations being whether the addressee’s bid was “good”, “very good” etc.
  • Reasons provided must fully explain why the marks in question were awarded; if a person unfamiliar with the process cannot readily understand from the reasons why a particular score was awarded then the reasons will be insufficient. Here, RPS lost 40% of the marks for a criterion with three elements, where the reason given only referred to one element and was only a “mild” criticism. It was not evident to the Court that the reasons given supported the loss of marks, therefore the reasons were insufficient. 
  • Contracting authorities must respond positively to requests for further reasons, after the initial standstill letter is sent. A refusal to engage was described as a “fundamental flaw”. The Court concluded that there are two separate elements to the obligation to give reasons under EU law, namely:
    • a contracting authority must automatically give a summary of the reasons for its decision with the standstill letter (this is expressly transposed in the Irish Remedies Regulations); and
    • the contracting authority must provide further information, within 15 days, upon receipt of a written request (under Article 41 of Directive 2004/18). 

The Court’s conclusion that contracting authorities are obliged to continue to engage with disappointed bidders may put such authorities in a difficult position. To comply with the Irish Regulations they must include the characteristics and relative advantages of the winning bidder in the initial standstill letter, yet this judgment requires that they must engage further with tenderers and provide further elaboration on such characteristics and relative advantages within 15 days, should a request be made. If the first letter has provided full information on characteristics and relative advantages, it is difficult to see what further positive engagement can be made. The Court appeared to anticipate that bidders would raise more detailed individual queries about their bespoke reasons, which the contracting authority would be obliged to answer unless one of the grounds in Article 41 of Directive 2004/18 applied (eg that the information is commercially sensitive). 

  • The courts may be critical of the conduct of contracting authorities from a public policy perspective. For example:
    • in this case the Court was critical of KCC for not providing a debrief meeting; and
    • the Court criticised KCC for not providing meaningful feedback that would allow RPS to improve its tenders going forward. It noted that no reason had been given why more meaningful feedback could not have been provided. Authorities who are not providing detailed feedback should therefore be careful they can provide a robust justification for so doing, eg that one of the grounds for withholding information in Article 41 applies. 
  • The Court indicated that providing additional information, or engaging in a debrief meeting, will not extend the standstill period or the period in which a disappointed tenderer may challenge the result. According to the Court, even if the standstill letter is defective, the standstill period and challenge periods will still start running. The only way in which the standstill period or challenge period could be taken to “restart” would be if a court quashed the standstill letter itself (which the judge determined could only arise if the challenge was taken during the original standstill period). The Court did, however, comment that in its view, the Irish Remedies Regulations should be amended such that the standstill period should expire after 30 days (ie at the same time as the challenge period).
  • As an aside, the Court noted that KCC had changed its marking scheme during the tender process without notifying tenderers of this fact. The change was to use a stepped scoring band approach (whereby a response got a specified mark (100%, 80%, 60% and so on) by reference to the band into which it fell, with no provision for awarding any score between these stepped marks . In other words, a bidder could get a mark of 60% or 80%, but not 65%). RPS did not raise this change as a ground for quashing the decision, however the Court pointed out that, had the issue been argued before it, it would have found the change in the marking scheme to have been fatal to the process. The Court appeared critical of the stepped scoring band approach, remarking that it seemed "crude", with a great scope for subjectivity and a potential for large gaps in marks which did not necessarily correspond to equivalent differences in quality. While the stepped scoring band approach was not pivotal to the Court's decision, the comments made indicate that a similar banding approach may not find favour going forward.