A new trend seems to be emerging in terms of remedies other than the annulment of the tender – for example, the situation where the tendering body concludes after the submission that the specifications were partially incorrect.
A very recent decision by the Higher Regional Court of Düsseldorf (decision of 12. 1. 2015, VII-Verg 29/14) describes an approach that is both creative and surprising, particularly for the construction procurement process. In essence, the case concerns a tender in an EU-wide open procedure for the expansion of a police headquarters, where it became apparent after the submission that the underlying method for the shoring was incorrect and had also led to a different understanding among the participating bidders. In the essence of this decision, the awarding senate sees the possibility of refraining from canceling the invitation to tender and having the bidders re-price and re-bid the erroneous mass pre-sets for the individual items. And finally, it should also be possible to do this by sending e-mails!
In detail, after the submission, a price difference of around €20,000.00 was found between the defendant and the applicant for a total of €15.4 million. Following the submission, confusion then arose about the fact that the bidders had calculated partly on the basis of the smaller visible areas for the shoring and partly on the basis of the higher execution areas (static areas) of the shoring. This difference in the quantity rates in the bidders’ calculations led to a difference of around €400,000.00, according to the defendant’s submission. The second-placed applicant claimed that its bid was €400,000.00 more expensive than that of its competitors. In order to resolve the awkward situation, the awarding authority wrote to all bidders (by email) that they should submit a revised calculation for the relevant items by a defined submission deadline. This met with resistance from the subsequent applicant and ultimately led to the contract award review and complaint procedure.
First of all, the Düsseldorf public procurement senate emphasizes that DIN 18303 of the General Technical Contract Terms for Construction Work in Part C of the VOB (ATV) between the
- Billing modality according to visible areas (area measurement according to section 5.1)
- and such a static surface (length dimension according to section 5.2)
is different. The exact invoicing method in accordance with this DIN 18303 must always be determined by the awarding authority so that comparable tenders can be submitted. This is primarily because DIN 18303 cannot automatically be used as a basis for determining which invoicing method should be given priority. The Düsseldorf Higher Regional Court found that it was undisputed that the error in the specifications required correction. Furthermore, the decision not to cancel the tender was absolutely within the legal framework. In view of the fact that the annulment is the mildest means anyway, the awarding authority is even obliged to examine feasible alternatives for correcting a tender. According to the conclusions of the OLG, this also works in an open procedure. According to the OLG, it is not a matter of prohibited renegotiations if parts of the specifications can be re-priced by the bidders following the submission. Rather, the tendering procedure is partially postponed, with all bidders having the opportunity to re-price the relevant items on the basis of the same information. In particular, this could also mean that the bidding companies look for completely new subcontractors and that the calculation approach with regard to these items is therefore not only changed in terms of quantity. In addition, reference is once again made to the freedom of design of the contracting authorities in connection with specifications. One sentence deserves special mention: In the opinion of the OLG Düsseldorf, the submission of the partially new prices by e-mail to the contracting authority is also not objectionable. The explanatory sentence follows:
“Electronic notifications are now also a common and permissible form of communication in public procurement law.”
The consequence of the fundamental admissibility of second calculations for some service items under public procurement law is that the order of bidders can change. In this respect, all bidders would be subject to the same conditions and would also be aware that the two top bids were only €20,000.00 apart. The fulfillment of the necessary transparency requirements can at least be accepted in the case of a tender in accordance with VOB/A. It should be noted that it is questionable whether this case law can also be applied to VOL/A procedures. It is irrelevant that the bidders in a VOL/A tender do not know the prices of their competitors. However, whether this can be the decisive argument for the fact that the case law shown is not transferable to award procedures under VOL/A must remain open at present.
