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Perfecting Imperfect Bids Part 1 - When is a clarification not a clarification?

06 June 2017 #Public Procurement #Commercial


Issue under Review

In a tender for a public works, service or supply contract once a tender has been submitted what is permitted under Directive 2004/18/EC by way of clarification of that tender submission.

Summary of Judgement

  • clarifications are allowed, post submission of tenders, but only if they are genuine clarifications and do not perfect an imperfect bid,
  • requests for clarification must be addressed fairly between economic operators so as not to unfairly prefer one over another
  • an economic operator cannot submit by way of clarification information that was not included in its initial bid, and
  • where the contracting authority considers that a contract cannot be split, a bidder cannot prove its experience by relying on its own capacity and that of another (where the capacity of one or the other would be insufficient on their own)

The European Court of Justice has recently handed down its decision on a referral from a Polish Court on the tricky question of what is allowed by way of post tender clarifications.  The Judgment relates to the interpretation of the European Directive (2004/18/EC) (which were implemented in England & Wales as the Public Contracts Regulations 2006). It is also a useful piece of clarification for the operation of the Public Contracts Regulations 2015, as the principles of equal treatment and fairness between bidders flows across both sets of regulations. 

The contracting authority ran an open procedure for the purchase and supply of IT equipment. The Contracts were split into lots and the lot in question was to acquire a system for both an administrative department and medical department of a hospital. As part of the tender each bidder had to prove that it had performed at least two contracts supplying, installing, configuring and implementing an integrated IT system across both departments of the hospital (with a minimum number of beds and a minimum financial value). Specific pieces of supporting information were requested in order to prove such an experience.

Esaprojekt and Konsultant Komputer were both bidders in this lot. The contract was awarded to Konsultant Komputer on the basis that it submitted the most economically advantageous bid. This was immediately challenged by Esaprojekt in the Polish Court on the basis that Konsultant Komputer’s bid was based on incorrect information and did not meet the conditions set out in the tender. The Polish Court ordered that the original award was cancelled and that Konsultant Komputers should provide further information to justify its submission.

The contracting authority then requested that Konsultant Komputer provide the additional information, which it did. To satisfy the requirements about showing its previous experience Konsultant Komputers provided, amongst other things,

  1. Information showing that a third party (who had not been mentioned in the original submission), with whom it intended to sub contract, had relevant experience, and

  2. Information showing experience across both departments, but not in the same contract.

The contracting authority went ahead and awarded the contract to Konsultant Komputer. Once again, Esaprojekt challenged the decision.

The referral to the ECJ included a number of questions. Those most relevant to the issue of clarifications can be summarised as follows

  1. Would it be a breach of the principles of equal and non-discriminatory treatment of economic operators and of transparency to allow a bidder to provide a clarification which was not referred to in its original tender and in particular can it refer to the performance of contracts by another entity who was not mentioned in the original tender?

  2. Would it be a breach of the principles of equal and non-discriminatory treatment of economic operators and of transparency to allow a bidder to rely on the capabilities and resources of another entity (without whom it could not show that it had the capabilities to carry out the contract) where the contracting authority has stated that performance of the contract cannot be divided?

So what level of level of clarification can be requested after a bid has been submitted. The ECJ confirmed that

  1. the Directive does not prevent clarification and amplification of details of a tender. However, these must be limited to a genuine clarification or to correct obvious and material errors. In addition, the same questions must be raised of all bidders, if the same principles and errors are shown to apply, and

  2. the contracting authority could not allow a clarification that results in the submission of entirely new set of documents, or new documents that form such a substantial part of the tender that the submission and clarification is in effect a new tender.

In this case the ECJ found that the information provided (which was not referenced or included in the original tender) went much further than merely clarifying statements made or correcting obvious errors. It was in effect a “substantive and significant amendment of the initial bid”, which is more akin to the submission of a new tender. The contracting authority was found therefore to have unduly favoured Konsulting Komputers. They therefore sent the matters back to the Polish Court for them to determine what orders they should make in the context of the claim brought by Esaprojekt. It went on to say that if a contract could not be split one economic operator could not rely on the experience of another to meet the required levels of experience.

So in summary

  • clarifications are allowed, post submission of tenders, but only if they are genuine clarifications and do not perfect an imperfect bid,
  • requests for clarification must be addressed fairly between economic operators so as not to unfairly prefer one over another
  • an economic operator cannot submit by way of clarification information that was not included in its initial bid, and
  • where the contracting authority considers that a contract cannot be split, a bidder cannot prove its experience by relying on its own capacity and that of another (where the capacity of one or the other would be insufficient on their own).

This is a helpful clarification though it is all still a question of degree. If you are a contracting authority it is important to have a clear audit trail showing that you are merely requesting clarification of information already contained within a bid and not assisting one particular bidder to perfect its submission and thus unduly favouring that bidder over the others.

If you as an unsuccessful bidder consider that a contracting authority has supported the successful bidder in perfecting its bid, you should take action swiftly to obtain relevant information to support that and further advice can be provided on this by my colleagues in the dispute resolution department.

 

Clarkslegal, specialist Public Procurement lawyers in London, Reading and throughout the Thames Valley.
For further information about this or any other Public Procurement matter please contact Clarkslegal's public procurement team by email at contact@clarkslegal.com by telephone 020 7539 8000 (London office), 0118 958 5321 (Reading office) or by completing the form on this page.

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Kirstin Parker

Kirstin Parker
Senior Consultant

E: kparker@clarkslegal.com
T: 0118 953 3936
M: 07876 740 984

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