A recent decision from the Danish Public Procurement Complaints Board[1] deals with a tender procedure involving negotiation with bidders. Negotiation is normally not allowed in EU tender procedures because of the risk of unequal treatment of bidders. It is on the other hand recognized that complex procurement may require dialogue with bidders, for example for the purpose of allowing fine-tuning tender requirements. For procuring entities in utilities sectors the procedure is allowed to a wider extent as part of more flexible rules for these sectors.
The complaint arose in connection with a tender concerning laboratory analysis service. The procuring entity was a power plant operator, and the complaint concerned the manner in which the operator had conducted the negotiations. The negotiation took place in two stages with the first stage being based on preliminary bids and the second stage happening upon receipt of reworked bids. Following this second negotiation the final bid could then be submitted. As regards the purpose of the meetings, the tender material included the following:
”(ii) The purpose of the first negotiation meeting is; (i) to give the Tenderer the opportunity to present its First Tender; (ii) to clarify any misunderstandings and/or uncertainties the Tenderer or the Contracting Entity might have; (iii) to provide feedback to the Tenderer; and (iv) to negotiate the terms and conditions set forth in the Tender documents. Accordingly, requirements and the Contracting Entity’s wishes can be changed during the procedure. The aspects of the Tender discussed at the negotiation meeting are not an exhaustive list of potential improvements to the Tender.”
The first negotiation with the complaining bidder focused on award criterion concerning education and work experience of staff to be involved in servicing the power plant. Various feedback was provided concerning shortcomings in the CV’s included in the preliminary bid, which had resulted in a low rating – at “yellow level” covering the interval 4 – 6 points.
At the second negotiation concerning the reworked bid, the procuring entity informed the bidder, that the reworked bid had pushed the rating to the highest, “green level”, which covers the interval 7 -10 points. The second negotiating was otherwise exclusively focused on adjustments in the reworked bid concerning other aspects than staff.
What happened then was that at the evaluation of the final bid, the rating remained at “green level” but with a scoring at the lowest end of the interval, namely 7 points. Partly due to the low scoring the bid was not selected as winner.
The complaint from the bidder acknowledged that feedback provided during the negotiations is not required to be exhaustive. This was in fact clarified in the tender material, see last sentence in the above quote. However, because of the positive evaluation expressed during the second negotiation, the procuring entity is in the opinion of the complainant obliged to inform the bidder in case of changes in the evaluation.
If not, the bidder is being misled. The bidder could understandably be under the impression that the quality of staff aspect of the bid had been improved to such an extent that no further improving of the bid before final submission would be necessary; – no potential for improvement, as was the turn of phrase in the Board decision. The point was made that bidder would have improved the bid again, if the procuring entity had made clear that there would still be room for such improvement; – the CV element of the bid was rated green, but there are different shades of green.
The procuring entity did on its part argue that the lack of such clarification could not be seen as a failure and referred to the fact that there is no obligation for procuring entities to provide exhaustive feedback. It was furthermore argued that feedback by its nature can in any case only be of a temporary nature and not binding on the procuring entity. The procuring entity finally stated that it is the bidders that carry the risk for uncertainties or failures in the bid.
The Board did not agree with the complainant that the procuring entity was obliged to fully clarify any potential for improvement. Furthermore, the Board did in its decision make the point that the rating of education/work experience remained green from the second negotiation and onwards; – therefore no misleading had taken place. In other words, green remained green despite the shades.
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It seems to be a mere coincidence that the remaining CV shortcomings were not discussed during the second negotiation. Upon getting the good news about the upgrading to level green, it could have been expected that the bidder would have queried the rating further. After all, the bidder was aware of the relatively broad interval 7 – 10 for the rating; the rating system was detailed in the tender material.
Queries from bidder might then have led to discussing any remaining CV-shortcomings and thus clarify the potential for improvement of the bid. However, it seems that the bidder did not query the rating – the degree of greenness. A main reason behind the decision of the Board could very well be that the bidder is the closest to carry the risk for the uncertainty as regards the precise ranking.
To place the risk on the procuring entity by assigning an obligation to provide “full” feedback would be difficult to manage in practice. Such an obligation would often rely on how feedback was exactly formulated and how interactions otherwise took place during the negotiations. After all, review of procurement procedures can for purely paper- based procedures largely rely on what objectively follows from tender specifications, tender conditions, submitted bids and other written sources. Negotiated procedures automatically introduce uncertainty as to what was actually said during the negotiations and how this was understood.
[1] Decision of 17 May 2023 concerning a tender of Ørsted Bioenergy / Thermal Power A/S