The Court of Justice of the European Union (CJEU) has delivered a recent judgement regarding the action that should be taken by Contracting Authorities when they are presented with an abnormally low tender.
Although English Courts are no longer bound by CJEU decisions, they may still take a CJEU decision into consideration and, as such, English Courts may follow suit in future claims (especially given that recent English Law decisions are at odds with the CJEU findings).
Background
Veridos were unsuccessful in a tender for services relating to the supply of identity documents. It sought to challenge the validity of the tender by the winners, Mühlbauer ID Services GmbH, claiming that is appeared abnormally low and considered that the Contracting Authority should have investigated this factor. Veridos claimed that had the Contracting Authority investigated the tender on the grounds of being abnormally low, it would have been rejected.
CJEU considered whether Contracting Authorities are obliged to investigate whether an abnormally low tender under the principles of transparency, non-discrimination and equal treatment enshrined in EU law and whether failing to do so distorts the competition between the tenders.
The CJEU findings
EU law does not dictate what is considered to be an ‘abnormally low tender’, it is for the Member States and, in particular, the Contracting Authorities to determine a method of calculating this.
However, as a general rule, if there is a suspicion that a tender is abnormally low, the Contracting Authority is under an obligation to:
- to identify suspect tenders,
- then to allow tenderers concerned to demonstrate their genuineness by asking them to provide the details which it considers appropriate,
- then to assess the merits of the information provided by the persons concerned, and
- to take a decision as to whether to admit or reject those tenders.
The court also held that where a Contracting Authority failed to take steps to ascertain whether a tender is abnormally low, its assessment may be subject to judicial review if the contract award decision is challenged in the Courts.
It is worth noting that the Public Contracts Regulations 2015 (PCR 2015) are largely derived from EU law and as such the rules considered by CJEU above reflect those in Regulations 56 (general principles in awarding contracts) and 69 (abnormally low tenders) of PCR 2015.
Comment
The above finding is much broader than the approach taken by English Courts in SRCL Ltd v NHS England [2018] EWHC 1985 (TCC) and Bechtel Ltd v High Speed Two (HS2) Ltd [2021] EWHC 458 (TCC) where the Contracting Authorities were only obliged to investigate whether a tender had the appearance of being abnormally low if they were excluding the tender on that basis. If the Contracting Authority thought the tender was abnormally low but did not think non-performance was a risk, there was no duty to investigate further.
In light of the CJEU findings, it may be that English Courts are persuaded to hand down similar decisions in future cases. As such, it may be beneficial in the long run for Contracting Authorities to investigate tenders that appear abnormally low in all circumstances, rather than only when they are considering excluding the tenderer on that basis. This could avoid future challenges and claims, minimise the risks of non-performance and uphold the competition within the tender process.
If you have any queries or issues in relation to this judgement or procurement law generally, please contact a member of our Procurement team.
