2 September 2010 | Richard Auton
In the light of a recent European Court ruling, Richard Auton explains why local authorities must provide unsuccessful bidders with information to challenge a decision
The Remedies Directive, implemented last December, and the recent European Court of Justice decision in Uniplex v NHS Business Services Authority (Time for a challenge?) have underlined, once again, the importance authorities need to place on disclosure to bidders.
The purpose of the so-called “Alcatel” process is to give unsuccessful bidders
a last opportunity to prevent a contract award and information to consider whether there are grounds to challenge.
Though this may seem something to avoid, the new rules mean that not to do so where required puts the authority at far greater risk.
The Remedies Directive requires that contracts may only be entered into after the expiry of a standstill period. The service by the authority of an award decision notice determines when this standstill period starts and ends.
The notice must be served as soon as practicable after the decision to award the contract and must be sent to all unsuccessful bidders and candidates (those not selected to bid). One advantage for authorities under the new rules is they need not serve a notice on anyone already excluded, say at PQQ, provided they were served with a notice of exclusion and told the reasons at the time.
The length of the standstill period depends on how service is undertaken. For award notices served electronically and simultaneously, it is 10 days (though it must end on a working day). Otherwise it could be as long as 15 days after the last contractor received it.
The award notice must contain:
• The name of the winner;
• The award criteria;
• The scores received by the winner and the recipient;
• The reasons for the decision, including the “characteristics and relative advantages of the successful tender”;
• A full explanation of the standstill period.
Failure to comply will constitute a “ground of ineffectiveness” allowing a court to set aside the awarded contract on a challenge brought up to six months after signature. It leaves the authority potentially liable for a fine and compensation to the successful bidder, and possibly damages to the challenging tenderer, not to mention the costs of a fresh procurement.
If the information provided in the award notice is insufficient or inaccurate, the courts may view it as invalid, also amounting to a ground of ineffectiveness.
Complying and giving early, full disclosure limits the opportunity for unsuccessful bidders to stop a contract being signed to 10 days. It also means the signed contract cannot be set aside. Challenges after the 10 days are subject to restrictions. The Uniplex case established there is a three-month time limit from when the claimant knew, or ought to have known, of the infringement.
Authorities must take the view the more information they give bidders and the earlier they do it, the sooner they will flush out potential challenges and end the opportunity to bring a claim.
Richard Auton is a director in the commercial – public sector and projects group at Walker Morris