The Düsseldorf public procurement senate also comments on a decision by the Higher Regional Court of Dresden (dated July 23, 2013, Verg 2/13). The Dresden Senate had dealt intensively with the question of whether and to what extent, in the event of an exceptional recalculation of some items, the entire tender competition may be affected in such a way that, as a result, only an annulment can be considered correct. The legal idea of the Dresden Senate is that a certain threshold of insignificance of the relevant items in relation to the total contract sum must be observed. In Saxony, a de minimis threshold of 15% is assumed for these cases. Put simply, if bidders recalculate more than 15% of the total performance, the entire tender competition is literally “unhinged” and can no longer be used for a proper award procedure. The OLG Düsseldorf is not able to follow this Dresden case law. This is because the Rhineland Senate already sees difficulties in the way in which such a de minimis threshold could be determined. It raises the question of whether this 15% should refer to the original estimate of the awarding authority, or alternatively to the average of the bids submitted, or again alternatively to the best bid. Due to these difficulties alone, the OLG Düsseldorf refuses to establish a de minimis threshold expressed as a percentage.
However, in cases of such a partial postponement of the tendering procedure on the part of the contracting authority, it is imperative to determine in the context of an evaluative consideration to what extent the changed calculation of individual items may not shake the price structure of the respective bidder as a whole, and thus also the competitive structure among all bidders as a whole. If the presumption is that the entire competition is ultimately affected, the discretionary decision can ultimately only go in the direction of a complete annulment of the tendering procedure. Once again, the freedom of choice of the contracting authority is emphasized in this context. In particular, the Düsseldorf Senate emphasizes that the level of scrutiny required of contracting authorities in this regard should not be too high.
The Düsseldorf Higher Regional Court’s final finding that the price reduction of around 75% offered by the successful bidder in relation to the seven items in the second calculation should not cause the bid to be inadequate is astonishing and can ultimately only be assessed on the basis of knowledge of the complete file.
The Dresden Higher Regional Court’s decision, which has already been described in part, also concerned an EU-wide, open procedure on the subject of shoring work. There, 20 items to be changed were in question, which were part of a total volume of 529 service items. However, the text of the decision reveals a more cautious attitude on the part of the Saxon Public Procurement Council with regard to the partial postponement of public tendering procedures. In particular, it rightly points out that the VOB/A
“the possibility of changing the contents of the tender, and certainly not after submission”
provides for this. § Section 17 VOB/A merely opens up the possibility of canceling a tender. However, the Dresden Senate concedes that there may also be such situations of cancellation that are not standardized. It is noteworthy that the senate there shows a certain reservation with regard to the partial postponement of the tender. However, based on the realization that this possibility of partial reassignment should not be cut off as a milder means compared to the annulment of the tender, the Dresden Senate wanted to draw the aforementioned limit of the insignificance threshold of 15% in 2013.
Conclusion:
The path of healing through partial postponement of the procedure outlined by the higher courts is still relatively new. It will be important for the awarding authorities to establish a good documentation situation that reflects all relevant considerations in the context of the discretionary decisions to be made. In principle, it is to be welcomed if public procurement law is loosened up to a certain extent, even in public tendering procedures that are strict in terms of form. It may be pragmatic not to want to allow large and high-volume tendering procedures to fail due to negligible item sizes. In this respect, the path that has now been found is a very interesting alternative and also a counterpart if certain errors or incompleteness in the specifications are not noticed before the time of submission in the bidding phase. It is certainly to be regarded as a contradiction in terms of evaluation if all possibilities of correcting a bill of quantities exist in the bidding phase, even if the errors are noticed and reprimanded by a bidder two days before the submission, with the consequence that the submission date can also be postponed. However, it is difficult to understand why all of this should no longer be possible once the submission has taken place and either the awarding authority or the bidders determine on the basis of the submission results that the bids were prepared on the basis of a partially different understanding of the award document. Of course, the interaction of the changed service items to be recalculated with other items must always be taken into account in the new procedure described. If this is the case, and if there is an overall presumption that the competition is “skewed” because the overall calculation would be different and possibly even the group of bidders would be partially different, there will be no way around canceling the tender.
