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Should you award a contract to a bidder able to complete a project by the anticipated deadline

Common sense says – yes! so why should the European Court of Justice - an eminently sensible body – decide that a contracting authority cannot use the contractor’s ability to complete the project by the anticipated deadline as one of the criteria used to award a public contract?

The decision of the Court on 24 January 2008 in Lianakis AE v. Dimos Alexandroupolis again highlights the need for contracting authorities to design and operate effective procurement practices in order to ensure the success of their public projects.  In this case, the actions of a Municipal Council in developing the award criteria and weighting to be applied to the criteria as the procurement proceeded led to a breach of public procurement law.

The Municipal Council of Alexandroupolis issued a request for tenders for a contract to carry out a project to survey and value property in the town.  The budget for the project was £313,560.  The Contract Notice listed the award criteria in order of priority as (1) the proven experience of the expert on projects carried out in the last three years; (2) the firm's manpower and equipment; and (3) the ability to complete the project by the anticipated deadline, together with the firm's commitments and professional potential.  During evaluation of the tenders the Municipal Council allocated weighting of 60%, 20% and 20% to the award criteria and stipulated that the criteria should be evaluated by reference to the value of completed projects, the size of the project team and the value of the bidders existing commitments.

In the course of its decision, the Court re-iterated that the determination of a tenderer’s suitability and the award of a contract are two distinct procedures governed by different rules.  The suitability of tenderers is to be checked in accordance with criteria of economic and financial standing and of technical capacity; the award of contracts is based on the criteria of lowest price or of the most economically advantageous tender.

The Municipal Council could not use award criteria essentially linked to the evaluation of the tenderers’ ability to perform the contract in question as the criteria were not aimed at identifying the most economically advantageous tender but rather at identifying the tenderers’ suitability to perform the contract.

The Court then considered the actions of the Municipal Council in determining the sub-criteria of most economically advantageous tender and in allocating weighting to the sub-criteria.  Potential tenderers, the Court decided, must be aware of all the elements to be taken into account by the Municipal Council in identifying the most economically advantageous offer – and their relative importance - when they prepare their tenders.  As a result, the Court decided that the Municipal Council could not stipulate the weighting to be allocated to award criteria or the sub-criteria of the award criteria after the issue of the contract documents.

Best practice in public procurement provides for a contracting authority to determine the scope of the procurement and the award criteria and sub-criteria in conjunction with each other at an early stage in the development of a project – to ensure that the latter delivers the former.  Time constraints often militate against such good practice.  While time can be saved by concurrent operation of the different procurement procedures, there can be no doubt that the deadline for determining the award criteria and their weighting is the date of issue of tender documents.

By following the Court’s guidance, contracting authorities can ensure that all of the tenderers are able to complete the project by the anticipated deadline and that the successful tenderer does so in the most economically advantageous manner.

A PDF of this article is available for download here.

Schofield Sweeney’s Projects, PFI and Housing Team can assist you with all aspects of public procurement and State aid law.  Please contact Andrew Finfer at Schofield Sweeney’s Leeds office on 0113 220 6285.

The information contained within this briefing is not intended to be a complete statement of the subject matter of the briefing.  Professional advice should always be taken on the application of the law in any particular case.

© Schofield Sweeney LLP 2008