BAM PPP PGGM Infrastructure Cooperative U.a. v National Treasury Management Agency and Minister for Education and Skills - 6 October 2016
In BAM v the National Treasury Management Agency ("NTMA"), the High Court found that the NTMA had a power to accept and evaluate tender documents submitted after the tender deadline. This is the first case where the issue of late tenders has been considered in detail by an Irish court and the first case where an Irish court has ruled on the issue of late tenders in the context of a completely electronic tender procedure.
The challenge by BAM relates to the procurement process for the design, finance, construction and maintenance of part of Dublin Institute of Technology's Grangegorman campus. The deadline for the submission of tenders via the electronic tendering portal was 17:00 on 28 November 2014. Of the three qualifying tenderers, only BAM met the deadline for submission. In February 2015, the NTMA notified BAM that it had identified Eriugena as the tenderer with the most economically advantageous tender. The letter to BAM also included the following paragraph:-
“The Authority wishes to note that at the time of submission of the Tender documents to Asite, the uploading of a small number of the Eriugena documents was not completed until shortly after the 5pm deadline on 28th November, 2014. Having investigated the matter, the Authority was fully satisfied that no unfair advantage was gained by Eriugena in the circumstances and the Authority exercised its discretion to accept the Eriugena Tender prior to the evaluation exercise commencing.”
BAM initiated proceedings challenging the decision to accept the late submission and the appointment of Eriugena. The central assertion in the case was that the NTMA was not entitled under either the Invitation to Negotiate (“ITN”) or the relevant legal rules to accept a tender that was received in whole or in part after the expiration of the deadline for receipt of tenders.
The challenge by BAM was ultimately unsuccessful with the High Court finding for the NTMA on all six issues identified by the Court of Appeal.
Issue 1 - Did the NTMA have a 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?
Of particular relevance to the NTMA's decision were the "Important Notice", Section 4 (headed "Submission Requirements") and Section 7 ("Tender Evaluation") of the ITN. The court applied the "reasonably well-informed and normally diligent tenderer" standard established in SIAC v Mayo County Council (Case C-19/00) in interpreting the provisions of the ITN. Section 7(d) was titled "Authority Discretion following Receipt of Tenders" and provided at paragraph (ii) that:-
A tender will not be deemed to be non-compliant, by reason only of the inclusion of any of the following: … (ii) an error, which in the reasonable opinion of the Authority is clerical or administrative.
The Court concluded that the NTMA had a discretionary power under this section 7(d)(ii) to accept and evaluate documents submitted after the tender deadline where it was of the opinion that such omission/failure to submit was clerical or administrative. This interpretation was supported by the absolute discretion reserved by the NTMA in the "Importance Notice" of the ITN to ensure "a healthy competition is maintained throughout all stages of the Tender Process". The Court held that as the s.7.1 (d) power was expressed as a discretion it was not open-ended. The NTMA was obliged to consider the circumstances and form an opinion before it exercised this discretion.
Issue 2 - Did the NTMA misdirect itself in law or make a manifest error in considering that it had discretion?
In its letter notifying of the appointment of Eriugena as Preferred Tenderer, the NTMA did not cite any particular provision of the ITN as the source of its discretion. In its letter of 6 March 2015, the NTMA, wrote:- “The ITN is quite clear in affording the Authority discretion in this regard (see for example, Sections 4.1(c), 4.1(b)(D), 4.1(d) and the Important Notice.” BAM argued that the NTMA misdirected itself in law and made a manifest error as to the existence and basis for its alleged discretion.
While the Court agreed with BAM that insofar as the NTMA relied on section 4 of the ITN, it had misdirected itself in law, the Court held that it was clear that the NTMA was at all times relying more generally upon the terms of the ITN as the source of its discretion.
Importantly for contracting authorities more generally, the Court held that even if it was wrong in its determination that the NTMA enjoyed discretion under the ITN, the NTMA had discretion under the general law to extend time for acceptance of tender documents/files in exceptional circumstances. This finding was based on a consideration of the general principle of proportionality under EU law. Haughton J also referred with approval to the decision in J.B. Leadbitter & Co. v. Devon County Council  which was approved and followed in the Court of Appeal.
Issue 3 (a) - Did the circumstances relied on by the NTMA constitute valid reasons for exercising its discretion?
The NTMA provided detailed evidence on the justification for its decision. The Court found that the "exceptional circumstances" relied on by the NTMA were prima facie based on relevant considerations and that there was a "logical connection" between these circumstances and the decision reached. The central considerations identified as important by the court included the fact that that only 8 of Eriugena's 280 tender documents were submitted after the deadline, the fact that the technical difficulties experienced by Eriugena in the upload were not "wholly within its control", the fact that Eriugena had notified the NTMA of these difficulties at 17:14 and the fact that complete submission was achieved by 18:13. The Court found that the NTMA was entitled to conclude that Eriugena did not receive any unfair advantage over the applicant in the tender process as it had satisfied itself that none of the documents were created or modified after the deadline.
This finding of validity in relation to the reasons relied on was subject to the Court's consideration of whether the circumstances relied on by the NTMA infringed the principles of non-discrimination, equal treatment, transparency and proportionality (Issue 3(b)). The Court also considered whether the NTMA's conduct in waiving the tender deadline notwithstanding the provisions of the ITN breached the procurement regulations and the general principles of EU law ("General Principles") (Issue 6).
