Giving reasons to unsuccessful bidders

Issues over debriefing and the giving of reasons were to the fore in the most recent procurement challenge by European Dynamics. David Hansom looks at the lessons to be learned.

The importance of giving reasons to unsuccessful bidders has been affirmed in the latest procurement challenge by Greek company European Dynamics. This procurement relating to two public tenders for different procurement processes was run by the European Agency for the Management of Operational Cooperation at the External Borders, known as Frontex.

European Dynamics appealed against its rejection for both of the procurements. The General Court upheld the first appeal in relation to the First Tender, however, it rejected entirely its second appeal relating to the Second Tender.

Bids for procurement contracts financed in whole or in part from the EU budget

The General Court made clear in this case from the outset that it was settled case law that EU contracting authorities, such as Frontex, enjoy a broad discretion to take into account factors it considered important in the award of a public contract following an invitation to tender. The Court stated that its review was limited to checking that the rules governing the procedure and statement of reasons (for rejection of a tender) have been complied with, the facts are correct, and there has been no manifest error in assessment or misuse of powers.

Council Regulation 1605/2002 (the Financial Regulation) governs the award of all public contracts financed in whole or part from the EU budget and Regulation 2342/2002 (the Implementing Rules) deals with implementation of the Financial Regulation. The Financial Regulation and the Implementing Rules are similar to the EU public procurement directives, however, the latter are generally enforceable only at Member State level.

Article 100 of the Financial Regulation requires that a contracting authority notify tenderers of the grounds on which a rejection was made and name the successful tenderer and the relative advantages of their bid - Article 149 of the Implementing Rules requires that such requests be responded to within 15 days.

Duty to state reasons for rejection

The General Court made it clear that the duty to state reasons for rejection of a tender were an "essential procedural requirement". In relation to the First Tender, the General Court found that Frontex had failed to provide an adequate statement of reasons in breach of Article 100 of the Financial Regulation. Such an obligation could have been satisfied by a contracting authority, without making the evaluation report available to the unsuccessful tenderer by providing succinct comments on the successful and rejected tender.

In this case, the statement of reasons was defective because it did not allow European Dynamics (or the General Court) to determine, with certainty, the evaluation criteria applied and the reasons behind the scoring in parts of the tender evaluation. More particularly, the reasons did not provide certainty in the evaluation criteria applied by Frontex nor the reasons for its low scores in certain aspects of the evaluation. European Dynamics' bid was rejected at the technical evaluation stage, prior to evaluation of its financial bid; however, in the letter providing the statement of reasons supplied by Frontex, the reason for the low scores was based on the financial bid which had yet to have been evaluated at the technical stage. The General Court concluded that this was an infringement of essential procedural requirements and that the contested decision should be annulled.

In relation to the Second Tender, the appellant argued that the explanations provided by Frontex through its evaluation report were imprecise and limited to negative comments and thereby breached Article 100 of the Financial Regulation. The General Court however, in response, stated that no contracting authority was obliged, by virtue of its duty to state reasons for rejection, to enter into a debate regarding such reasons. After analysing Frontex's letters in response to European Dynamic's request for reasons, the General Court dismissed the ground of appeal entirely and that there had been no manifest error of assessment and the statement of reasons was compliant.

Comment

This case is a timely reminder to contracting authorities of the importance of debriefing bidders in any procurement procedure and providing reasons for the decision of the rejection.

David Hansom is a partner and head of the public sector group at Veale Wasbrough Vizards. He can be contacted on 020 7665 0808 or This email address is being protected from spambots. You need JavaScript enabled to view it..