Public sector contracts invariably involve high value contracts. The EU has developed a series of complex regulations governing the way contracts are awarded and which set out the remedies for unsuccessful tenderers who feel aggrieved by the tender process.
The European Communities (Public Authorities' Contracts) (Review Procedures) Regulations 2010 aim to encourage more cross-border tendering by giving tenderers greater certainty about their rights and a more robust review procedure. They were signed into Irish law on 25 March 2010 and apply to decisions taken after that date.
The regulations provide that there must be a standstill period in respect of certain public contracts and that the contracting authority is not allowed to award the contract during that time period. The standstill period begins on the day after the tenderer is sent (rather than receives) a notice of the outcome of his application. The length of this standstill period is at least 14 days if the notice is sent by fax or email and 16 days if it was sent by post.
The notice to the unsuccessful tenderer must:
- Inform him of the decision reached,
- State the exact standstill period which applies to the contract,
- Provide a summary of the reasons for the rejection of the tender. This should give the name of the successful bidder and explain why that tender that was selected.
In the case of an unsuccessful candidate, the summary may be provided by setting out:
- The score obtained by the candidate concerned; and
- The score achieved by the lowest scoring candidate who is considered to meet the pre-qualification requirements in respect of each criterion assessed by the Contracting Authority.
If a bidder believes that his rights have been infringed or that the contract was not properly awarded, the bidder can seek an interlocutory order from the High Court to correct the alleged infringement or seek to judicially review the award of the contract. An interlocutory order is a temporary order which a court may make pending a full trial of the issues in dispute. Such an application must be made within 30 days after the applicant was notified of the decision or when it knew, or ought to have known, of the alleged infringement.
The 30 day time limit will apply to most procurement challenges with the exception of applications for a declaration of ineffectiveness. The limitation period for those seeking a declaration of ineffectiveness will be six months from the date of conclusion of the contract.
If an application is made for an interlocutory order, the contracting authority is prevented from concluding the contract until the court has determined the matter or has removed any suspension of the procedure. Before seeking a court order, the applicant must inform the contracting authority in writing of the alleged infringement and of his intention to apply to court.
Under the previous remedies regime, judicial review proceedings had to be brought at the earliest opportunity, and in any event by no later than three months from the cause of the action. Now the period is 30 days which will mean that aggrieved tenderers will need to move very quickly.
The Court's Powers
The court has the power (depending on the circumstances) to:
- Set aside or vary the contracting authority's decision.
- Declare a public contract to be ineffective.
- Impose penalties on the contracting authority.
- Make interlocutory orders to correct an alleged infringement or prevent further damage.
- Suspend the operation of a decision or contract.
- Award damages as compensation as a result of loss caused by an infringement of EU law or the law of the member state in question.
The court can declare that a contract is ineffective in a number of circumstances, including where the contracting authority has concluded a contract during the standstill period or where a contracting authority has concluded the contract after a candidate has applied to court for a review of the decision.
Declarations of ineffectiveness are likely to be granted only in situations where there have been significant breaches of procurement rules. In that event, from the moment that a declaration of ineffectiveness has been granted, all future obligations of the parties will end.
The court can decline to declare a contract ineffective if it decides that there are overriding reasons why the contract should continue in existence. In that event, it can impose a penalty of up to 10% of the value of the contract and can terminate or shorten of the duration of the contract .
The Need to Move Quickly
Given the tighter deadlines that now apply, obtaining information about the assessment of the tender will become an even more urgent priority. We are of the view that the new timeframes will put increased pressure on aggrieved tenderers to make a prompt decision as to whether they wish to challenge the procurement process. Swift, firm and immediate action will be required in order to avoid any potential action becoming statute barred.