Summary of law
The Court held that there was no persuasive or clear authority of the European courts which provided that a public procurement tender deadline could never be extended. Rather EU case law showed that the contracting authority must apply the General Principles when considering whether to accept late or omitted documents. The Court helpfully summarised the situations where the European courts have been prepared to sanction a contracting authority granting some leeway to tenderers i.e. where -
(1) discretion is afforded by the applicable tender rules, and/or
(2) the irregularity - be it error, ambiguity, omission or late filing - is the fault of the contracting authority, or is not the fault of or within the control of the tenderer, and
(3) the exercise of that discretion does not breach the principles of equality, proportionality and transparency (and in respect of these considerations there is no margin of appreciation), and
(4) there has been no manifest error in the exercise of the discretion by the contracting authority - and in this respect the courts concede a “margin of appreciation” to the awarding authority in relation to matters of judgment or assessment.
On the evidence that was before it, the NTMA was entitled to treat the late submission of documents as an administrative error and to accept the late documents and to proceed to evaluate them. Further, and in the alternative, the NTMA was entitled to treat the circumstances giving rise to the late delivery of documents as “exceptional”.
Duty to allow late submission in exceptional circumstances
The Court also noted that in certain "exceptional circumstances" a contracting authority may be duty bound to extend a tender deadline. Haughton J considered that “exceptional circumstances” would encompass failure to achieve deadlines as a result of power failure, or force majeure, but was reluctant to define or limit the scope of what might be considered “exceptional”. He noted that what might not seem exceptional at first glance must be considered in the context of all relevant facts, and might then be seen to reach the threshold of “exceptional” when viewed objectively, particularly from a tenderer’s perspective.
The Court rejected the argument made by BAM that the NTMA breached the principles of non-discrimination and equal treatment in accepting the late documents. The Court quoted the decision of the Court of Justice of the European Union ("CJEU") in Fabricom SA v Belgium  ECR I-1559 where at paragraph 27 the CJEU stated:
Furthermore it is settled case-law that the principle of equal treatment requires that comparable situations must not be treated differently and that different situations must not be treated in the same way unless such treatment is objectively justified.
The Court noted that while BAM and Eriugena had been treated differently, there was an objective basis for this different treatment and the Court accepted the submissions of the NTMA that no unfair advantage was obtained by Eriugena.
The Court also rejected the argument made by BAM that the decision to accept the late documents was disproportionate. The Court held that the NTMA was entitled to consider Eriugena’s predicament in the context of the lengthy 31 weeks process and the public interest in progressing the project rather than risking its abandonment. The Court also noted that the objective of maintaining “…a healthy competition is maintained throughout all stages of the Tender Process” as set out in the ITN could have been lost if the late documents had not been accepted with the distinct possibility that the competition would be abandoned with only one tender to evaluate and consequent delay in delivery of the project.
By the 17:00 deadline the vast majority of Eriugena’s tender files had been uploaded and none were modified post-deadline. The difficulty encountered by Eriugena while not the fault of the Authority, was also not the fault of Eriugena. The Court was therefore satisfied that the decision taken was “the least onerous” option, and in accordance with the principle of proportionality.
Interestingly, the Court noted that any other decision would have been open to objection by Eriugena that it breached the principle of proportionality.
Breach of Transparency
BAM sought to argue that the NTMA had failed to set out the powers relied on in the impugned decision in breach of the general principle of transparency. The NTMA successfully objected to this ground of challenge on the basis that it had not been included in the pleadings and was therefore time-barred.
The Court held that the transparency issue had not been the subject matter of a complaint in the correspondence prior to the commencement of proceedings. Accordingly, BAM failed to comply with Regulation 8(4) of the European Communities (Public Authorities’ Contracts) (Review Procedures) Regulations 2010 (S.I. 130 of 2010) (“the Remedies Regulations”). This was sufficient to deal with the matter however the Court also found that BAM had failed to comply with Order 84A, Rule 3, Rules of the Superior Court by failing to directly or adequately raise the issue in the statement of grounds.
The decision is noteworthy as it is the first time an Irish court has considered in detail the issue of how a contracting authority should deal with the late submissions of tender documents.
Although the Court found the existence of a general power to accept late submissions in certain circumstances, contracting authorities should consider including a specific power to do so in the tender documents. Where the tender documents expressly prohibit extensions of time, a contracting authority will have less room for manoeuvre.
The decision also highlights the importance for contracting authorities of following proper procedures and documenting decisions taken when faced with issues such as the submission of late documents. The NTMA sought legal advice and carried out a full investigation of the circumstances before taking a decision and this worked in their favour in defending the challenge. The Court noted that it was "prudent" that a particular individual within the NTMA with potential knowledge of the financial aspects of the tenders referred the decision to a higher authority within the NTMA. The Court noted that had one of the decision-makers been in possession of knowledge of the financial aspects of any of the tenders before deciding to accept Eriugena’s late documents, this could have compromised their capacity to take part in the decision.
The case also serves as a reminder of the importance of including all grounds of challenge in the pre-litigation correspondence and in the pleadings.
For further information, contact Anna-Marie Curran or any member of the EU, Competition & Procurement Group at A&L Goodbody.
Date Published: 23 January 2017