The Rights and Entitlements of Unsuccessful Bidders under Public Procurement Law
10 December 2019
Does your business tender for public contracts? If so, the following reminder of your rights and entitlements upon the award of a public contract, may be of assistance:
Many businesses depend on winning public contracts, with the Irish Government spending approximately €12bn on goods, services and works annually. For such businesses, the consequences of failing to win or renew a public contract under a public procurement process can be particularly severe. They will therefore typically wish to fully understand why their bid was unsuccessful and their options in seeking to protect their rights.
What information is an unsuccessful tenderer entitled to under the Remedies Regulations?
The Public Contracts Remedies Regulations (S.I. 130/2010 as amended) (known as the “Remedies Regulations”) set out the remedies regime applicable to public procurement processes for public contracts above certain EU thresholds for which advertising of contracts in the Official Journal of the EU is obligatory. The relevant thresholds will depend on the subject of the contract. For instance, a €5.548m threshold applies to public works contracts. There are distinct but similar remedies regimes for utilities contracts (S.I. 131/2010 as amended) and concessions contracts (S.I. No. 326/2017).
The Remedies Regulations require a contracting authority to send unsuccessful tenderers a notice known as a “Standstill Letter” informing them of its decision concerning the award of the contract or the conclusion of a framework agreement or the establishment of a dynamic purchasing system. It must also provide a summary of the reasons for the rejection of their tenders (subject to exemptions relating to the release of certain information) and a statement that the contract will not be concluded with the successful tenderer until after the expiry of a period of time known as the “Standstill Period”. This will be 14 calendar-days if the Standstill Letter was sent electronically or 16 calendar-days if the Standstill Letter was sent by any other means. The Standstill Period begins the day after the Standstill Letter has been issued. There is no Standstill Period for certain types of contract such as contracts entered into on the basis of a framework agreement, though a contracting authority may choose to observe a voluntary Standstill Period.
For unsuccessful tenders who have submitted an admissible tender, the Standstill Letter must additionally set out the name of the successful bidder or, in the case of a framework agreement, the names of the parties to it, and the “characteristics and relative advantages” of the tender selected. In RPS Consulting Engineers Limited v Kildare County Council (2016) the High Court held that in order to set out the “characteristics and relative advantages” of the successful tender, the contracting authority must at least mention the matters which should have been included in the applicant’s tender or the matters contained in the successful tenders. The statement of reasons must therefore be sufficiently detailed to explain how the preferred tender was advantageous by reference to particular matters, respects, examples or facts supporting a general assertion of relative advantage.
What information is an unsuccessful tenderer entitled to if the Remedies Regulations do not apply?
Where the Remedies Regulations do not apply because the value of the contract is below the EU thresholds, contracting authorities are required to comply with the Office of Government Procurement’s (OGP’s) Guidelines and Circulars. For instance, the OGP’s Public Procurement Guidelines for Goods and Services (2019) provide: “Where formal tenders have been received in a below threshold competition, a contracting authority should inform all tenderers of the outcome as soon as possible after an award decision has been taken…Contracting authorities are encouraged to give constructive feedback to unsuccessful tenderers.” Similarly, Circular 10/14 provides that: “For contracts above EU thresholds for which advertising of contracts in the Official Journal of the EU is obligatory, buyers are required to give appropriate feedback to companies who have participated in a public procurement competition. For all other contracts buyers are strongly encouraged to provide written feedback as a matter of good practice.”
Debriefing Meetings and Freedom of Information (FOI) Requests
Unsuccessful tenderers may seek further information from the contracting authority by requesting a debriefing meeting. These meetings are held at the discretion of the contracting authority. Contracting authorities typically exercise caution in ensuring that feedback given in debriefing meetings is consistent with the records of the procurement evaluation group and reflects the actual reasons for the award decision.
