Wednesday, November 23, 2016
In October 2016, the Irish High Court ruled that documents may be accepted in a tender process even after the deadline for submissions has passed. BAM PPP v National Treasury Management Agency is the first Irish case to consider this issue. The procurement process concerned a PPP project for the design, finance, construction and maintenance of educational buildings for Dublin Institute of Technology at the Grangegorman site in Dublin. The applicant, BAM, was one of three qualifying tenderers for the project, the others being Eriugena and Kajima. Tenders were to be submitted electronically through an online portal. The deadline for tender submissions was 17:00 on 28th November 2014. BAM was the only entity who submitted all the relevant documents within this timeframe. Following the evaluation procedure, Eriugena was selected as the preferred tenderer despite the fact that a number of documents were submitted after the 17:00 deadline. It was on this basis that BAM issued proceedings.
Submissions by the parties
BAM argued that NTMA did not have the discretion to accept a late submission, and that even if the authority did possess this discretion, such discretion was exercised in error. BAM argued that the authority failed to comply with the requirements of non-discrimination, equal treatment, transparency and proportionality. BAM further submitted that the authority took the decision without properly scrutinising or examining its power to do so, and that the authority failed to take as its starting point that late tenders should be rejected.
The respondent denied that it accepted late tenders and instead contended that it accepted “late documents”. It was submitted that the NTMA did possess the discretion to accept these documents after the deadline, and that this discretion was exercised properly. NTMA argued that the decision to accept the late tender was permissible as some of the contents of the late files were the same as the other documents required as part of the tender. It was contended that the fact that the same or similar information may appear elsewhere as part of the requirements of the tender process is relevant to the exercise of the authority’s discretion.
Did NTMA have discretion under the ITN to accept (a) a late tender or (b) a tender notwithstanding that some of its documents were received after the deadline or (c) the tender of Eriugena?
In answering this question, the judge scrutinised the ITN document and applied the REWIND criteria i.e.: the “reasonably well-informed and normally diligent tenderer.” Within the ITN it was held that NTMA reserved the right, in its absolute discretion, to take such steps as considered appropriate to ensure that a healthy competition is maintained throughout all stages of the Tender Process. NTMA submitted that there was no express provision in the ITN stating that rejection is a necessary or inevitable consequence of failure to submit the complete soft copy tender by the 17:00 deadline. Section 7 (d) (ii) of the ITN stated that “a tenderer will not be deemed to be non-compliant, by reason only of the inclusion of…an error, which in the reasonable opinion of the Authority is clerical or administrative.” The court interpreted this as meaning that NTMA has the discretionary power to accept and evaluate late documents where it believes such a failure is clerical or administrative. Further to this, it was ruled that there was not a material difference between a discretionary acceptance of a “late tender” or a discretion to accept “late tender documents.” There was much argument regarding whether the omission of documents could be covered by the wording which refers to “inclusion of… an error.”
Did NTMA misdirect itself in law or make a manifest error in considering that it had discretion?
It was held that NTMA does enjoy a discretion under the general law to extend time for acceptance of tender documents or files in “exceptional circumstances.”
NTMA made it plain that it had discretion, and more importantly set out at length the considerations that it took into account and the reasons that found favour with it in exercising that discretion according to the court. The court held that this was done with sufficient detail – therefore the applicant could not make a real complaint of a lack of transparency.
Did the circumstances that NTMA relied on constitute valid reasons for exercising its discretion?
The NTMA outlined what was believed to be “exceptional circumstances” in accepting the late tender. Twenty three grounds were listed, some of which included the following:
Haughton J was satisfied that prima facie the reasons relied upon by NTMA in the correspondence was based on relevant considerations and on evidence that was before the decision maker. Additionally, the fact that NTMA took legal advice demonstrated that the decision makers were expressly aware that they had some discretion and addressed their minds to the evidence in that context. There was held to be a logical connection between the circumstances found to exist on the evidence presented and considered and the decision taken.
Did the circumstances that NTMA relied on in its letters infringe the principles of non-discrimination, equal treatment, transparency and proportionality?
With regard to the possible infringement of the principles of non-discrimination, equal treatment, transparency and proportionality, Haughton J examined the Procurement Directive as well as the Procurement Regulations. He held that there is nothing in the Directive requiring contracting authorities to lay down any special condition setting out the consequences of failure to comply strictly with a deadline. Equally there is no prohibition on NTMA citing terms which confer a discretion to accept late tenders.
BAM argued that it was disadvantaged in that they stopped working on developing its tender promptly in order to ensure compliance with the deadline, and that the late acceptance of files afforded additional time to Eriugena to review and work on their tender, and that this discriminated against BAM. This argument was unsuccessful; it was held that the ITN did not require that the tenderers stop working on their tender documents when submissions were being accepted – it was a matter for each tenderer to decide when to cease work on improving and finalising the tender files. NTMA took into account that Eriugena claimed that it commenced its upload two days before the deadline and that the decision to accept their files was based on evidence of the completion of the material documents prior to the deadline.
The court then considered the issue of proportionality – it was not accepted that the decision was disproportionate. Given the scale of the project in question, NTMA could not afford to see the competition process cancelled as a result of the late document submission.
With regard to transparency, the fact that NTMA circulated the circumstances on which the decision was based was deemed sufficient by the court.
Did NTMA take into account irrelevant considerations in deciding to receive the Eriugena tender?
BAM contended that there were three matters which should not have been considered by NTMA:
Haughton J held that no legislative provision expressly addresses or sets out the considerations that should be taken into account by a contracting authority when deciding to accept late tender documents. Therefore, NTMA were required to apply the General Principles and in doing so, were correct to give regard to the above matters. It was held that considering when the late documents were modified is rationally related to the discretion to accept late documents. With regard to the content of the late documents, the court accepted that if a document has in substance, but in different form, already been submitted prior to the deadline, then this is a relevant factor to take into account in deciding whether to accept the correct document or file after the deadline. The question of fault for late delivery was deemed to fall within the remit of “exceptional circumstances” and therefore, NTMA acted properly in considering this matter.
The High Court found against BAM on all grounds, holding that NTMA did not misdirect itself in law in considering that it had discretion to accept Eriugena’s late submission.
This is an interesting judgment which is set to impact what may be defined as being “exceptional circumstances” in electing to accept late tender files. Ultimately it is a judgement that may well come back to haunt contracting authorities in the future as it opens the door to every late tender received. Contracting authorities will need to carefully consider their obligations in circumstances of both accepting and not accepting late tenders following this judgement.
The case also highlights some of the difficulties that may be encountered going forward with the submission of electronic tenders which will become mandatory in September 2018.