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Procurement - Framework Agreement Award Cancelled

on Friday, 20 May 2016.

The Court of Justice of the European Union (CJEU) recently annulled decisions by a contracting authority to award contracts to three bidders under a framework agreement for IT services and to reject a bidder's tender.

In another case involving European Dynamics v European Union Intellectual Property Office, the CJEU annulled the contracting authority's decision for the following reasons:

  • The contracting authority did not provide sufficient reasons for rejecting the tender, as the bidder's scores for the sub-criteria were not provided. Additionally, no explanation was provided as to why the bidder's score had been reduced.
     
  • The contracting authority had made manifest errors of assessment in evaluating several parts of the bidders tender.
     
  • Members of one of the successful bidders' consortium had been involved in cases of fraud, corruption and bribes and should have been excluded from the process. The CJEU considered the failure to exclude the consortium infringed the principles of equal treatment.

The claimant also argued that there was a conflict of interest in the procedure. A sub-contractor to one of the successful bidders was part of the same group of companies that had been involved in preparing the tender specifications. The CJEU was satisfied that the contracting authority had taken steps to mitigate against the conflict of interest by seeking clarification from the bidder that no conflict of interest had arisen.

The CJEU agreed to annul the decision to award the framework and that it was appropriate to award damages, and ordered the parties to negotiate a settlement (failing which the court would determine the level of damages).

Consistent with the current jurisprudence of the CJEU in deciding how to award compensation for loss of opportunity, the Court considered the following factors to be relevant:

  • the value of obtaining the framework contract for the initial three year term
     
  • the likelihood of the claimants bid being successful
  • the nature of the agreement and there was no certainty that it would be renewed by the contracting authority
     
  • the net profit which could have been made by the bidder if they had been awarded the contract
     
  • the other profits made as a result of the bidder rejection from the contract
     
  • to calculate compensation for the loss of opportunity, the established net income is multiplied by the likelihood of success.

Comment

This is yet another case where authorities' decisions to award a framework have been cancelled by a court. Authorities may well want to reflect on the way in which their frameworks are established and how call offs are made in compliance with the rules.


For more information please contact Stephanie Rickard on 0117 314 5675.

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