This article is an excerpt from The Art of Tendering: A Global Due Diligence Guide, which is available for purchase.
Tender compliance issues have given rise to numerous recent bid disputes across multiple jurisdictions. Public institutions worldwide face similar challenges when it comes to assessing tender compliance and defending their tender compliance decisions.
For example, in its November 2014 decision in Mogale City Municipality v. Fidelity Security Services, South Africa’s Supreme Court of Appeal upheld a lower court decision that struck down the award of a security services contract due to the improper rejection of a competing bidder. The rejected bidder was disqualified after it was discovered that one of its directors was listed on the registry of contractors and individuals prohibited from doing business with the government. The bidder was unaware of the listing at the time of bid submission and failed to declare the listing as required by the tendering rules. The Court of Appeal determined that the rejection was “patently wrong” since a “bar on awarding a tender does not mean that a possible obstacle to the award of the tender cannot be removed before the decision on the tender is made.” In fact, the bidder had offered to remove the listed director but was not provided with an opportunity to do so. The Court of Appeal ultimately determined that the process was fundamentally flawed due to the procedural error and upheld the lower court decision to strike down the resulting contract award.
However, in its January 2016 decision in Advanced Decisions Vectors, Inc., the U.S. Government Accountability Office (GAO) upheld the rejection of a late bid in a bid dispute over a Department of Homeland Security Request for Quotations (RFQ) for security support services. While the complainant submitted a bid into the government’s e-Buy system before the deadline, that bid was caught in the government’s firewall and never made it to the designated contact person. The GAO dismissed the complaint after finding that the complainant breached the bid submission rules by submitting into the government’s general electronic system rather than submitting directly to the designated contact person as required by the RFQ bid submission rules.
Conversely, in its January 2016 decision in Export 220Volt, Inc., the GAO ordered a re-evaluation of transformer tenders after finding that the government had failed to establish the compliance of the winning bidder’s proposed equipment. The Request for Proposals (RFP) required suppliers to submit product literature to substantiate the acceptability of their proposed products. However, the GAO found that the government neglected to enforce this requirement, simply relying on the winning bidder’s general representation of compliance. The GAO ordered a re-evaluation after noting that “blanket statements of compliance” are insufficient when a solicitation specifically calls for product literature to demonstrate compliance.
On the other hand, in its May 2017 decision in Archus and Gama v. Polskie Górnictwo Naftowe I Gazownictwo S.A., the European Court of Justice ruled that a state-controlled Polish oil and gas company properly rejected a bid due to technical non-compliance. The case dealt with an Invitation to Tender (ITT) for digitizing archival documents. The complainant challenged the process after its bid was rejected for failing to provide required work samples. However, in upholding the bid rejection, the Court ruled that the principle of equal treatment of bidders under the European procurement directive precluded the acceptance of non-compliant bids, post-bid corrections, or post-bid negotiations.
Finally, in its July 2017 decision in Suburban Disposal, Inc. v. City of Camden, the New Jersey Superior Court upheld a contract awarded to a bidder that used the consolidated financial statements of its parent company to meet the financial information requirements in the solicitation. The case dealt with a tender call for the collection of solid waste and recyclables. An unsuccessful bidder challenged the contract award, alleging that the winning bidder was non-compliant for failing to provide the required financial information. The Court disagreed, finding that the information of the parent company, which consolidated the information of its subsidiaries, satisfied the requirements.
As these recent bid disputes illustrate, purchasing institutions across a broad range of jurisdictions face legal challenges arising out of their tender compliance decisions. These recent cases underscore the importance of ensuring that tender compliance standards are clearly defined and consistently enforced so that public institution are better positioned to defend resulting evaluation decisions and contract awards from legal challenge.