RPS Consulting Engineers Limited v Kildare County Council, judgment of Humphreys J. of 15 February 2016

Summary

In RPS Consulting Engineers Limited ("RPS") v Kildare County Council (the "Council"), the High Court found that the Council had a legal obligation to provide RPS, an unsuccessful tenderer, with reasons that have been individually considered and formulated so as to clearly specify the relative advantages of the winning tenderer over RPS. The High Court also found that the Council had a legal obligation to positively respond to a request by RPS for further information related to the rejection of their tender within 15 days of having notified RPS. This is the first case where the sufficiency of reasons provided to unsuccessful tenderers has been considered in detail by an Irish court.

Background

The challenge brought by RPS related to the tender process for engineering consultancy services in relation to the design and construction of the Athy southern distributor road. The tender was published by the Council on 21 October 2014. RPS was successful in reaching the final stage of the tender, but was ultimately unsuccessful in being awarded the contract. This was despite the fact that the RPS tender was more competitive on price than the successful bidder.

On 2 April 2015, the Council issued RPS with a "notification of award decision" (the "Notification"). This provided RPS with the scores attained under the Council's marking system and included a scoring table and statement of the reasons why RPS's tender bid was unsuccessful. The scoring system employed by the Council consisted of the scores in each criterion being marked as excellent, very good, or good etc. attracting marks of 100%, 80%, 60% and so on respectively. The Court considered that the Council had changed its scoring system by applying an undisclosed banded scoring system although as RPS had not challenged the scoring system, it was not considered as a ground for quashing the decision – instead, the Court took it into account in assessing the adequacy of the reasons given. 

In its judgment, the High Court noted (paragraph 7):-

"The reasons [provided in the Notification] were a combination of a repetition of the criteria, a repetition of the scores but phrased in terms of “good”, “very good”, and so on, and a handful of additional words, 16 in total, which contained a vague and general reference to the manner in which the preferred tenderer was superior in qualitative terms to the applicant. Despite being ahead on price, the applicant was held to be behind on quality by a relatively narrow margin."

RPS was not satisfied with the reasons provided, and maintained the view that the Council had failed to provide detailed feedback in a sufficiently transparent manner. In a number of subsequent letters to the Council, RPS took the position that the "comments provided do not enable us to determine the relative advantages of the preferred bidder and [are] not sufficiently transparent as to how such substantial quality scores were lost." RPS also requested more detailed feedback and a de-brief feedback meeting with the Council. The Council took the position that it was satisfied that it had fully met its obligations in connection with the tender process and under the procurement rules and that RPS had been provided with the reasons for the decision. RPS subsequently applied for relief to the High Court on 1 May 2015, outside the standstill period of 14 days but within the statutory limitation period of 30 days.

Decision

The High Court identified the essential point on which the case turned as being "namely, whether the council provided sufficient reasons for its decision." The Court noted, and placed great importance on the fact, that similar reasons were used for each one of the unsuccessful tenderers.

The Court held that the Council had not provided RPS with sufficient reasons and that it was legally obliged under Directive 2014/18/EC to positively respond to requests for further information made by an unsuccessful tenderer within 15 days from the date of receipt of that request.

The applicable EU & Irish Law

At the outset, the High Court identified the general EU law requirement to give reasons in a procurement context and the two-stage process involved in providing reasons, namely, the initial stage where a summary of reasons is required to be provided under the Remedies Directive (Directive 89/665/EEC as amended by directive 2007/66/EC) at the time of the announcement of the contract award decision and the subsequent stage where a tenderer is entitled under the substantive Directives (i.e. Directive 2004/18/EC as replaced by Directive 2014/24/EU) to more detailed reasons upon request unless there are substantial grounds for not doing so.

The High Court observed that although the obligation under Directive 2004/18/EC to provide more detailed reasons upon request was not directly transposed into Irish law by the European Communities (Award of Contracts by Utility Undertakings) (Review Procedures) Regulations 2010 (S.I. 131 of 2010) (the "2010 Regulations"), it is a right specifically conferred by EU law and is directly applicable (enforceable in an Irish court in the same way as domestic legislation).

The level of sufficiency required when providing reasons

The Court went on to consider, in detail, the level of sufficiency required when providing an unsuccessful tenderer with reasons.

