COMMUNICATION FROM THE COMMISSION - Procedure for informing candidates and tenderers, after a contract has been awarded and before the actual contract has been signed, in respect of public procurement contracts awarded by the Commission under Article 105 of the Financial Regulation

1. Background

At the request of the Ombudsman, the Commission has agreed to put in place, within the public procurement procedures covered by Article 105 of the Financial Regulation, a procedure for informing tenderers or candidates (depending on whether the procedure is open or restricted) before the actual contract has been signed. It sent the following reply to the Ombudsman on 7 November 2002:

Remedies available to bidders in tender procedures organised by the Commission

In the light of the judgement of the Court of Justice mentioned in the Ombudsman's letter, the Commission agrees that, prior to contract signature, authorising officers will have to inform without delay all bidders or candidates of the award decision in the public procurement procedures covered by Article 56 of the current Financial Regulation and by Article 105 of the new Financial Regulation, and should provide for a reasonable delay before contract signature in order to enable bidders and candidates to request the reasons for the award decision and, the case being, file a judicial recourse against such a decision.

The Commission will pay particular attention to the practical and organisational aspects of this procedure, in order to ensure a timely management of its activities, taking account of the high number of the Commission's public purchases every year (several hundreds) and the duration of the public procurement procedures. In the light of this, the Commission intends to work out the practical arrangements so that the above-described procedure could be in place from the beginning of 2003 and is taken into account in the planning of the new public procurement procedures to be launched by then.

In reply to the Commission's letter, the Ombudsman wrote again on 10 December asking the Commission to specify the procedure and arrangements it intends to apply. He also called on the Commission to state whether it plans to set up a non-judicial appeal procedure for bidders who would prefer it to the judicial procedure.

The information procedure covered by this decision is without prejudice to any court actions which candidates and tenderers may bring.

It is therefore neither the purpose nor the effect of any requests for information and the ensuing replies to suspend the time allowed for lodging appeals against award decisions notified to candidates and tenderers. Under Article 20 EC, candidates and tenderers have two months to appeal from the date on which they are notified of award decisions.

2. Legal basis

The procedures for informing candidates or tenderers after a contract has been awarded are laid down in the Financial Regulation and its Implementing Rules.

Article 100(2) of the Financial Regulation states:

"The contracting authority shall notify all candidates or tenderers whose applications or tenders are rejected of the grounds on which the decision was taken, and all tenderers whose tenders are admissible and who make a request in writing of the characteristics and relative advantages of the successful tender and the name of the tenderer to whom the contract is awarded.

However, certain details need not be disclosed where disclosure would hinder application of the law, would be contrary to the public interest or would harm the legitimate business interests of public or private undertakings or could distort fair competition between those undertakings."

Article 101 of the Financial Regulation adds "The contracting authority may, before the contract is signed, either abandon the procurement or cancel the award procedure without the candidates or tenderers being entitled to claim any compensation. The decision must be substantiated and be brought to the attention of the candidates or tenderers."

Further details are provided in Article 149 of the Implementing Rules:

"1. The contracting authorities shall as soon as possible inform candidates and tenderers of decisions reached concerning the award of the contract, including the grounds for any decision not to award a contract for which there has been competitive tendering or to recommence the procedure.

2. The contracting authority shall, within not more than fifteen calendar days from the date on which a written request is received, communicate the information provided for in Article 100(2) of the Financial Regulation."

3. Procedure proposed

Approach

In accordance with the Commission's reply to the Ombudsman of 7 November 2002, the proposed procedure allows a reasonable length of time, after the award decision and before the contract has actually been signed, to enable unsuccessful tenderers and candidates to ask the contracting authority for additional information about the reasons for the award decision and, if appropriate, to bring a judicial action against the decision. It will apply to public procurement contracts awarded by the Commission under Article 105 of the Financial Regulation.

The advantage of the proposed procedure lies not just in informing candidates and tenderers. It offers the contracting authority the possibility of being informed quickly after the award decision of any relevant point which might need to be taken into account for the subsequent stages of the procedure, before a contract is actually concluded.Procedure

Under Article 147(3) of the Implementing Rules, the contracting authority, after the evaluation procedure and in accordance with the internal arrangements in each department, takes the decision on the award of the contract, which must contain various items of information listed in this article.

