By Co-Partner Ronnie Rosenfold, Kluge Advokatfirma
As of July 1, 2018, all general customers were required to use electronic means of communication, so-called competition execution tools, to receive bids, among other things. It is the customer who decides which technical solution to use. What is the result of the bidder’s inability to deliver the bid on time as a result of technical challenges? The court has ruled on several occasions that this is the service provider’s responsibility.
As a result of late submission of bids or tenders submitted by e-mail
Public Procurement Regulations (“Procurement Regulations”) § 24-1(1) has rules regarding both late submission of bids and delivery via the wrong form of communication. In the text of the law, the legislator equated both types of formal errors, and the result of the violation was that the customer was obliged to refuse the bidder.
In the case of TOBYF-2021-5815, the Oslo City Sheriff’s Office dealt with the question of whether the customer really rejected the bidder who completed the bid before the bidding deadline using email. The background to the case was that the bidder had received an error message in the price form that was to be loaded into the client’s competition execution tool. The bidder therefore decided to send the price form to the customer by email before the bidding deadline expired. It is concluded from the judgment that it was not possible to clarify the cause of the error message.
The customer decides to decline the bid because it was submitted in violation of the customer’s requirements for means of communication, see Procurement Regulations § 24-1 (1) Letter A. The bidder stated that only parts of the bid were submitted by e-mail and that the provision, referring to “offer,” did not therefore provide a legal basis for the refusal. The court writes the following about the client’s duty to refuse the offer:
In this case, the court does not have to decide the exact content of the word “offer” in paragraph 24-1, since in this case it is a basic document, the price matrix. In competition in which price is the only criterion, the offer is not delivered in the correct form of communication when an important factor such as price is not delivered in the correct form of communication. “
After careful evaluation, the court concluded that the customer was under an obligation to refuse the bid, as a result of the failure to submit the price form.
In order to highlight the rigorous practice developed in case law, reference can also be made to the decision of the Borgarting Court of Appeals in Case LB-2017-194440-2, which concerned a supplier who had not received its tender via the Competition Enforcement Tool, due to an incorrect mark in the form ESPD. The error in the ESPD form was of such a nature that clarification could have been provided if the offer had been delivered within the deadline. Since the bidder did not realize the error, the bid could not be delivered within the deadline, and was emailed to the customer after the bidding deadline. Also in this case, the customer decided to refuse as a result of bid submission by wrong means of communication, in addition, after the deadline for bid submission. The Court of Appeal in this case also concluded that the refusal was lawful.
Practice shows that there is no room for error when bidding, but I think there is reason to wonder whether this is necessarily a reasonable outcome.
Rejection will not always be a reasonable outcome
In general, procurement regulations are based on the division of responsibilities between the customer and the supplier. For example, the procurement regulations clearly state that the customer bears the risk of ambiguity in the bidding documents, which is consistent with the bidder bearing the risk of ambiguity in the bid, see Procurement Regulations §14-1 and 23-3.
It is therefore possible to agree to the old KOFA practices, where it has been established that bids submitted to the wrong address should be rejected, see KOFA Status 2016/118. The same is true for tenders delivered to the correct address after the bid deadline, see for example the KOFA cases 2003/81 and 2008/89, which relate to delays at the post office. This is justified by the fact that it is the bidder who chooses the form of the shipment, and is therefore the closest to bear the risk of the bid reaching the customer on the deadline.
However, I think there is reason to wonder if the bidder could also be exposed to the risks of weaknesses and errors in the competition enforcement tool, which the client provides. After all, it is the customer who chooses the supplier of tools for the implementation of the competition. A fairly obvious example is that the customer’s door is locked when the bidder arrives to deliver the bid. Wouldn’t it be reasonable for the customer to then accept that the offer be delivered in an alternative way? The point is that it is the customer in this case who makes it difficult to deliver the offer on time.
