Clarification of tender responses

In our recent Government opportunities blog ‘Abnormally low bids’ (14 December 2011), we considered how a contracting authority should deal with bids that appear to be abnormally low.

This issue has been further examined in the European Court of Justice (ECJ) ruling on a preliminary reference from a Slovak court on the ability of a contracting authority to seek clarification of tenders (Case C‑599/10 – SAG ELV Slovensko a.s., and others v Úrad pre verejné obstarávanie, judgment of 29 March 2012.). The ECJ considered the wording of Directive 2004/18 (the “Directive”).

The starting point is Article 51 of the Directive, which provides that contracting authorities may invite economic operators to supplement or clarify the certificates and documents submitted in support of their applications to be selected to bid. Under Article 55 of the Directive, if a tender appears to be abnormally low, the contracting authority shall, before rejecting the tender, request certain details.

The ECJ decided that Article 55 of the Directive requires national law to make provisions requiring that, if a tenderer offers an abnormally low price, the contracting authority must ask it in writing to clarify its price proposal. Article 55 is stated in a mandatory manner: the contracting authority must examine the details of tenders that are abnormally low in order to prevent the contracting authority from acting in an arbitrary manner and to ensure healthy competition between undertakings. As noted in our ‘Abnormally low bids’ blog, there has been some debate over the apparent departure in the Public Contracts Regulations 2006 and Public Contracts (Scotland) Regulations 2006 from the wording of Article 55. Regulation 30(6) states that the contracting authority ‘may’ reject an offer that is abnormally low, but only if it has taken certain precautions.

In Slovensko, the ECJ was predominantly focused on the application of Article 55 to bids submitted under the Restricted Procedure and found that there was no requirement for national law to oblige the contracting authority, in a Restricted Procedure, to request that tenderers clarify their tenders in light of the specified technical requirements. By its nature, the Restricted Procedure means that, in principle, once the tenderers have been selected and their tenders submitted, the tenders cannot be amended. Enabling the contracting authority to require a tenderer to provide clarification of an imprecise tender or one which fails to meet the technical requirements risks the appearance of a negotiation. If that tenderer were then successful, it may be to the detriment of others and in breach of the principle of equal treatment.

Contracting authorities may, at their discretion, ask tenderers to clarify their tenders or correct obvious errors, provided that this does not, in practice, amount to a new tender. When exercising their discretion, contracting authorities must treat tenders equally, fairly and without discrimination.

The ECJ’s conclusion provides some clarity about the scope of the ability of a contracting authority to seek clarification about tenders. It emphasises that, in a Restricted Procedure, the contracting authority is under no obligation to seek clarification of an imprecise tender or one which fails to meet the specified technical requirements. However, a contracting authority may, once it has looked at all the tenders, request the correction or clarification of tenders where appropriate, provided that this does not amount to an amendment of the tenders. When doing so, the contracting authority must be very careful to treat all tenderers equally, fairly and without discrimination.

This blog was provided by Ruth McNaught, Solicitor at Harper Macleod for Government Opportunities.

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