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Successful procurement
29 September 2009
It has been an interesting few months for anyone involved in
public procurement. There has been a flurry of cases
brought before the UK courts and the European Court of Justice
(ECJ) which may affect the Fire & Rescue Service over the
coming months.
Variation to procured contracts
In Pressetext Nachrichtenagentur GmbH v The Republik Österreich
(Bund) the ECJ considered to what extent amendments to an existing
procured contract constituted the award of a new contract under the
public procurement rules. The claim brought by Pressetext
principally revolved around two things: at what stage do amendments
made to a procured contract actually mean that a new contract is
being awarded and whether it was ever permissible to assign a
public contract to a new provider.
In its judgment, the ECJ stated that where amendments are made to
the provisions of a public contract which are materially different
from the provisions of the original contract, the parties are
effectively awarding a new contract and accordingly, the relevant
procurement rules would need to be followed before such award.
The Court suggested that the following factors could influence
whether an amendment would be material:
- conditions which, had they been part of the initial award
procedure, would have allowed other tenderers to tender or the
acceptance of an alternative tender;
- extending the scope of the contract considerably to include
services not initially covered; or
- changing the economic balance of the contract to favour the
contractor in a manner not provided for in the terms of the initial
contract.
The Court specifically assessed whether amendments to pricing
mechanisms would be material. It stated that changing a
pricing mechanism could potentially conflict with the principles of
transparency and equal treatment although this was not found to be
in the circumstance of the case.
The Court stated that ordinarily assignment could amount to a
substantial amendment and thus a new award. However, as the
transferee was a wholly owned subsidiary of the original service
provider, there was no change in overall performance of the
contract and that the original contracting party remained jointly
and severally liable for performance the court concluded that there
was no new award.
This case has offered guidance on the extent to which variations
and transfer of contracts procured pursuant to the EU rules can be
made. However, much will depend on the facts of each
individual case and careful thought will need to given to any
actions taken in relation to procured contracts.
Disclosing evaluation Criteria
The Court of Appeal have recently upheld an
interim injunction sought by Lettings International Limited
(Lettings) against the London Borough of Newham which prevented it
from completing a framework agreement, following, what Lettings had
argued, was a flawed procurement exercise.
Newham had issued a notice for 2 framework
contracts. The Invitation to Tender indicated that tenders
would be evaluated by reference to 3 criteria, compliance with
specification, price, and premises. At completion of the
evaluation Lettings challenged the award alleging that Newham’s
assessment of compliance with the specification was actually
carried out by reference to 5 sub-criteria which had not been
disclosed in any of the contract documents or the contract
notice.
Two points of interest come from this case.
First, it is one of the few UK cases to uphold an injunction
preventing award and secondly, it gave further guidance on
Regulation 30 of the Public Contracts Regulations 2006 which
requires a contracting authority to state clearly, evaluation
criteria weightings.
In granting the injunction, the Court stated
that it was not necessary to show that a tender would have been
successful but for the alleged breaches. All that was needed was to
show that there was a breach of the requirement for transparency
and fairness which amounted to a loss of opportunity to take part
in a properly conducted tender process.
Interestingly, in granting the injunction the
Court considered that Newham was unlikely to need to immediately
award contracts under the framework arrangements and that the
inability to utilise them was not going to prejudice its ability to
discharge its functions.
Considering the use of the sub-criteria the court stated that
bidders must be aware of the relative importance of all evaluation
criteria to allow proper preparation of bids. The court felt
that the sub-criteria were treated as additional formal criteria
which should have been in the contract documents. The Court
also felt that the way in which bids were scored had not been made
clear meaning bidders didn’t know what they had to do to get full
marks.
Rounding Up
These two cases set out some important
considerations for The Fire Service. It is important to ensure all
contract documents are clear, all evaluation criteria is set out so
that tenderers know what they are bidding against and the procured
agreements are sufficiently flexible to provide what is needed
throughout the term. Once in place the scope to change them in any
material way may be limited.
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