Once it has taken its decision, the contracting authority would proceed as follows:

- Where the contract is not awarded, or the procurement procedure abandoned or cancelled, the contracting authority must inform candidates or tenderers as soon as possible, giving appropriate reasons. The rules governing public procurement in the Financial Regulation do not stipulate what reply should be given to requests from candidates or tenderers for additional information following such notification. The general rules on communicating information available to the Commission and the Code of Good Administrative Behaviour therefore apply. The same procedure also applies where the contracting authority decides, during a procurement procedure, to cancel or abandon the procedure.

- Where the contract is awarded, and prior to signature It should first be borne in mind that the rules (see point 2) require the contracting authority itself to inform unsuccessful candidates or tenderers of the reasons why their application or bid has not been accepted, without their having to request this. This proposed procedure and the time limits laid down are based on these rules.

- Notification of unsuccessful tenderers or candidates [1] As soon as possible after the award decision and within the following week at the latest, the contracting authority notifies all unsuccessful tenderers or candidates simultaneously, by mail and fax or email (preference going to the fastest communication method), that their bid or application has not been accepted. Each tenderer or candidate is notified individually; the reasons why the bid or application has not been accepted are specified in each case, for instance by taking up in a concise but explicit form details contained in the award decision. In the message the contracting authority informs unsuccessful tenderers or candidates that it will not be signing the contract with the successful tenderer until two calendar weeks have elapsed from the day after the simultaneous dispatch of the notification messages. It will also be stated that additional information about the reasons for rejection of the bid or application can be obtained in response to a request in writing, by mail, fax or email. For all tenderers who have put in an admissible bid, this information could also extend to the characteristics and relative advantages of the bid accepted and the name of the successful tenderer. The restrictions referred to in the second subparagraph of Article 100(2) of the Financial Regulation will apply.

[1] A model standard letter will be drafted.

Finally it will be added that if the contract cannot be concluded with the successful tenderer or if the successful tenderer were to pull out, the contracting authority may review the award decision and could then award the contract to another tenderer, close the procedure or decide not to award the contract. In this case all candidates or tenderers will be informed and appropriate reasons given.

- Notification of the successful tenderer [2] The contracting authority notifies the successful tenderer of the award decision, [3]at the same time as the other tenderers or candidates are informed that they have been unsuccessful. It specifically states that the notification does not constitute a commitment on the part of the Commission.

[2] A model standard letter will be drafted.

[3] In some departments which already apply a similar procedure, the successful tenderer may be asked to confirm that certain aspects - such as operational capacity - have not changed since the tender was submitted. The draft contract may also be added.

The contracting authority also informs the successful tenderer that unsuccessful candidates or tenderers have been notified and given reasons why their bid or application has not been accepted and that they may obtain additional information from the contracting authority on the matter and that unsuccessful tenderers who submitted an admissible bid may be given the characteristics and relative advantages of the bid accepted and the name of the successful tenderer. Any replies to requests for additional information from unsuccessful candidates or tenderers would comply with Article 100(2) of the Financial Regulation. The successful tenderer will be told that the contract cannot be signed until two calendar weeks have elapsed from the day after the date of dispatch of the notification. It will also be pointed out that the contracting authority may, until the contract has been signed, either abandon the procurement or cancel the award procedure without the candidates or tenderers being entitled to claim any compensation. The decision would have to be substantiated and brought to the attention of the candidates or tenderers. Lastly it will be stated that the contracting authority may suspend signing of the contract for additional examination if justified by requests or comments made by unsuccessful tenderers during the two calendar weeks mentioned above or by any other relevant information received during that period; all candidates or tenederers would then be informed within three working days.

- Budget commitment The authorising officer responsible may make the budget commitment at the same time as the notifications are sent out. No budget commitment needs to be made prior to notification of the successful tenderer as this notification states that it is not a commitment on the part of the Commission. If it subsequently transpires that the contract cannot or need not be concluded with the successful tenderer, the authorising officer would make the decommitment.