What to Avoid When Awarding Public Contracts

Based on our experience, we have prepared an analysis of 10 most common mistakes made by authorities awarding public contracts. This has shown that the contracting authorities, when inviting to submit a bid, make three types of mistakes: their contract specifications are rather insufficient; they set out discriminatory requirements or artificially subdivide above limit contracts. By doing so, the contracting authorities fail to realise that the faulty setting of the contract specification may be easily challenged by the participants which, in the better case, means a prolongation of the award procedure counted in months; in the worse case, a fine may be imposed by the Office for the Protection of Competition.

Insufficient Specification

1. Insufficient Specification of Required Contract Documents

The contracting authority sets out a confusing contract specification and the tenderers face an objective problem to prepare a bid which would meet these requirements. Particularly, such problems include internal inconsistency of the contract documents, discrepancies between the individual parts of the contract documents or enclosed “specimen” of affirmations related to the qualification criteria which fail to comply with the law. From our experience, the quality of the selection procedure and the transparency of the criteria are increased especially by means of enclosing a binding draft of the contract for the required performance directly to the contract documents.

2. Faulty Setting of Qualification Criteria

The contracting authority merely copies the Public Procurement Act without setting out the minimum requirements in the contract documents. This regards, for example, the references – the contracting authority fails to set out, in which area, to what extent and in what number of copies the tenderer has to submit the certificate of reference contracts performed. Similarly, the requirements in relation to the members of the performing team of the tenderer often omit to include the required number. Although the contracting authority specifies certain roles of the team members in the contract requirements, these roles do not correspond to the subject matter of the public contract, or the contracting authority fails to set out the minimum requirements as to education or professional qualification of these members.

3. Fuzzy Evaluation Criteria

From the point of time of being invited to submit bids, the tenderers have to have an idea what and in what manner the contracting authority shall be considering under the category of the so called most economically advantageous bid. Sometimes, the contracting authorities fail to describe how the consideration shall proceed as to the individual criteria, what solution and what parameters shall be deemed the most advantageous. For example, the contracting authority often states the criterion of technical solution of the subject matter of the contract as a partial criterion. The contract documents, however, fail to specify the weighting of the technical solutions. It also happens that the contracting authority defines the weighting of the evaluation criteria or the consideration procedure poorly or insufficiently or it omits to define the procedure. The contracting authority is obligated to set the criteria so as to allow the tenderers to submit bids which the contracting authority will be able to compare with each other. In addition, the contracting authorities often wrongfully set a requirement to be considered which they have already set out as the qualification criterion.

4. Missing Percentage Weighting of Subcriteria

In case of setting individual subcriteria within a single assessment criterion, the contracting authority fails to set a percentage weighting of such subcriteria. As a result, the bids cannot be considered in compliance with the law. The contracting authority states a general individual criterion which it subdivides into several subcriteria. However, it fails to assign importance to such subcriteria.

Discriminatory Requirements

5. Requiring Specific Performance

The contracting authority sets out technical specification so as the bid may be submitted only by a single tenderer. Thus, for instance, the contracting authority calls for a specific product from a specific producer under the situation where there are more comparable products available in the market. A major mistake is likewise when the contracting authority gives a general description of the performance within the technical specification of the award procedure but this one description corresponds practically to a specific product of a particular contractor. This issue is carefully watched by the Office for the Protection of Competition. The contracting authority should specify the technical specification so as the tenderers get a clear idea about the required performance; however, so that this description does not evoke a specific product.

6. Requirement for Binding Tender Structure

Under the threat of excluding the tenderer, the contracting authority incorrectly requires that the bid has a particular content or structure. Thus, the tenderers may complain about such conditions and they are pretty likely to succeed as similar provisions find no support in the law. If the tenderer submits a bid having a different structure than required, this cannot represent a reason for exclusion.

7. Too High Tender Revenue Requirements

The contracting authorities set out unreasonable requirements in relation to the estimated value of the awarded public contract. The resolutions of the Office for the Protection of Competition imply that it is admissible to require from the tenderer to show a double or threefold revenue compared to the contract value. However, the contracting authorities insist on far higher revenues (often more than five times the estimated value).

8. Requirement to Prove Share Capital

The contracting authority sets the requirement that the amount of the share capital be proven with tenderers who are legal persons. Contradicting the law, the contracting authority reserves the right not to accept a bid from a tenderer – a business company – whose share capital fails to meet the minimum capital requirement set out by the contracting authority. Nonetheless, the amount of the share capital has no informative value in relation to the economic and financial standing of the tenderers related to their ability to perform the public contract. In addition, imposing such requirement contradicts the law.

9. Unauthorised Requirement for Bid Copies

Wrongfully, the contracting authority, again under the threat of excluding the tenderer, requires, in addition to the original of the bid, also an unreasonable number of copies, for instance in order to be handed out to all the members of the committee to consider the bids (up to seven copies). The Office for the Protection of Competition ensures that unreasonable requirements not be imposed on the tenderers by the contracting authorities which is, according to the Office for the Protection of Competition, the said case. On the other hand, it is not excluded that the contracting authority requires, for instance, two copies to be submitted (the extent of the required documents and thus the volume of the tender as such have always to be considered).

Artificial Subdivision of Above-Limit Contracts

10. Subdivision of Public Contracts

The contracting authority wrongfully subdivides the subject matter of the public contract. Instead of a single public above limit contract, several separate below limit contract award procedures or procedures for the award of a low value contract are conducted. For the sake of determining whether or not the subdivision conforms with the law, it shall be decisive, whether such performances together - both as to the subject matter (functionally) and the time - are linked and whether or not by the subdivision of the contract the estimated values of the public contract as defined by law are reduced. 

Vilém Podešva
Jan Strelička

ROWAN LEGAL