The past twelve months has seen a large increase in the volume of procurement challenges coming before the Irish Courts. Below, we look at what is driving these and some key issues arising from recent cases.
Biting the hand that feeds?
During the financial crisis, service providers were faced with a trade off in relation to public tenders: needing to win any tenders that were published (given there was a drastic reduction in published tenders generally during the period) and not wanting to bite the hand that was feeding them (the Government) at the time. On balance, service providers appeared to have been more concerned with not biting the hand that fed them. The cases that did come before the Courts were often from incumbent providers who had been unsuccessful in tender processes for large contracts.
More recently there has been a marked change in the behaviour of bidders. They are:
- Less reliant on the public sector for business;
- Being selective about what they are tendering for; and
- Much more aware of, and willing to enforce, their legal rights.
This combination of factors means bidders do expect tender processes to be run fully in compliance with public procurement law and are prepared to hold the public sector to account in this respect. We expect this trend to continue.
ARE YOU IN THE FRAME(WORK)?
Centralising common purchasing across the public sector for a small country such as Ireland makes obvious sense. Large procurers such as the Office of Government Procurement have and continue to run a large number of framework tenders. Given these frameworks tend to result in multi annual appointments, getting onto the framework can make or break a business. In recent years, there have been a number of proceedings issued in respect of the appointment to frameworks, such as Homecare Plus and Others v Health Service Executive, Copymoore Ltd v The Commissioner for Public Works and Gaswise Limited v Dublin City Council. Given the number of frameworks being put in place, we expect to see the trend of cases in relation to frameworks to continue. We also expect there to be a rise in cases which seek a review of the manner in which contracts are awarded off frameworks.
THE SUSPENSE IS (NOT) KILLING ME
When a bidder is unhappy about a tender outcome, generally it is because they think they ought to have won. When challenging the tender process, they want to be appointed as the winner instead, or to have the tender process set aside. The Remedies Regulations promote “precontractual remedies”, that is, the idea that the tender process should be subject to review before the contract is awarded. Once proceedings are issued, there is an automatic suspension created which prevents the award of the contract being challenged. This automatic suspension can be lifted. There have been two reported cases (Arthur Cox was involved in both) dealing with applications to lift the automatic suspension since the 2015 Remedies Regulations were introduced. In both BAM PPP PGGM v National Treasury Management Agency and Powerteam Electrical Services Limited v The Electricity Supply Board, the Irish Courts decided that the contracting authority should be entitled to proceed to award the contract (notwithstanding that the tender process for the award of the contract remains under challenge) largely on the basis that the bidder complaining about the tender process can be compensated by an award of damages rather than the award of the contract it tendered for. This follows the approach being applied in the UK. This is an EU wide issue. We think at some point this matter will be referred to the European Court of Justice to decide whether an award of damages (being a post-contract award remedy) is consistent with the precontractual remedy of review which the Remedies Regulations seeks to promote.
GIVE ME A REASON I CAN BELIEVE IN
The recent case of RPS Consulting Engineers Limited v Kildare County Council is likely to require a major change in the way tender processes are conducted and documented. It is interesting to note at the outset that this was not a case about some allegation in relation to the evaluation of the tenders or application of the award criteria, but rather about the legal right to be given adequate reasons as to why a tenderer was unsuccessful. RPS was prepared to incur the costs of litigating to ask the Court to intervene and enforce its legal right to be given the required standard of information.
Based on this decision, a contracting authority which uses qualitative criteria cannot simply give out the scores, they must provide written reasons. Those written reasons must be bespoke to the unsuccessful tender in question (awarding authorities cannot simply give the same generic reasons to all unsuccessful bidders). The contracting authority’s comments must be sufficiently precise to enable unsuccessful tenderers to ascertain the basis on which the contracting authority rejected their tender and accepted that of another bidder. As regards the characteristics and relative advantages of the successful tender, the contracting authority must at least mention the relevant matters which should have been included in the applicant’s tender or the relevant matters that were contained in the successful tender. This should be by reference to particular matters or facts supporting a general assertion of relative advantage.
Also, this case appears to suggest that contracting authorities are obliged to respond to requests for additional information even where a valid standstill letter has issued. This is not currently the practice.
There is a short 30 day period within which to commence proceedings when a procurement breach has occurred or is alleged. This case also suggests that time runs from the date of receipt of the relevant notification, even if that notification is defective. That may mean that a bidder is required to institute proceedings even where it does not have a sufficient amount of information to determine whether the tender process needs to be challenged.
WHERE TO NEXT?
There are a number of significant cases making their way through the Courts in which Arthur Cox is involved, where judgments are expected during 2016. These will address key issues such as acceptance of late tenders and disclosure requirements in relation to award criteria.
THE TIME IS NIGH – THE NEW PROCUREMENT DIRECTIVES
By 18 April 2016, the new Procurement Directives will be Irish law (we expect, through transposing regulations). We will be running a number of seminars setting out what will need to be done differently when the new laws are in place.