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Public procurement case digest (March 2016)

March’s case digest includes a Privy Council decision in a Montserrat case where the court held that irrespective of the legislative background to a public procurement and the existence of an implied contract, the courts will apply a general principle that tenderers should be afforded fair and equal treatment, plus a Scottish Court of Session ruling on the quantification of future demand for services in a tender process.

Please feel free to submit a comment below or send us an Ask query if you have any views on the cases covered, or think that we have missed a case that should be brought to the attention of public procurement practitioners.

Privy Council holds that tenderers for public contracts should be afforded fair and equal treatment by contracting authorities (Central Tenders Board and another v White (t/a White Construction Services) (Montserrat))

The Privy Council has dismissed the appeal of the Central Tenders Board of Montserrat (CTB) against a decision of the High Court, upheld by the East Caribbean Court of Appeal, that it was in breach of a building contract made with the respondent. The trial judge had ordered that the respondent should recover compensation, to be assessed in default of agreement. The Privy Council held that the CTB owed an implied contractual duty to the respondent and all other bidders that they would be treated fairly and equally. By withdrawing the award of a contract to the respondent’s company, the CTB had breached that duty and was liable to compensate the respondent for the loss of a chance of the contract in question.

This case will be of interest to contracting authorities because the Privy Council held that, irrespective of the legislative background to a public procurement and the existence of an implied contract, the courts will apply a general principle that tenderers should be afforded fair and equal treatment.

The case also reinforces the point that contracting authorities will be held to the effect of the wording they adopt in their procurement documents.

Scottish Court of Session ruling on procurement contract for provision of ferry services (Shetland Line (1984) limited V The Scottish Ministers)

The Scottish Court of Session has handed down a ruling on a complaint brought by the Shetland Line (1984) Limited (Shetland Line) against the Scottish Ministers challenging a procurement award decision.

The Scottish Ministers had advertised a contract for the provision of ferry services to the Northern Isles, which was eventually award to Serco Limited (Serco). Shetland Line claims that the decision to award the contract to Serco breached Article 4(3) of the Public Contracts (Scotland) Regulations 2006 because Serco’s bid did not satisfy the tender requirements because the freight services to be provided would not be sufficient to meet demand.

The Scottish Court of Session dismissed the action in its entirety, finding that all reasonably well informed and diligent tenderers would have realised that it was for them to assess current and future anticipated demand, including appropriate provision for time sensitive freight. No reasonably well informed and diligent tenderer would have concluded that it was obliged to include capacity to carry the lift-on, lift-off freight carried by Shetland Line. The Court of Session also concluded that the evaluation panel had carefully examined the demand for freight identified in each of the bids and the proposals which were made to meet that demand. In the cases of Serco’s bid and Shetland Line’s bid, the panel was satisfied that the demand assumed appeared to be based on appropriate investigations and consultations, and that the proposals for services to meet that demand were robust and adequate to meet it. Therefore, the panel had duly assessed the bids in accordance with the criteria set out in the contract documentation.

Advocate General opinion on whether method to be used to evaluate tenders needs to be set out in contract notice or documents (TNS Dimarso NV v Vlaams Gewest, AG’s opinion)

Advocate General Mengozzi has stated that the obligations placed on contracting authorities relating to the disclosure of how tenders will be evaluated should not be extended to include the method used in addition to the criteria and weightings.

TNS Dimaros NV submitted a tender for a contract for housing surveys in Flanders. The contract documents referred to 50/100 in connection with each of the two criteria used by the contracting authority (quality and price). The referring court held that each of the two criteria was to be regarded as having the same value and each therefore determined half of the ranking of the tenders. However, the court referred a question to the ECJ to query whether when the contract is awarded to the tenderer who submits the most economically advantageous tender from the point of view of the contracting authority, the contracting authority is always required to establish in advance, and indicate in the contract notice or contract documents, the method of assessment or the weighting rules, irrespective of their scope, predictability or commonness, in the light of which the tenders will be assessed in accordance with the award criteria or sub-criteria?

The Advocate General considered that Article 53(2) of Directive 2004/18 must be interpreted as meaning that the contracting authority is not required to make known to potential tenderers, in the contract notice or the contract documents, the method to be used to evaluate tenders with a view to assessing whether the award criteria published in advance in the contract notice or the contract documents have been met. However, this is only the case provided that such a method was adopted after the time-limit for the submission of tenders has expired but before those tenders are opened and that it does not alter the contract award criteria and the relative weightings of those criteria as set out in the contract notice or the contract documents, that it contains no elements which, had they been known at the time when the tenders were prepared could have affected their preparation and the measure was not adopted in the light of matters capable of having a discriminatory effect on one of the tenderers. It is for the national court to verify these conditions.

Advocate General opinion on coordination of procedures for public procurement (Ambiente e Sistemas de Informacao Geografica SA v Associacao de Industriais do Concelho de Pombal, AG’s opinion)

Advocate General Wathelet has handed down an opinion on a preliminary reference ruling from a Portuguese court regarding the coordination of procedures for the award of public works, supply and service contracts.

The preliminary reference request related the direct effect of Directive 2004/18 and the interpretation of permitted restrictions that could be imposed on an applicant in relation to its evidencing of technical ability.

The Advocate General considered that Directive 2004/18 had direct effect in principle, but it is for national courts to determine whether the relevant contracting authority is a public body. The Advocate General also considered that self-declaration of technical ability could be limited by the contracting authority, but notarisation of this declaration was not a permitted requirement.

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