When an economic operator is told that its tender has not been accepted, the instinctive reaction is to look for the reason. The first legal question, however, is a different one: is this exclusion, or rejection of the tender?

The distinction is not academic. It affects the legal basis of the dispute, the arguments available, and in some cases the remedies that can realistically be sought.

Exclusion and rejection are not the same thing

As a general matter, exclusion concerns the operator’s own eligibility to take part in the procedure. The statutory mandatory and discretionary grounds of exclusion are examples: certain criminal convictions, serious tax or social insurance breaches, grave professional misconduct, conflicts of interest, or serious deficiencies in the performance of earlier public contracts.

Rejection of the tender generally concerns whether the tender itself complies with the terms of the procedure. It may relate to technical deviations, failure to meet mandatory requirements, gaps in the required documentation, non-compliance with the technical specifications, or other defects in the bid.

In practice the two can overlap. That is why the specific legal basis relied upon by the contracting authority always needs to be examined.

Why self-cleaning matters

Not all grounds of exclusion operate in the same way. The legislation distinguishes between mandatory and discretionary grounds, and for a number of situations it allows remedial measures — self-cleaning.

An operator may show that it has taken adequate measures to restore its reliability: compensating the damage, cooperating with the competent authorities, and putting appropriate organisational, technical or corporate compliance measures in place.

A contracting authority is not obliged to accept any assertion of self-cleaning. It is, however, obliged to assess whether the measures taken are in fact adequate in the circumstances of the particular case.

The most common grounds for rejecting a tender

In practice, most challenges against decisions of contracting authorities fall into one of the following categories.

Non-compliance with the technical specifications

The contracting authority may conclude that the product, work or service offered does not meet the technical requirements of the procedure.

In such cases the questions are whether the evaluation was based on what the tender actually said, whether the technical specifications were correctly interpreted, and whether they were applied in the same way to every tenderer.

Missing documents or certificates

Failure to submit required documents is among the most frequent grounds of rejection.

Not every omission leads automatically to exclusion, however. In some cases clarification is permitted in respect of material that already existed at the time the tender was submitted. In others, producing it later would amount to an impermissible alteration of the tender.

The answer always depends on the terms of the procedure and on the relevant case law.

Abnormally low tender

A low price is not, in itself, a sufficient basis for rejecting a tender.

Before excluding an operator on the ground that its tender is abnormally low, the contracting authority must seek explanations and assess whether the price is justified by objective factors — the technical solution proposed, the method of performance, particularly favourable conditions, or other legitimate considerations.

Whether that procedure was followed is frequently the decisive point in a challenge.

Failure to meet the selection criteria

Some cases concern not the tender itself but the conclusion that the operator has not sufficiently demonstrated its economic, technical or professional capacity.

Here the issues are both the correct interpretation of the tender terms and the adequacy of the contracting authority’s reasoning.

Clarification, or impermissible supplementation?

One of the hardest questions in public procurement is where permissible clarification ends and impermissible alteration of a tender begins.

A contracting authority may, in defined circumstances, seek clarification or explanation of material that has already been submitted.

What it may not do is permit later supplementation or amendment where the effect is to substitute a new tender, or to change essential elements of the tender already submitted, contrary to the principle of equal treatment.

The line has been drawn through the case law of the Court of Justice of the European Union, and is always applied by reference to the facts of the individual case.

Where cases are usually decided

Most successful challenges do not rest on a single argument but on a combination of legal defects.

The issues that recur most often are:

  • different treatment of comparable tenders,
  • inadequate or contradictory reasoning,
  • misapplication of the tender terms,
  • failure to evaluate material that had already been submitted,
  • misapplication of the rules on clarifications,
  • defective assessment of an abnormally low tender,
  • breach of the principles of equal treatment, transparency or proportionality.

In some cases the real problem lies not in the tender but in the terms of the procedure themselves. If a term is unlawful, disproportionate or unjustifiably restricts competition, it has to be challenged within the deadlines the legislation provides. Raising it later, after the tender has been rejected, is frequently out of time.

Before deciding whether to challenge

The initial assessment usually turns on the following questions:

  • Is this in fact exclusion, or rejection of the tender?
  • Which specific provision or tender term is the contracting authority relying on?
  • Was lawful clarification available?
  • Was the principle of equal treatment observed as against the other tenderers?
  • Was the prescribed procedure followed, particularly in the case of an abnormally low tender?
  • Was there an opportunity to challenge the tender terms in time?

The answers largely determine the strategy of any challenge.

Conclusion

Whether a challenge succeeds rarely depends only on what happens after a tender is rejected. It is usually determined by the preparation that came before: close reading of the tender documents, checking the bid before submission, flagging problematic terms in time, and correctly assessing the legal basis of each decision the contracting authority takes.

Need an assessment?

Every case turns on its own facts and on the documents behind them. For an initial assessment of your position, you are welcome to contact the Firm at info@topouzislegal.com.

This article is provided for general information only and does not constitute legal advice on any specific matter.