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Procurement

Taking A Stand On Standstill Letters

February 2016

 

What level of information is to be provided to unsuccessful tenderers? For the first time, the Irish High Court has addressed this specific question in a judgment delivered by Mr Justice Humphreys on 15 February 2016.

The judgment provides welcome clarity to contracting authorities and tenderers on the extent of the duty to provide reasons both in the standstill letter and following a request by the tenderer for further information. 

Background

In RPS Consulting Engineers Limited v Kildare County Council the unsuccessful tenderer’s price for engineering services in a road project was significantly more competitive than the successful tenderer however it lost out because it received slightly less marks on the qualitative criteria than the successful tenderer. The standstill letter set out the marks and brief reasons for the marks but the reasons only contained “vague and general” references to the manner in which the successful tenderer’s tender was better. Before the expiry of the standstill period, the Applicant issued a request for more information and for a debriefing meeting. This and subsequent requests were refused and the Applicant was informed that the contract had been signed. It issued proceedings challenging the adequacy of the reasons provided by Kildare County Council. 

The Court held that the Respondent failed to give sufficient reasons to enable the Applicant to know why it was unsuccessful and to enable the court to assess the validity of the decision. The Respondent had infringed the rights of the Applicant under the Directives. The Court quashed the Respondent’s letters that had refused to give further information for its decision and ordered that the Respondent shall provide the reasons which must meet the specific criteria set out in the judgment. The Court did not accept the Applicant’s argument that the standstill notice was invalid and decided not to set aside the standstill letter in the interests of maintaining certainty. However it indicated that had the proceeding been brought during the standstill period it might have taken a different approach.

It found that under the relevant European Directives (1), the giving of reasons for a contract award decision is a two-stage process. While the contracting authority must provide in the standstill letter a summary of the reasons automatically with the notification of decision, it must also provide a statement of reasons including characteristics and relative advantages, to the tenderer on request, subject only to exceptions for confidential information. Although the Irish Remedies Regulations (2) had not transposed Article 41(2) of the 2004 Directive (repeated in the 2014 Directive at Article 55 (2), the court found that Article 41 was directly effective and therefore could be relied on by the Applicant.

In reaching its decision the court considered a number of cases of the European Courts and in particular the 2012 decision of the General Court Case T-447/10 Evropaiki Dynamiki v Court of Justice as the facts were somewhat similar to the extent that the Court of Justice had given general reasons for its decision without specific reference to supporting facts. He also made reference to administrative guidelines in Ireland (Circular 10/14) and in England.

In its summary of the legal principles taken from the various cases, Directives and administrative guidelines, the judgment sets out a useful guide for the authors of standstill letters and for tenderers who are concerned about the contract award decision. Specifically, it notes the following:


- In the standstill letter:

  • scores alone could only constitute sufficient reason if the criteria revolved around price only or other purely quantitative measurements; 
  • where the lowest price tenderer is unsuccessful there is a particular need for it to be clearly demonstrated that valid objective reasoning was applied;  
  • “bespoke” reasons are required involving a comparison between the successful tenderer and the particular unsuccessful tenderer;
  • the reasons must be sufficiently precise to enable the unsuccessful tenderer to ascertain the matters of fact and law relied on by the contracting authority in its decision to award the contract to another tenderer;
  • the information about characteristics and relative advantages of the successful tenderer must be sufficiently detailed to explain how the successful tender was advantageous by reference to particular matters, respects, examples or facts supporting a general assertion of relative advantage;

- following the standstill letter:

  • an unsuccessful tenderer is entitled to request additional information,
  • the request must be responded to positively unless specific limited exceptions of confidentiality listed in Article 41 apply.

Comment

The judgement provides a helpful guide on the level of information to be provided to unsuccessful tenderers and the public policy reasons for sufficient information to be given. Contracting Authorities should review their procedures to ensure compliance. 

The judgment also underlines the particular necessity for an unsuccessful tenderer to move quickly during the standstill period. The High Court was reluctant to interfere with the contract that had already been awarded and therefore did not set aside the standstill notice despite the fact that the reasons provided were insufficient. In procurement cases, the 30 day timescale for an unsuccessful tenderer to bring a legal challenge to the award of the contract is shorter than the time limits in other types of judicial review such as planning cases. Unsuccessful tenderers are often faced with the dilemma of having to make a decision whether to commence a High Court challenge on the basis of very little information. The court suggested that the provision of meaningful reasons should reduce the need to have recourse to court and would help in acceptance of the award decision. If a challenge is brought after the award of the contract, the remedies available are likely to be limited. The court acknowledged this and suggested that the legislation be amended to provide for a standstill period of 30 days to take account of the 15 day period during which additional information requested by tenderers is to be provided by contracting authorities.  

Ronan Daly Jermyn acted for the Applicant in this case.

Finola McCarthy

(1) Council Directive 89/665/EEC as amended by Directive 2007/66/EC, Directive 2004/18/EC and Directive 2014/24/EU
(2) European Communities (Public Authorities’ Contracts) (Review Procedures) Regulations 2010(S.I. No. 130 of 2010)

 
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