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All bidders are equal, but are some ‘more equal’ than others?


All bidders are equal, but are some ‘more equal’ than others?

November 5, 2018 10:37 AM | Posted by Beresford-Jones, Jenny | Print this page

The lodestar of EU public procurement law is the application of the EC Treaty principles of transparency, non-discrimination, and equal treatment. Much of our work as procurement lawyers involves helping clients to apply these concepts in a practical way to real life situations, where the colour tones tend to be grey rather than black and white!

One of the questions we are regularly asked is about the operation of the equal treatment principle in a situation where an incumbent provider is taking part in the re-procurement of a contract. How far must you go to “level the playing field?” Surely the incumbent has an in-built potential advantage; how do we neutralise that?

A recent European case is helpful and suggests that we don’t need to tie ourselves in too many knots about this.

The claimant was a IT company called Proof. It took part in a competition to provide website and intranet services to the contracting authority, the European Institute for Gender Equality (“EIGE”). This was a re-procurement of a service that was originally set up in 2014. The incumbent provider also took part in the new competition, and emerged as the successful bidder.

Proof brought a claim alleging that the award criteria were vague and that EIGE had deployed excessive discretion in giving a higher score to the incumbent, because of the knowledge the latter had obtained through operating the contract since 2014. Proof cited in particular the following extract from the evaluation report of the winning bid which it said showed favouritism to the incumbent on the basis that it had had the opportunity to understand the contract in greater depth:

‘the tenderer presents a deep understanding of the objectives of the framework contract that is at the same time holistic and highly specific.’

The Court was not persuaded by this argument. It held that, even if the incumbent did enjoy an advantage, this advantage was not as a result of any conduct on the part of EIGE (such as unfair marking or other bias). The Court went on to say that it is “inevitable” that an incumbent will enjoy an “inherent de facto advantage” in any situation where a contract is to be re-procured and the incumbent decides to bid. The authority could only nullify that advantage by excluding the incumbent; this drastic action could not be expected as it would amount to discrimination against the incumbent and would itself be a breach of the EC Treaty principles.

The case illustrates that the equal treatment principle is not a mandate for dealing with all bidders in an identical manner. It shows too that, sometimes, to take this approach might in itself be a breach. Instead, you need to treat bidders who are in the same situation in the same way, and bidders who are in different situations, differently. The reality is that an incumbent and a new potential supplier are in two slightly different positions in relation to the procurement and in terms of their relationship with the contracting authority. While authorities must always guard against any overt actions or decisions that favour the incumbent, it is unlikely that the equal treatment principle will be breached merely for crediting the incumbent with "knowing what it knows" as a result of its prior contractual relationship with the authority.

Case T 10/17 Proof IT SIA v EIGE (16 October 2018)

Posted by Jenny Beresford-Jones

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