Procurement in a nutshell – tenderers’ experience
16th December, 2016
A recent case has highlighted the importance of identifying satisfactory contracting partners in a public procurement exercise.
On 14 November 2016, Advocate General Bobek issued an opinion in the case of Esaprojekt Sp.z o.o. v Wojewodztwo Lodzkie (Case C‑387/14). A preliminary ruling was referred to the Court of Justice of the European Union (CJEU) following the award of a public contract to supply hospital IT systems in Poland.
The facts
Nicolaus Copernicus Independent Provincial Hospital ran a tender for the purchase and supply of a hospital integrated system (HIS) for both their administrative and medical sectors.
One element of the tender specification was that the tenderers could demonstrate that they had performed at least two contracts covering certain outlined HIS services for a healthcare establishment with at least 200 beds and having a value of no less than 450,000 Zloty.
The company Komputer Konsult (KK) won the tender. The evidence supplied by KK of previous contracts covering HIS services consisted of two supplies which had been carried out as part of a consortium consisting of KK and another entity.
The decision was challenged by Esaprojekt who claimed that the contracts listed by KK did not fulfil the stated tender requirements. KK was required to submit clarifications. The clarification process revealed that:
- One of the entries given by KK for the previous supply of HIS services was in fact a supply made within two separate contracts, each of which related to a relevant sector but neither of which covered both.
- Two alternative supplies listed by KK had been carried out by a third party.
Following a further challenge by Esaprojekt, the Polish court referred the matter to the CJEU for a preliminary ruling.
The Advocate General’s (AG) opinion
The opinion of the AG addressed the matters in the following way:
Reliance on experience acquired as part of a consortium
The AG expressed the view that a bidder is entitled to rely on its own experience acquired in the performance of a contract, as part of a consortium. The precise role of an entity and the consequent experience which it obtains depends on the specific circumstances.
The relevance of the experience in the context of a particular tender is therefore fact-specific. Where contested, this is a question of fact for the national court to decide.
Reliance on the experience from two or more separate contracts as a single contract
The AG considered that a bidder should be able to draw on “fragmented” experience. Noting that the Procurement Directive does not dictate specifically how or by whom the relevant experience must have been garnered, he notes that: “What is critical is whether the overall experience that the economic operator can genuinely rely on, being either its own or of a third party, is sufficient to carry out the contract.”
The AG did consider however, that the express exclusion of such reliance will be possible in exceptional circumstances.
Reliance on the capacity of other entities
The AG was of the view that when clarifying or amending a tender, a bidder should not be able to rely on the experience of third parties which had not been contained in the original submission. This would in fact amount to a significant change in the tender, rather than a clarification, since: “The very identity of the entities carrying out the work, or at least whose experience is being called upon to do so, is being altered. That is a material change affecting a key element of the procedure.”
Why is this important?
The identification of satisfactory contracting partners is fundamental to ensuring that any tender process best meets the needs of the contracting authority (CA) concerned and achieves value for money.
Tailoring the selection criteria to encompass the fundamental requirements of a procurement is necessary in order for a CA to ensure that the selected bidder has the capability to perform the contract.
As with all other procurement criteria and conditions, the overarching principle of transparency applies to the selection criteria. Accordingly, CAs should provide clarity regarding the selection criteria from the outset.
The opinion of the Advocate General is subject to confirmation by the CJEU. The stance taken by the Court in this case will ultimately have a bearing on the extent to which CAs will need to consider bidders’ reliance on third parties and joint reliance on the experience of two or more contracts as a single contract.
A widening of the potential pool of bidders for a given procurement would stress the need for CAs to consider carefully the requirements that they set out in their specification, ensuring full transparency from the start.
How can I find out more?
If you have any queries on the issues raised or on any aspect of procurement, please contact us via our procurement hotline on 0191 204 4464.
Please note that this briefing is designed to be informative, not advisory and represents our understanding of English law and practice as at the date indicated. We would always recommend that you should seek specific guidance on any particular legal issue.
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