Public procurement: Laying out the principles and limits of bid regularisation

With the introduction of the new Luxembourg law of 8 April 2018 on public contracts and its implementing Grand Ducal regulation, a major clarification has been made in terms of the extent of the power to regularise tenders submitted as part of a public procurement procedure.

1) The situation under the previous 2009 regime

Although it had the merit of being clear, the principle that applied under the previous regulatory framework was particularly severe: “Tenders that do not meet the conditions of the special specifications or whose prices are recognised as unacceptable shall be eliminated”. (Art. 71 of the Grand Ducal Regulation of 3 August 2009 (hereinafter “RMP 2009“)) and was subject to very few exceptions.

In fact, by way of derogation, three main mechanisms made it possible to regularise a file:

1) rectification of an arithmetical error, as provided for in article 72 of the 2009 RMP ;

2) rectification of purely material errors, within the limits of what had been established by the judges of the Administrative Court:

“A material error must be rectified when it is clearly apparent at the time the bids are examined. Indeed, the rectification of obvious material errors does not affect the rules prohibiting or restricting the possibility of price modifications or adjustments, i.e. it is not likely to distort the free play of competition, but on the contrary, it tends to correct the will declared by the bidder and to reveal its real will, i.e. its real offer.”

Administrative Court, 21 February 2001, no. 12.238 – Administrative Court, 14 December 2006, no. 22.262

3) the request for additional information, on the basis of Article 240 of the RMP 2009: “the contracting authority may invite economic operators to complete or explain the certificates and documents submitted pursuant to Articles 222 to 239“, this possibility being reserved, however, for information submitted solely in the context of the qualitative selection criteria, in particular in terms of economic and financial capacity;

Although the purely material nature of an error may be open to interpretation, in practice it is the request for additional information that can give rise to difficulties, for two main reasons.

On the one hand, the use of the term “supplement” implied the existence of a document that had been submitted and therefore ruled out the pure and simple omission of a document.

From this point of view, it is interesting to consider the recent appeal by an unsuccessful competitor who argued that, even though he had not submitted a certain certification with his bid, his subcontractor had it, so his exclusion was unfounded. In response to this argument, the president of the administrative court pointed out that the contracting authority could not carry out such an ex post regularisation of a bid:

“As regards the subsidiary plea, based on the assertion that on the date of submission of its tender, the temporary association …, its subcontractor, …., would have had the disputed certificate, mentioning the 111 welding process for the period from 7 October 2016 to 6 October 2018, as well as on the allegation that as this company was well established in the field of metal furniture, it would have been “obvious” that it too fulfilled these conditions, the temporary association … admitting, however, that it had not been able to obtain the certificate in question. … admitting, however, that it had not produced this document in support of its bid, this argument is hardly convincing in view of the requirement, on pain of exclusion, to submit all the documents required at the time of the bid and the impossibility, under case law, of regularising an incomplete bid ex post, this impossibility having been laid down precisely, in the light of case law, in order to guarantee equal and non-discriminatory treatment of all competitors”.

Trib. adm., Ord. 29 June 2018, docket no. 41.273

On the other hand, the reference to articles 222 to 239 of the 2009 RMP led to questions about the possibility of requesting missing documents or information that would not be directly included in the documents required for verifying compliance with the qualitative selection criteria.

2) The situation under the new 2018 regime

With the advent of the European Single Procurement Document scheduled for 18 October 2018 – a document in which economic operators will be able to declare on their honour that they comply with the conditions for participation in a contract – the question of the scope of regularisation of tenders arises with additional interest.

Firstly, it is essential to note that while Article 80(1) of the Grand Ducal Regulation of 8 April 2018 (hereinafter “RMP 2018“), implementing the Law on Public Procurement of 8 April 2018 (hereinafter “LMP 2018“) still contains the principle of eliminating “tenders that do not satisfy the conditions of the tender file“, the second paragraph of this provision is dedicated to dealing with the cases of dossiers that are incomplete or contain erroneous information but also – and above all – documents that have not been submitted.

In such cases, the contracting authority will have the possibility to ask the tenderer concerned to “submit, complete, clarify or specify the information or documents concerned within an appropriate period” (Art. 80(2) of the RMP 2018).

It should be emphasised that, as with the former Article 240 of the 2009 RMP, this is simply a possibility reserved for the public purchaser and not an obligation.

Similarly, this possibility may have been excluded in the tender documents by stating, for example, that: “All the documents, certificates and information required must be provided in support of the tender, failing which the tender will be eliminated“. If such a clause is present, it will be binding on the contracting authority, which will have no room for manoeuvre in making requests for rectification.

Without explicitly specifying the appropriate deadline, it is interesting to note that the last paragraph of Article 80(2) of the RMP 2018 provides for the possibility of applying this mechanism by requesting information within a period of 15 days.