There are implications in legal theory that a client can deviate from the rule of absolute refusal when the late submission is due to unusual circumstances. For example, Lasse Simonsen wrote in Pre-Contractual Liability (1997), p. 603:
“There has been a contentious issue in the Norwegian Tendering Act over deadline rules, which are understood as absolute, or whether a short-term deadline can be accepted in special cases of delays. The question must be resolved on the basis of the natural interpretation of bid systems. In general, the rules do not have any reservations. One exception remains to be made. If the delay is due to the tenderer or the person responsible for it, the bid may not be rejected.
A similar view can be found in Sue Arrowsmith, Public Procurement and Utilities Act, (2014) page 733:
“But the question arises as to whether there are any exceptions to the requirement to reject late bids. It is suggested that although there is generally no discretion to accept a late bid, it may be argued that there is a duty to do so, at least before the decision to award is made, when the bid is delayed due to the fault of the contracting authority itself.
As follows from the theory, it can be said that the customer should take responsibility for the fact that bids are not submitted on time, if the reason is the circumstances for which the customer or his assistants are responsible. The client should be clearly responsible for the competition enforcement tool.
In both the decision of the Bailiff Office in Oslo and the Borgarting Court of Appeal, it was decided whether offers should be rejected as a result of their submission by e-mail. So it can be said that there is a difference between submitting errors late and submitting them. However, the fundamental error in both cases is that the competition enforcement tool withheld bids for either known or unknown reasons.
The fact is that the device on the Competition Execution Tool acts as a locked mailbox. In my opinion, the customer should consider whether an offer should be rejected, not automated processes. The 2014/24 Procurement Directive, on which the Norwegian regulations are based, clearly support automation decisions:
«[…] However, the mandatory use of electronic means of communication under this Directive should not obligate Contracting Authorities to conduct electronic tender processing, nor should the Directive result in electronic evaluation or automatic processing. ‘, See the preamble to the guidance, section 52.
As follows from the introduction to the guidance, care should be taken when electronic assessment or automated processing. So I think customers should be aware of the functionality that comes with the Single Competition Execution Tool.
Alternative consequences of rejection
Although it can be opened to accept late offers in individual cases, and should therefore be opened to offers made via alternative forms of contact, case law has been based on a very strict interpretation. In view of the legal situation, it is therefore difficult to contradict the customer claiming that the bid should be rejected if it was submitted by e-mail, when there was a requirement to use the competition enforcement tool.
I think the customer should nevertheless be aware that if errors are made in the execution of the purchase, it may cancel out the competition. This appears to be an appropriate scenario if the client uses the competition execution tool, which may later be found to have inherent weaknesses which means that one or more bids are not submitted within the deadline.
The issue was in the decision of the Burgarting Court of Appeal, but the majority refused. The majority concluded that the bidder should bear the responsibility of submitting the bid within the deadline. However, the minority concluded that the competition should have been cancelled, and justified this on the grounds that the information provided in the Competition Implementation Tool was unclear, and thus made it difficult to determine what was missing for the bid.
In my opinion, the rule that a customer is required to cancel the competition due to errors or ambiguities in the competition implementation tool has the best reasons for this. At this point, one can return to the rule in the Procurement Regulations that the customer runs the risk of ambiguity in the tender documents, see § 14.1. Although the regulations are probably not intended to directly cover the competition enforcement instrument, the consideration underlying the rule appears to imply a reasonable distribution of risk. Despite the fact that a majority of the members of the Court of Appeals dismissed the claim, I think there may still be issues that may be relevant. On the other hand, the city sheriff’s office did not take a position on the issue, simply because it was not mentioned.
Despite the fact that the customer has a direct contractual relationship with the competition enforcement tool supplier, case law appears to place a significant responsibility on providers when it comes to timely submission. So it is easy to recommend to all bidders to submit the bid well before the bid deadline. However, it is also reasonable to ask whether the court did not deprive the client of the responsibility to ensure that there is an easy-to-use and accessible solution to bidding. I think it is reasonable to expect the customer to bear this responsibility, because only the customer influences the technical solution.
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