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Public procurement case digest (November 2012)

PLC Public Sector reports:

Our November case digest focuses on the clarity of selection criteria; when an authority can seek clarification of a tender; and joint control for the Teckal test.

Please feel free to submit a comment below or contact us at: 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.

Confusing selection criteria and the requirement to clarify (Clinton (t/a Oriel Training Services) v Department for Employment and Learning [2012] NICA 48).

For those wondering when an authority needs to or can seek clarification of a tender, this judgment makes interesting reading.  However, the disparity of views between the Court of Appeal judges highlights the problems that face anyone advising on public procurement – it is difficult to say with any degree of certainty what approach the court will take to interpreting a grey area.

The Court of Appeal in Northern Ireland (by a 2:1 majority) upheld the High Court’s finding that the Department for Employment and Learning had applied an interpretation to one of the selection criteria that lacked clarity and transparency, and would not have been clear to all reasonably well-informed and normally diligent bidders. Therefore, excluding the bidder from the tender procedure for failing to satisfy the criteria constituted a manifest error. However, the court also held (also by a 2:1 majority) that the High Court erred in finding that the Department would have been able to ask the bidder to provide certain missing information. The submission of such missing information would, in reality, have amounted to the submission of a new tender.

The key lesson from this case is the need for contracting authorities to ensure that the wording of tender documents is as clear as possible in all respects. Any attempt to remedy a weakness in the documents after the fact could be seen as introducing new criteria and therefore as further compromising the process, but any failure to remedy such a weakness could be held to be using an undisclosed criteria.

It will be interesting to see whether the Department seeks to pursue this matter any further.

In-house award: when joint control will meet the requirements of Teckal (Joined Cases C‑182/11 and C‑183/11 – Econord SpA v Comune di Cagno and others)

With shared services still very much on the agenda, the ECJ has given a timely ruling on the conditions for applying the Teckal “in-house” exception in a situation where a local authority has only a minority shareholding in the in-house service provider. The ECJ examined the test of “similar control” established by case law. This test states that a contract can be awarded directly to an entity if the following apply:

  • The entity in question is subject to control enabling the contracting authority to influence that entity’s decisions.
  • The power exercised is of decisive influence over both the strategic objectives and the significant decisions of that entity.
  • Where there is more than one authority, the control that the public authorities which are members of that company exercise over it may be categorised as similar to the control they exercise over their own departments when it is exercised by those authorities jointly.

The ECJ held that the condition of “similar control” is only fulfilled where each of those authorities not only holds capital in that entity, but also plays a role in its managing bodies. The nature of that role is unclear, however. In this case the ECJ has left it to the Italian court to decide if the necessary degree of control is met by a shareholders’ agreement under which all authorities have the right to be consulted, to appoint a member of the supervisory council and to appoint a member of the management board, in agreement with the other participating authorities.

Too late for damages (Case C-469/11 P, Evropaïki Dynamiki – Proigmena Systimata Tilepikoinonion Pliroforikis kai Tilematikis AE v European Commission)

The ECJ has dismissed an appeal about a claim for compensation relating to a procurement process organised by the European Commission. The Commission rejected the claimant’s tender on 15 September 2004. The General Court annulled the Commission’s decision in September 2008. However, the claimant only brought an action on 25 September 2009 seeking compensation for loss it had suffered as a result of the unlawful rejection of its tender. The General Court rejected this claim on the grounds that it was out of time.

The ECJ found that the General Court had made no error in law and that the action was time-barred on account of the limitation period expiring five years after the tender was rejected and the extension on account of distance only being applicable to procedural time limits.

The Ombudsman on evaluation

November 2012 saw two decisions from the European Ombudsman dealing with evaluation:

  • In a decision relating to a complaint concerning the European Commission’s conduct of a tender procedure for a contract to provide development services to Syria, the Ombudsman emphasised that it is necessary for the Commission to ensure that apparent conflicts of interest of evaluation panel members are avoided in all cases.
  • The Ombudsman also found no maladministration in respect of the Commission’s use of the BSI layer-7 test requirement to evaluate tenders for a supply contract under a EuropeAid external aid programme. He also found no grounds to inquire further into the price calculation method on the basis of which the contract was awarded.

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