At midnight yesterday (17th April 2018), the extension to the standstill period (the period where challenging a tender decision is permitted) for the award of the contract to make UK passports expired.
De La Rue, the incumbent manufacturer of UK passports since 2009, has abandoned their hopes of appeal against the decision to award the contract to their competitor Gemalto. After taking additional legal consultation, they have been advised that “the grounds for overturning the decision are insufficiently strong to justify continuing this course of action."
So, how has this situation come about and what are the implications?
UK public sector procurement must comply with relevant UK legislation and EU directives. EU directives on public procurement cover tenders that are expected to be worth more than a given threshold. The core principles of these directives are transparency, equal treatment, open competition, and sound procedural management. They are designed to achieve a procurement market that is competitive, open, and well regulated.
Most tender evaluations combine quality and price scores, in varying ratios (e.g. 60% quality and 40% price) to identify the most economically advantageous tender (MEAT). While De La Rue assert that they submitted the highest quality and technically most secure bid, Gemalto was identified as the bidder that has been evaluated as submitting the most economically advantageous tender.
In response, De La Rue has claimed that it was "undercut on price" by Gemalto.
To allow suppliers to seek effective review of contracting authorities’ decisions, obtain legal advice, consider any grounds for appeal, and challenge tender decisions, contracting authorities will include a 10-15 day standstill period between the point when the decision on the award of the contract is made and the contract is signed.
This is often called the “Alcatel Period”, as the rules have derived from the judgment in the case of Alcatel Austria v Bundesministerium fuer Wissenshaft und Verkehr (C-81/98).
Standstill letters include information about the contracting authority’s decision and often contain feedback on the scores achieved compared to the winning bidder’s tender. There are detailed requirements for this process, which are set out in the Public Contracts Directive.
So, what could De La Rue have based a challenge to the tender decision on? There are several possibilities to challenge a contract award including:
- Unfair or biased process.
- Illegal activity.
- Inaccurate scoring of the tender submission.
- Abnormally low price.
This last point is interesting. The Public Contracts Directive places a duty on contracting authorities (in this case Her Majesty's Passport Office) to investigate tenders it considers abnormally low and to disregard those that are based on approaches in breach of international environmental or social law.
One way in which De La Rue could have potentially challenged the contract award decision would be to argue that Gemalto’s tender price was abnormally low and that Her Majesty’s Passport Office had not investigated this thoroughly. While De La Rue cry foul, and claim they were undercut on price, the fact that they have been legally advised not to challenge the decision would indicate that Gemalto’s bid, while lower than De La Rue’s, was not abnormally low. They now must accept the decision and move on.
If you need to challenge a tender decision, use the standstill period to review all documentation, consider your position, take legal advice if necessary and then submit your challenge before the standstill period ends.
If you need help with writing and submitting a tender, contact BFT consult and we will be pleased to support you.