Ireland: Clarifications And Abnormally Low Tenders

Last Updated: 30 August 2012
Article by Philip Nolan and Robert McDonagh

A frequent issue is whether a public body can, or must, get clarification from a tenderer on aspects of its tender.  In a recent case SAG (C-599/10)1, the European Court of Justice was asked whether a contracting authority may or must seek clarification from a tenderer where the contracting authority is of the view that the tender submitted by a tenderer is abnormally low or imprecise or does not meet the technical specifications.

The Court considered each scenario in turn.  With respect to abnormally low tenders, the Court held that:

  • a contracting authority is required to examine the details of tenders which are abnormally low; and
  • for that purpose, a contracting authority must request the tenderer to furnish an explanation to prove that its tender is genuine. 

In the earlier UK decision in Varney,2the Court indicated that there is no obligation to investigate suspect tenders if the public body has no intention to reject them and that, in any event, no such duty could arise unless there was a suspicion that the tender was abnormally low.  This conflicted with the yet earlier interim decision in Morrison3 where the Court considered that there was a serious argument to say that there was an obligation to investigate suspect tenders.

Notably, in SAG the Court did not say that the requirement to investigate abnormally low tenders is conditional on the tender appearing to the contracting authority to be abnormally low, but rather simply stated that an abnormally low must be examined.  While open to interpretation, this may mean that such an obligation arises regardless of whether the contracting authority noticed that the tender may be abnormally low or intended to reject it.  This is different to the conclusion in Varney and may mean that public bodies need to reconsider their approach to abnormally low tenders.

The Court noted that the contracting authority must provide sufficient information to the tenderer to enable it fully and effectively to show that its tender is genuine.  It appears, therefore, that the contracting authority needs to clearly identify which specific parts of the tender are considered to be abnormally low.

The Court then considered the position in relation to tenders which are imprecise or do not meet the technical specifications. It stated that a contracting authority is not required to seek clarifications where a tender is imprecise or unclear. Its reasoning was that the ambiguity is attributable solely to the tenderer's failure in putting its tender together.  This is important and will give contracting authorities comfort in this respect.

However, the position may be different where the ambiguity is due to the contracting authority's error in the first place or, in light of the earlier Tideland case (case T-211/02), where there is a strong case of an obvious and easily explicable error.

The Court did say that a contracting authority may seek the correction or amplification of details of a tender where appropriate. This, however, is to be done "on an exceptional basis", particularly when it is clear that they require mere clarification, or to correct obvious material errors.  Any such correction or amplification may not in reality result in the submission of a new tender.  

The Court stated that a contracting authority:

  • may only seek clarification after reviewing all the tenders; and
  • the request must be sent to all tenderers which are in the same situation, unless there is an objective justification for treating tenderers differently such as where the tender must be rejected on other grounds; and
  • once a contracting authority seeks clarification in one respect, it cannot reject a tender due to a lack of clarity in another respect unless it has sought clarification in that respect also.

This raises the question as to whether it is permissible to only seek clarifications from the highest ranked tenderer, which is frequently done in the construction industry.  There is no clear answer to this currently, and it will probably depend on the circumstances in each case and the nature of the clarifications sought. 

Interestingly, the Court also stated that a tender, once submitted in a restricted procedure, cannot be amended at the request of the contracting authority or at the request of the tenderers.  This may suggest that you cannot use best and final offer rounds in restricted procedures, despite the contrary finding in the Irish case of Danninger v Bus Atha Cliath.4 

In Clinton,5a Northern Irish judgement delivered shortly before SAG, it was held that a public authority acted unlawfully by seeking clarification from some bidders, but not from the plaintiff. This was because the Court considered there was no material difference between the clarification required from the plaintiff and that sought from the other tenderers. The Court also held that the evaluation committee had made a manifest error in interpreting the discretion given to them by the tender documents.  This highlights the need to carefully and properly consider what the tender documents say you can and cannot do and that a consistent approach must be adopted to clarifications with all tenderers, unless the difference in treatment can be objectively justified.  

Case C-599/10 - SAG ELV Slovensko a.s., and others v Úrad pre verejné obstarávanie

Footnotes

1 Case C-599/10 SAG ELV Slovensko a.s. and Others v Úrad pre verejné obstarávanie.

2 Varney & Sons Waste Management Limited v Hertfordshire County Council [2010] EWHC 1404 (QB)

3 Morrison Facilities Services Ltd v Norwich City Council [2010] EWHC 487 (Ch).

4 Danninger v Bus Atha Cliath [2007] IEHC 29.

5 Clinton (t/a Oriel Training Services) v Department for Employment & Learning [2012] NIQB 2.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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