With regard to the provision of scores alone, the Court held that this will only be appropriate where they relate to purely quantitative assessments and not to qualitative ones (e.g. pricing).

Where there is a qualitative element involved, the Court inferred that a narrative comment is required. The Court then went further stating that, where there is mismatch between the quantitative and the qualitative (e.g. when a losing tenderer submitted a lower price than the winner (as was the case here)), a stronger emphasis will be placed on the need for specific and valid objective reasoning to be provided to the losing tenderer to justify such an outcome.

In regard to the need for narrative comments to refer to specific identified matters, the Court set down seven "standards" that it suggested should guide the provider of the reasons, namely:

a) If an award turns on quantitative criteria such as price, scores alone may be sufficient in relation to such quantitative criteria (as is laid down by Regulation 6(5) of the 2010 Regulations);

b) There is a heightened obligation to give reasons where there is a qualitative element involved, especially where an unsuccessful tenderer offered a more competitive price;

c) The awarding authority must give reasons as to the advantages of the successful tenderer relative to the unsuccessful tenderer to whom the reasons are addressed. There is a legal requirement for a bespoke statement of reasons;

d) Succinct comments will not necessarily be sufficient;

e) The reasons given must be sufficiently precise to enable unsuccessful tenderers to ascertain the matters of fact and law on which the authority based the rejection of their offer and accepted the offer of the successful tenderer;

f) The authority must mention the matters which should have been included in the unsuccessful tender or the matters that were contained in the successful tender. From these, it should be clearly identifiable why the preferred tender was advantageous by reference to particular matters, respects, examples or facts supporting a general assertion of relative advantage; and

g) On top of the general requirement to provide reasons, an unsuccessful tenderer may request additional information about the reasons for their rejection in writing. The request must be responded to positively unless specific exceptions apply. (The Court said that this was due to the direct effect of EU law and Article 41 of Directive 2004/18/EC (which was replaced by Directive 2014/24/EU but both are similarly applicable in this context)).  

The Court pointed to the requirement under Regulation 6 of the 2010 Regulations for a contracting authority to furnish a "summary of the reasons for the rejection" of a tender and, specifically, the requirement that this summary comprise "the characteristics and relative advantages of the tender selected". The Court was of the view that the reasons provided by the Council in this case were not in line with the "standards" outlined above, and that they did not satisfy the requirements of Regulation 6.

Time limits

On the issue of time limits, the Court held that the 30 day time limit set out by Regulation 7(2) of the 2010 Regulations starts to run when the unsuccessful tenderer is initially notified. The inference to be drawn here is that, even if an unsuccessful tenderer is provided with insufficient reasons in the initial notification, the time limit will still run from the date of that initial notification even if additional information is subsequently provided.

The Court also noted that, due to the need for legal certainty, the standstill period of 14 or 16 days would still run from the date of notification in this case. Again, the inference to be drawn is that the time periods will begin to run even where reasons provided to the unsuccessful tenderer in the initial notification may be insufficient.

Remedy

Interestingly, the Court did not quash the initial statement of reasons provided to RPS – the Court therefore must have considered this an adequate summary of the reasons. However, the Court did quash the subsequent refusal of the Council to provide additional information and the Council were ordered to provide within 15 days of the date of judgment a statement of the reasons including the characteristics and relative advantages and, in particular, the principal specific facts and matters by reference to which each characteristic or advantage could be judged.

Obiter comments

The Court also made some obiter comments in relation to Ireland's transposition of the Directives and aspects that should be considered by the legislature namely; (i) it could be made clearer where scores alone would suffice as "reasons"; (ii) the obligation to provide further information upon request should be expressly transposed into Irish law; and (iii) the standstill period should possibly be extended to 30 days to allow applicants time to request further information related to the rejection of their tender and time for authorities to then respond.

Comment

The RPS case sets out a high standard of information that contracting authorities should provide to unsuccessful tenderers. This will impact heavily on the administrative resources of contracting authorities particularly when providing information to several unsuccessful tenderers.  The case makes it clear that contracting authorities are obliged to comply with requests from unsuccessful tenderers for further information and may be required to provide even more bespoke and specific detail than was contained in the reasons provided in the initial summary notification. 

For further information, contact Anna-Marie Curran or any member of the EU, Competition & Procurement Group at A&L Goodbody.

Date Published: 25 January 2017