Challenging Tender Awards and Public Procurement Decisions
You might think about challenging tender awards when you lose a bid. Was the decision unfair? Was the procurement process flawed? Or have you been scored incorrectly?
Associate Consultant, Carl Rogers, is an expert on public procurement. In this post he explains what is involved in challenging tender awards and decisions: Understanding public sector procurement regulations, what you can object to and what to consider before commencing proceedings.
This only applies to public sector tenders and procurement. The private sector is not bound by the same rules. But many large companies have their own processes for making a complaint against a buyer’s decision.
What Are the Obligations on Public Authorities When Purchasing Goods, Services and Works?
All public sector bodies (Contracting Authorities in Public Sector Procurement Parlance) must follow the fundamental principles:
- Transparency – Clear process undertaken
- Equal treatment – All have access to the same information
- Non-discrimination – No bias in favour or against companies
- Mutual recognition – Market access across the EU
- Proportionality – Requirements are relative and reasonable
These principles are the guiding light. Contract Authorities must consider them every time they procure goods/services and works. If an Authority believes that it may have breached these, it must take corrective action. Not wait for challenges and be directed by the courts.
UK public sector procurement is regulated by the Public Contract Regulations (PCR) 2015. This details what is (and is not) acceptable conduct by a Contracting Authority.
You can read about Public Procurement Policy at https://www.gov.uk/guidance/public-sector-procurement-policy
Contracting Authorities announce the outcome of a tender via an intention to award notice. This is normally sent via the e-tendering portal that was used to submit bids. They must provide information to unsuccessful tenderers to enable them to understand how their bid fared in comparison to the winning submission. Detailed information is found in PCR Regulation 86.
The intention to award notice must contain the following:
- Reasons for the decision, including the characteristics and relative advantages of the successful tender
- The score (if any) obtained by the tenderer receiving the notice
- The name of the tenderer to be awarded the contract or place on the Framework
- The date ending the 10-day standstill period
- Any reason(s) why the performance or functional requirements laid down by the contracting authority were not met
Contracting Authorities must make the awards based on the Contract award criteria. This is detailed in the tender pack at the beginning of the tender exercise. If this criterion is not followed, there may be grounds to challenge a tender award decision.
What Options are Open to Suppliers if They Feel There Has Been a Breach of the Public Contracts Regulations 2015?
The Contracting Authority must apply its award criteria (published with the tender pack). This includes how it evaluates all bids submitted.
In all circumstances, the first action is to contact the Authority for clarification. You should raise any queries that you have about the intention to award notice. This is the starting point to establish if there is any justification to raise a challenge to the award of the tender.
- Clearly explain your concerns along with your reasoning
- Ask if the standstill period can be extended while your request for clarification is being dealt with (the Authority isn’t obliged to do this)
- Request the Regulation 84 report (provides details of the evaluation process undertaken)
If an issue is recognised by the Authority it may decide to recall the tender, re-evaluate or start again. So, you may not need to take any more action.
What If the Authority Does Not Believe That There Are Grounds for Challenging A Tender Decision, But You Do?
It is highly advisable to seek appropriate legal advice before embarking on any legal proceedings.
Before acting, consider your future relationship with the Authority. What if your tender award challenge is found to be unjustified? Remember, public sector procurement is a small world. Buyers move in between authorities and frequently talk to each other!
You must be sure of your facts. Consequences can be severe. They can impact negatively on future relationships. Not just with the Contracting Authority, but other Tenderers who may have been adversely impacted.
When Can You Challenge Tender Awards?
Challenging tender awards must be undertaken within 30 days of a tenderer knowing (or should have known) that there are grounds for a challenge. This is detailed in PCR Regulation 92 which covers the General time limits for starting proceedings. The Regulations state:
“Such proceedings must be started within 30 days beginning with the date when the economic operator first knew or ought to have known that grounds for starting the proceedings had arisen.”
Once a formal challenge is raised, the Contracting Authority normally suspends the award of Contract.
What Suppliers Need to Do to Challenge Effectively?
Firstly, seek professional advice to ensure that there are grounds to bring a challenge. It is disappointing to not win a contract. But you must ensure that any decision to challenge a tender award is based on the facts. Not an emotional knee jerk reaction. If you are advised not to proceed, this is likely to be good advice.
Note: Zemaitis Associates does not provide legal advice. But it can give you a professional procurement opinion on whether there are grounds to challenge a tender award. Contact us if you want to discuss challenging a tender.
One of the usual complaints raised by unsuccessful tenderers is that their price was cheaper than the winning bid. Unless the tender documentation specifically stated that price is the determining factor, tenders are awarded on the basis of the Most Economically Advantageous Tender (MEAT). This means that price is not the only factor. There are also quality assessments. So, the result should be the bid with best overall value.
If there are grounds for a challenge, explain these to the Contracting Authority. This may prompt a review and change of opinion. If not, your legal advisor will provide support with any logging of the formal challenge.
The Contracting Authority is obliged to award a contract based on of its award criteria. Therefore, any challenge must be able to demonstrate that the Authority has not complied with them. Or that the principles mentioned at the beginning of this article have been breached.
What Are the Possible Outcomes of Bringing a Challenge?
The ultimate outcome of a successful challenge may be that the tender is cancelled by the Contracting Authority and re-run. Depending on how far this has gone, there may be compensation payable. For example, the case of Virgin Trains regarding the West Coast rail franchise tender in 2012 which is reputed to have cost the taxpayer up to £50m.
If the challenge is taken to court, there may be a Declaration of Ineffectiveness. This the contract award will be set aside. If the award has taken place, and depending on the public interest, compensation may be payable.
If the challenge fails, the tenderer bringing the case may be faced with a hefty legal bill to pay. Always seek advice at the earliest stage if a challenge is being considered.
Public sector procurement does make mistakes. But to challenge a tender award, you need to be certain that there has been a valid and demonstrable mistake. Being the cheapest or believing that the Authority didn’t understand your response isn’t enough.
If you believe that you have been incorrectly evaluated, contact the Authority for clarification. If something is wrong with the tender process, that is often enough to give you another chance.
If you think you want to challenge an award, always get professional advice before proceeding.
Consider the impact on future relationships with the Authority and the public sector as a whole should you go ahead with a challenge.
Lastly, there is no guarantee that you will win. Losing could be costly!
You can contact us if you want some quick advice or to have a chat about a bid award decision you are concerned about.
Feel free to share your experiences of challenging tender award decisions in the comments box.