In addition, unsuccessful tenderers may make an FOI request to the contracting authority under the FOI Act 2014. The information sought from a contracting authority under an FOI request may include for example, competitor tender documents, the contracting authority’s internal notes and correspondence on all tenders including the unsuccessful tenderer’s tender, and detailed marking schemes. However, the extent of information actually obtained under an FOI request may vary as the contracting authority may rely on several exemptions to FOI requests including for records relating to the deliberative processes of an FOI body, negotiations of a public body, legal professional privilege, confidentiality and commercial sensitivity. One of the key issues will be whether the public interest would, on balance, be better served by granting than by refusing to grant the FOI request concerned. The decision whether to grant the records sought under the FOI request may be appealed to the Office of Information Commissioner.
What if things go wrong? How Can an Unsuccessful Tenderer Bring a Legal Challenge under the Remedies Regulations?
The Remedies Regulations provide for a statutory form of judicial review proceedings in the High Court under Order 84A of the Rules of the Superior Courts. If the unsuccessful tenderer is not satisfied that the Standstill Letter sets out the reasons for the rejection of its tender or the “characteristics and relative advantages” of the successful tender, or if it otherwise believes that the public procurement process has failed to comply with public procurement law, it may wish to consider making a judicial review application to the High Court under the Remedies Regulations. In that regard, it must pay particular attention to the very short time limit for initiating review proceedings under the Remedies Regulations which is 30 calendar-days “after the applicant was notified of the decision or knew or ought to have known of the infringement alleged”. The only exception to the 30 calendar-day time limit is for an application for a declaration that the contract is ineffective, which must be made within 6 months after the conclusion of the relevant contract.
An unsuccessful tenderer who intends to make a judicial review application under the Remedies Regulations must firstly notify the contracting authority in writing of the alleged infringement, his or her intention to make an application to the High Court, and the matters that in his or her opinion constitute the infringement. Once the application to the High Court has been made, the contracting authority must not conclude the contract until: (a) the Court has determined the matter; or (b) the Court gives leave to lift any suspension of a procedure; or (c) the proceedings are discontinued or otherwise disposed of.
How Can an Unsuccessful Tenderer Bring a Legal Challenge if the Remedies Regulations do not apply?
Unsuccessful tenderers who wish to challenge the award of a below-threshold contract may bring an application for judicial review in the High Court under the normal judicial review rules in Order 84 of the Rules of the Superior Courts. Leave must first be obtained from the Court to bring the application which must be made within three months from the date when the grounds for the application first arose. The challenge may be based on the common law principles of judicial review, for instance, the principles of fair procedure. Furthermore, if the relevant contract has a potential cross-border interest (for instance, by reference to its value, complexity and location) the public procurement process will be subject to the general principles of EU law, including the principles of transparency, equal treatment, non-discrimination and proportionality; these principles may be the basis of a legal challenge.
Complaint to the European Commission
A party with concerns about the validity of a contracting authority’s decision may make a complaint to the European Commission. The European Commission has discretionary powers in this area and is not required to investigate the complaint. However, if it does, it may eventually lead to what is known as an ‘infringements procedure’ under Article 258 of the Treaty on the Functioning of the European Union (TFEU). This procedure involves the European Commission bringing an action before the Court of Justice of the European Union against the member state of the contracting authority for breach of an EU law obligation.
In practice, unsuccessful bidders never wholly rely on making a complaint to the European Commission to protect their rights, due to the very high degree of unpredictability and time involved. Even if the European Commission decides to open an investigation and take an infringements procedure, the time between a case being lodged with the Court under Article 258 TFEU and judgement is often over 2 years.
- Unsuccessful tenderers should remain aware of their entitlements to information under public procurement law, as well as the options of seeking a debriefing meeting or a making an FOI request.
- Unsuccessful tenderers who wish to bring a legal challenge will need to act very quickly in instructing their solicitors, as the time limits for bringing a legal challenge are very short.
- Unsuccessful tenderers should fully consider their desired outcome; for instance, do they merely wish to fully understand why their bid was unsuccessful and how they can better prepare a tender in the future? Or, if there are grounds to do so, do they wish to ‘collapse’ the flawed public procurement process with a view to re-tendering in a subsequent tender competition? This will be a commercial decision for the unsuccessful tenderer and will guide the legal strategy in each case.
Please contact the author of this briefing Eoghan Ó hArgáin, or the other members of the public procurement team at Eugene F Collins, Jonathan Lynch or Siobhan Kenny if you have any queries in relation to public procurement law.