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20 November 2018
In a judgment dated 28 September 2018 the Cyprus Administrative Court resolved the question of the extent, if any, to which an action of a contracting authority can modify the published terms of the competition in a public procurement process.(1) The court rejected the recourse filed by the applicant, which sought to annul the decision of the Municipality of Limassol, as contracting authority, to award the contract to another tenderer ('the successful tenderer').
The Municipality of Limassol published a contract notice relating to the provision of services of a technical inspector for the implementation of projects of European programmes in the department of the municipal engineer in cooperation with the European affairs office ('the competition'). The competition was governed by the Law Regulating the Process of Public Tenders and Relevant Issues 2016,(2) which implemented the 2014 EU directive on public procurement.(3)
Article 3.3(c) of the published terms of the competition provided that the leader of the project team of the successful tenderer must meet the specified qualifications, which included "previous experience and participation in European Programs (HORIZON)", and provide evidence confirming this. According to the terms of the competition, the award criterion was the "lowest offer".
An online portal was established for the competition, through which any interested party could submit clarifying questions, suggestions and comments regarding the terms of the competition. The applicant, as one of the potential tenderers, posted a question on the online platform, asking whether a civil engineer with experience in European programmes co-financed by the Cohesion Fund would be deemed to satisfy the requirements of Article 3.3(c). The contracting authority, incorrectly and contrary to the terms of the competition, posted on the online platform the response that "the previous experience mentioned in Article 3.3(c), of the Terms of the competition will be an additional advantage", despite the fact that this conclusion was not supported by the literal interpretation of the terms. The applicant took this response to be an amendment of the terms and submitted an offer, which was the lowest offer submitted. The contracting authority examined all of the offers and awarded the contract to the successful tenderer, who was the only one who met the required qualifications.
The applicant filed a recourse against the contracting authority's decision on the grounds that the terms of the competition had been amended through the answer on the online platform, and that therefore the previous experience as described in Article 3.3(c) of the terms was no longer an "essential prerequisite", but an additional advantage which should be taken into account only in the event of two offers having the same price.
The position of the municipality, as respondent in the cases, was that there had never been an intention on the part of the contracting authority to amend the terms of the competition, and that the clarifying answer posted on the online platform interpreting the terms with a different meaning was not the regulated nor the correct means for the amendment of the terms, and therefore was without effect.
In addition, the respondent contended that the applicant's assertions were devoid of purpose, in view of the fact that if a finding were to be made that the contracting authority had amended the terms of the competition though an answer on the online platform, the whole public procurement would be declared invalid and void, due to failure to comply with the publication rules. Consequently, the respondent raised a preliminary objection that the applicant did not demonstrate a legitimate interest to promote the recourse as a tenderer whose submitted offer was invalid, as he did not comply with an essential element of the competition.
With regard to the substance of the case, the respondent claimed that the awarding of the contract to the interested party as the only tenderer meeting the prerequisites was legally permissible and within the limits of the respondent's discretionary power.
The procedure was completed with the filing of the written submissions of the parties and the administrative file with all the documents relating to the procurement. The court rejected the respondent's preliminary objection, finding that the applicant justified a legitimate interest to promote the recourse and raise issues on the legitimacy of his exclusion, since the issue in dispute was whether the essential element of the public procurement was amended so as to reduce an essential qualification to a mere secondary advantage.
The court's judgment on the merits of the case was that the published terms of a public procurement constitute a regulatory administrative act, and their infringement is a violation of substantive law. Based on the jurisprudence of the Supreme Court, the Administrative Court concluded that the answer posted on the online platform had no effect on the terms of the competition, since the regulatory administrative act concerned was incapable of being amended without legislative authorisation. The court repeated the established principle that its remit was only to examine the legitimacy of the administrative action, not the merits of the decision when it is within the discretionary power of the body making the decision. Accordingly, the recourse was rejected and the contested decision was ratified.
Notwithstanding the irregularity and the contracting authority's error in responding to the applicant's question, the published terms of the competition continued to apply exactly as they were set down in the public notice, governed by clarity and being equally accessible to any eventual interested tenderer. In line with the principles of equal treatment, non-discrimination, mutual recognition, proportionality and transparency, the applicant failed in his attempt to overturn the decision.
For further information on this topic please contact Argyro Angastinioti at Elias Neocleous & Co LLC by telephone (+357 25 110 110) or email (email@example.com). The Elias Neocleous & Co LLC website can be accessed at www.neo.law.
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