Combining this provision with the new principles applicable to electronic communication, and in the absence of any specification as to a request to be made by registered post with acknowledgement of receipt, the request for additional information(s) must – for contracts exceeding the European thresholds – be transmitted via the public procurement portal, in order to comply with the requirement of Article 196 of the RMP 2018. For national contracts, the request may be sent via the portal or by other means (fax, email, post).

In addition, to be legal, the request for regularisation of incomplete or missing documents must comply with three additional conditions:

1) The request must comply with the principles of equal treatment and transparency (Art. 80 (2) a) of the RMP 2018): The aim being to avoid a contracting authority deciding to regularise only the tender of a single economic operator and to eliminate the tenders of other tenderers who might be in a similar situation;

2) The request must not unduly favour or disadvantage the operator to whom it has been addressed (Art. 80(2) b) of the RMP 2018) : Beyond the fact that it is not easy to conceive of a scenario where the request for regularisation could disadvantage a tenderer, this condition seems to be an extension of the first in order to reinforce the equal treatment of tenderers and thus avoid falling into behaviour that could be construed as favouritism towards one of the economic operators;

3) The request must not make it possible to derogate from the principles of elimination of non-conforming tenders and immutability of tenders (Art. 80 (2) c) of the RMP 2018): On this last point, the character of non-conformity is understood in the sense of non-compliance with the technical specifications which cannot be the subject of a remedy by means of a request on the basis of Article 80 (2) ;

This last condition is essential because it enables a certain line of conduct to be determined in terms of what may and may not be subject to regularisation.

All documents and certificates that provide additional information without affecting the value of the tender should therefore be considered as eligible for regularisation.

In this respect, technical data sheets for the equipment proposed and historical documents on the company (balance sheet, articles of association, extract from the criminal record, approval/certification held, etc.) may be included in the category of documents that may be requested if they are missing, provided that they are not included in the assessment of the technical value of the bid, and, in the more common case of technical data sheets not being provided, provided that the brand and product have been mentioned in the tender documents.

On the other hand, the prices and the details requested in the tender documents regarding the products offered, as well as all the other documents and information involved in the initial verification of the tender’s conformity and/or in its evaluation, cannot be subject to regularisation(s).

From this point of view, it is interesting to refer to the judgment handed down on 8 May 2018 by the Administrative Court, which upheld the annulment of the award decision of the Centre Hospitalier de Luxembourg, which had taken the initiative to regularise the bid of a tenderer.

In the case in point, this regularisation had been made to a position where only the brand name had been mentioned in the tender documents by the tenderer to whom the contract had been awarded, despite the obligation to describe the type of engine proposed with precision:

“In the present case, the Court notes first and foremost that, at the level of item 1.8.5 of the special specifications relating to the “Umluftventilator”, under which the special specifications require an IE4 class motor, the company … did not describe the type of motor offered at all, but merely indicated a manufacturer’s make without any further details. In this respect, the Court cannot endorse the view of the contracting authorities, which advocate an analysis and reasoning at the level of item 1.8.5 of the special specifications by cross-checking with and deducing from information provided by the company … at the level of other positions in the special specifications, given that the rigour of the information provided by the candidates in the tender documents is the necessary and inescapable guarantee of fair competition and equal treatment of the economic operators, principles which leave no room for supposition and other risks of arbitrariness and distortion of competition.

It is primarily the responsibility of tenderers – who are supposed to be professionals and specialists in the field – to ensure that tender forms are completed accurately and rigorously, just as it is their responsibility to provide the contracting authority with all relevant information and documentation from the outset.

(…)
There can therefore be no question of a minor problem of discrepancies between clear entries in a tender form and erroneous supporting documents, which can be corrected if necessary, but the clear-cut appearance was and is that of a flagrant omission or inaccuracy on the part of the tenderer … when filling in his form. The result was a manifest non-conformity with position 1.8.5 of the special specifications vitiating the company’s tender … which the contracting authorities had to sanction, without any possibility of regularisation, however understandable or commendable the intentions of the decision-makers may have been.”

Administrative Court, 8 May 2018, docket no. 40.528C

From the foregoing, it should be noted that it is imperative – for economic operators – to continue to take the necessary care in preparing their bids so that they comply in every respect with the specifications, whereas although the new regulations place clear limits on the scope of regularisation, this remains a mere option for the contracting authority and will not in any event allow regularisation of a shortcoming in the content of the tenderer’s bid.

As for the contracting authorities, recourse to the possibility of regularisation on the basis of Article 80 (2) of the RMP 2018 will provide them with a more effective tool in the event of failure by economic operators. The aim is to avoid having to consider a procedure to be unsuccessful simply because a document has been omitted, which – even if it was required in the tender file – had no impact on the content and value of an economic operator’s tender.