HFW Ports & Terminals Update - May 2010

This article first appeared in the April 2010 issue of Port Strategy

Tender Trials By Anthony Woolich

Anthony Woolich examines how a new EU directive could lay bare port tender processes.

The new European Union Remedies Directive improving the effectiveness of review procedures concerning the award of public contracts was due to be implemented throughout the EU by 20 December 2009, aiming to provide more effective remedies for those suffering from breaches of the public procurement rules.

While this article describes the impact of the Directive in the UK, the impact is similar throughout the EU.

The Regulations focus on areas where potential bidders have, in the past, been frustrated in their attempts to secure an open and fair tender process. In particular, after contracts have been awarded, the remedies available to unsuccessful bidders were previously limited to a damages claim. Under the new Regulations, claimants are able to challenge the contract award and the courts are required to declare the contract ineffective in circumstances where it has not been properly tendered and no opportunity for challenge before contract award is given. This means that the risks of non-compliance have increased, but the successful contractor, as well as the port, bears the risk of the contract being declared ineffective. The Regulations also lower some of the obstacles faced by litigants and increase the range and gravity of the remedies available.

The Standstill Period

A key stage of the tender process for any potential claimant is the standstill period, which occurs after an announcement to award the contract to the successful bidder. A contract must not be entered into, nor a framework agreement concluded, before the end of the standstill period.

The Regulations replace the two-stage process under the old law with a single-stage obligation to provide the relevant information to all unsuccessful bidders in the standstill letter itself, rather than only to those who request it at a debrief meeting or in a subsequent letter during the standstill period. This should provide unsuccessful bidders with more time before the contract award to assess whether to bring a claim. A standstill letter must be issued to tenderers as soon as possible after the decision has been made. This must include:

the award criteria; the reasons for the decision, including the characteristics and relative advantages of the successful tender; the scores obtained by the recipient...