Public procurement deadlines must be realistic
Terms of reference should set contract performance deadlines that are possible to keep for completion of the contract and individual stages. It is better to specify these periods in years, months and days than as a specific date. However, if the contracting authority set specific dates which became impossible to meet after submission of the bids, it should modify them accordingly when signing the contract, reflecting the amount of time taken into account by contractors at the stage of submission of bids.
When planning a public procurement procedure, the contracting authority should bear in mind that it may be prolonged and the agreement with the selected contractor may not be signed within the original timeframe. Therefore, it should not set specific dates for execution of the contract, in particular with regard to intermediate dates, i.e. performance milestones. When analysing their chances for timely completion of the contract, contractors take into account the deadlines specified by the contracting authority and the possible date of conclusion of the contract. They submit a bid if the minimum time for execution of a given activity falls within the period between the expected date of conclusion of the contract and the deadlines specified by the contracting authority.
Circumstances taken into consideration when submitting bids
Let’s say that a given activity will take at least three months for the contractor to perform, and the deadline set by the contracting authority is six months after the deadline for submission of bids. It is reasonable to assume that the agreement will be concluded no later than two months after submission of the bids. In such situation, the contractor may assume that it will be able to execute the public procurement on time. And it is with this assumption that the contractor not only calculates the bid price, but also decides to submit a bid at all.
Sometimes, the contractor can speed up performance of the contract, but it requires more resources, which would affect the bid price. In addition, during the implementation phase, not every contractor has additional technical capacity or staff at its disposal, which it did not take into account at the time of the bid. Therefore, the bid price always reflects the expected cost and personnel commitment to the performance of the contract.
Defining deadlines as a number of days, months and years allows for more objective attention to the conditions for performance of the contract at the stage of submitting a bid. The choice of bid should always be made promptly, but an extension of the period between opening of the bids and conclusion of the contract for reasons beyond the contracting authority’s control will not force a revision of the contract schedule if it is abstract, setting periods, not dates.
Excessive length of bid analysis stage
In one of our cases, a client submitted a bid in a tender in December. In January and February, the contracting authority sent the client letters requesting clarification of particular elements of the bid, and then decided that the bid was subject to rejection. The client appealed against this decision and the National Appeal Chamber admitted that the client was right: in mid-March, the chamber ordered the annulment of the rejection of the bid. However, the contracting authority did not take any action, but after receiving the written ruling filed a complaint with the court against the ruling. In its complaint, it asked the court for priority, i.e. the fastest possible hearing of the case, due to the risk of losing the funding which was to cover the main part of the contractor’s fee. The court granted the request and, after just three weeks, examined the case at one hearing, issuing a ruling immediately. That was in mid-April. The court held that the complaint was unfounded because the ruling of the National Appeal Chamber was correct and the actions taken by the contracting authority to clarify the bid were irrelevant.
In other words, the court held that the contracting authority should have examined the bid promptly, without wasting time on the actions taken between January and April, i.e. from the first irrelevant demand at least until the date of the judgment, i.e. mid-April.
However, the contracting authority was not satisfied with this ruling by the court. It decided that before choosing a bid (and concluding the contract), it had to wait for the written justification of the court’s ruling. So it still took no action, and even though our client had prevailed at two instances (before the National Appeal Chamber in March and before the regional court in April), its bid remained rejected. At the same time, it was the most advantageous bid in terms of price, although the contracting authority had not yet officially stated this. Only in mid-May did it decide to invalidate the rejection of the bid and proceed to examine it, requesting submission of documents concerning the contractor in the last week of the month.
At the time of writing this article, the selection of the most advantageous bid had not yet been made. But after the selection, there is still a possibility of appeal proceedings, which may postpone the conclusion of the contract even until the end of July. Meanwhile, according to the terms of reference, the first milestone set by the contracting authority, requiring about four months of work, was to be completed by the end of June—that is, probably before the contract is signed, or just a few days after.
The need to change the deadline for contract performance
The change of deadlines set in public procurement contracts is not a new topic. Contracting authorities still often set specific dates, even though procurement procedures often drag on. This subject has been repeatedly analysed by the National Appeal Chamber. The lesson for the contracting authority seems obvious: it should adjust the original deadlines to reflect the situation of the parties at the time of conclusion of the contract, taking into account the impact that such adjustment could have on the outcome of the public procurement procedure.
Under the conditions of a given proceeding, a change in the performance deadline is not always a substantial change (National Appeal Chamber resolution of 30 October 2012, Case KIO/KD 86/12). From the point of view of Art. 144(1e)(2)(a) of the Public Procurement Law, a change in the deadlines specified in a public procurement contract may be insubstantial if it does not introduce conditions which, if they had been included in the procurement procedure, would have enabled the participation of other contractors or led to acceptance of bids of different content. A change of deadlines is insubstantial, among other things, when it does not affect the contractor’s fee and the deadline for execution of the contract did not constitute a criterion for evaluating bids. On the other hand, a finding that the change is insubstantial (i.e. permissible under Art. 144(1)(5) of the Public Procurement Law) leads to the conclusion that it is also legal to change the contract template after the selection of the most advantageous bid, so that the concluded public procurement contract contains a realistic deadline for performance.
Similar conclusions can be drawn from the ruling of the National Appeal Chamber of 7 February 2013 (Case KIO 154/13), where it was held that “the deadline for performance of the contract was not substantial within the meaning of Art. 144(1) of the Public Procurement Law. This is irrefutably evidenced by the fact that the deadline for execution of the contract was not included in the criteria for evaluating bids, which means that it did not affect the contracting authority’s conduct when evaluating the bids and, therefore, could not have resulted in a defect of the proceeding that would have led to an incorrect result. Therefore, amendment to the contract in this respect is not subject to the prohibition contained in Art. 144(1) of the Public Procurement Law.”
Change acceptable as insubstantial
Therefore, in order to recognise a change in the dates for performance of the contract, which were inadvertently defined as specific dates, as an insubstantial change in the contract, it is necessary to carry out a test of its impact on competition under the factual circumstances of the procedure. Could the knowledge that the deadlines would be extended have affected the participation of other contractors in the proceedings?
In the specific case of our client, it is obvious that when concluding the contract, the contracting authority must postpone the performance deadline by the time of delay in concluding the contract caused by the contracting authority. The new deadlines should take into account the situation of the contractors on the date for submission of bids.
Since there was still six months to the first deadline set by the contracting authority at the date for submission of bids, it is reasonable to assume that all contractors believed that after concluding the contract, they would have four to five months to complete the activities that had to be completed at the date set by the contracting authority.
Moreover, in this particular case, both the National Appeal Chamber and the court clearly found the contracting authority’s conduct from January to April to be baseless. Moreover, the contracting authority failed to comply with the decision of the chamber, pointlessly extending the proceedings even further. Even after the ruling of the regional court, the contracting authority did not immediately turn to examination and selection of bids. Its actions were the only reason the original deadlines from the date of concluding the contract could not be met. Therefore, these deadlines should be amended in an insubstantial manner: a period should be added to the original dates so that the situation of the selected contractor is the same as at the date of submission of the bid. Then the contractor can execute the procurement in the timeframe it assumed at that time, understood as a number of days, months or years.
Anna Prigan, attorney-at-law, Infrastructure, Transport, Public Procurement & PPP practice, Wardyński & Partners