Procurement in a nutshell – conflicts of interest: new case law
2nd February, 2016
In this Procurement in a Nutshell, we will be looking at the recently reported European case of Intrasoft International v European Commission and its approach to dealing with conflicts of interest.
Although the case is European, the ruling is of interest to all procurement practitioners for the approach taken on dealing with conflicts that arise in procurement exercises.
Please click here for the judgement.
Please click here for our previous Nutshell discussing conflicts of interest under Public Contracts Regulations 2015.
What are conflicts of interest?
Contracting Authorities (CAs) must take all appropriate measures to effectively prevent, identify and remedy any conflicts of interest that arise during the conduct of the procurement procedure so as to avoid any distortion to competition and to ensure equal treatment of all tenderers. This is prescribed by Regulation 24 of the Public Contracts Regulations 2015.
Regulation 41 of the Public Contracts Regulations 2015 deals with conflicts of interest caused by a bidder’s participation in a market sounding exercise or role advising a CA.
A CA has a duty to consider whether a bidder’s previous participation in preliminary market consultation or help in preparing the procurement procedure in any way distorts the competition. CAs must then ensure that competition is not distorted by taking “appropriate measures” and this could include the exclusion of tenderers where this is the only way to ensure equal treatment.
In Intrasoft International v European Commission, the excluded tenderer had been involved in the preparation of tender documents indirectly. The tenderer drafted documents for a historic procurement that was then ‘reused’ by the CA. The drafted documents were not in relation to the current procurement.
The draft procurement documentation was for a different, but similar procurement for ‘support services’ for the Republic of Serbia. The project at hand was for the Serbian European Aid procurement.
The Commission believed that the previous involvement amounted to an undue competitive advantage and required its exclusion from the tender process.
The General Court (GC) of the Court of Justice of the European Union decided to overturn the exclusion, on the basis of lack of evidence of the actual advantage enjoyed by the tenderer previously (indirectly) involved in the preparation of tender documentation.
Why is it important?
The case is significant because although the Public Contracts Regulations 2015 were not considered, the GC decision on what constitutes unfair competition, and the proof of unfair competition in the context of the procurement, is still relevant when looking at Regulations 24 and 41.
If there is no proof that an unfair advantage is sought, and appears to arise indirectly, it is objectively difficult to conclude there has been an unfair advantage.
Whilst not binding on the UK courts it is interesting to see the approach taken at European level on conflicts of interest.
How can I find out more?
If you have any queries on the issues raised or on any aspect of procurement, please contact us via our procurement hotline on 0191 204 4464.
Please note that this briefing is designed to be informative, not advisory and represents our understanding of English law and practice as at the date indicated. We would always recommend that you should seek specific guidance on any particular legal issue.
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