Bidders supported by other entities

It is not unusual for smaller bidders that do not possess all the requisite skills and experience to perform a contract, to seek to rely on another entity to fill the gap or bolster their bid so as to improve their chances.

This creates a tension. On the one hand it is healthy in a competitive market, especially one that wants to encourage small and medium-sized enterprises to bid for public contracts, to make the process easier for these smaller operators to bid by allowing them to join up with other entities so that they can compete with the bigger players in the market; on the other hand, from a contracting authority’s perspective, it needs to be confident that there is strong relationships between the bidder and the other entity, to give confidence that the bidder will deliver on the promises it makes if it is awarded the contract. Public procurement is a tortuous and slow process and the last thing that a contracting authority wants is to award the contract to a bidder that lets them down.

This issue was considered in a recent decision of the European Court of Justice (ECJ) involving a Latvian local authority. Under the terms of the procurement process, and quite reasonably you might think, the local authority required that a bidder, who wanted to rely on another entity in performing the contract, enter into a binding contract, or form a partnership, with that other entity before the contract could be awarded.

The Public Contracts Directive (2014/18) provides, in the context of “technical and/or professional ability”, a bidder may rely on another entity as part of its bid if the bidder can prove that they will have at their disposal the entity’s resources by, for example, producing an undertaking from that entity.

The Public Contracts Regulations 2015, in transposing the Directive, uses slightly different language, i.e. refers to a “commitment” rather than an “undertaking” but is broadly the same.

The ECJ held that the key issue is evidence and there can be no prescribed form that evidence may take. By specifically providing that the bidder must either contract or form a partnership with the other entity the contracting authority had gone too far and beyond the scope of the Directive. Had it simply identified a contract or partnership as a means of demonstrating a strong connection between the bidder and the other entity, leaving open the possibility of other means of proof or evidence being provided, then presumably that would have been okay.

This is a helpful steer from the ECJ on the correct interpretation of the law although, from a contracting authority’s perspective, they would no doubt prefer to be able to prescribe the legal form that any cooperation between a bidder and another entity takes.

Nathan Holden is a partner at Freeths. He can be contacted on 0845 077 9646 or This email address is being protected from spambots. You need JavaScript enabled to view it..