Law on Public Procurement (PPL) no. 131/2015 is applicable only if the estimated value of the public procurement is equal to or higher than the thresholds set in art. 2 (1) of the same law. The National Complaint Settlement Agency (NCSA) decision on the below case confirms the opposite. At the same time, NCSA acknowledges that the decision of the contracting authority to cancel its procurement tender is subject to the contentious review exercised by NCSA. But under what conditions?
Also, if there are two tenders with the same price, the contracting authority must go to the additional criterion that has been set. If after applying the additional evaluation criterion, tenders cannot be objectively distinguished, the NCSA confirms that the only solution is to cancel the tender.
Public Service Agency (PSA) announces a public tender to purchase civil liability insurance (CLI) services through Request for Price Quotation (RPQ), estimated value – 65’000 MDL. Award criterion – the lowest price, additional criterion: if tenders are submitted with the same price (the calculation price methodology for the CLI is set by law), as additional criterion will be applied – the number of violations found by National Commission for Financial Markets (NCFM) during the period 2017-2018. Three tenders have been submitted. One tenderer was disqualified for not providing a document. The other two had the same price, and the certificate issued by NCFM showed that both bidders had the same number of sanctions. PSA under art. 71 (1) letter g) of the PPL cancelled the procedure on the grounds of serious errors that cannot be remedied without violating the principles of public procurement set in art. 7. One of the tenderers submitted a complaint to the NCSA.
- (i) Voluntary application of the Law on Public Procurement
A procurement with the value of 65’000 MDL which does not exceed the thresholds from art. 2 (1) letter a) of the PPL, is not subject to the regime of this law, but to the Government Decree on micro value public procurement. In this context, the complainant, as the last argument, invoked that the PSA declared that it would carry out the procedure according to the PPL, and in the contract notice it was indicated that NCSA will examine the complaint.
Unfortunately, NCSA did not respond to this end of the argument, which is very important for procurement participants. At the same time, considering that the NCSA did not examine this procedural exception, but proceeded to the examination on merits of the complaint, tacitly accepted the complainant’s argument.
Here the NCSA should have exploited this opportunity to give some clarifications and guidance. As far as I know, there have been similar cases in the NCSA practice, however, due to the lack of a proper search engine, these Decisions are very cumbersome to be found. Maybe a reference to the first decision where this procedural aspect had been decided would have been more convenient.
The NCSA’s guidance, in my opinion, should refer to the criteria by which the economic operator must determine whether the procurement below the threshold in Art. 2 (1) letter a) of PPL, shall, nevertheless, be subject to the rigid legal regime of the PPL. Is the use of the Standard Tender Documents approved by the Ministry of Finance enough? Or is it sufficient to indicate in the contract notice that the PPL governs the procedure? In this case, PSA had used all the tender documents for the RPQ procedure. And the tender documents, referred to, abounds with references to the PPL.
Thus, for the time being, we can only deduce that the use of the standard tender documents by a contracting authority denotes an intention of the last, to apply the PPL in the concerned procedure.
Until I/we find other explanations, it is important and welcomed that the NCSA respects the intention of the contracting authority to voluntarily apply the PPL to a procedure below the threshold in art. 2 (1) letter (a).
- (ii) The decision to cancel its tender
Although indirectly, the present case shows that the decision of the contracting authority to cancel its tender is subject to the contentious review exercised by the NCSA. Unfortunately, the NCSA did not want to enter into details of this exercise and explain how it reached this conclusion.
The solution lies in art. 82 (1) and (2) PPL, from which it follows that amenable complaint are the acts:
- which are administrative acts of the contracting authority, i.e. action or inaction;
- which produce or can produce legal effects in connection with the public procurement procedure;
- which have violated the complainant right recognised by law;
- as a result of which complainant has suffered or may suffer damage;
This four conditions must be met cumulatively.
I agree with the NCSA that the decision to cancel its public tender can be the subject-matter of a complaint. Without elaborating on these four conditions, the logic of this deduction results from the idea that this decision puts an end to a public procurement procedure without awarding the contract, which seriously affects the legitimate interests of all tenderers who incurred costs for preparing and submitting their tender and had a legitimate expectation that the procedure will be finalised with the award of the contract. Per a contrario, to immunise such a decision from the contentious review of the NCSA will encourage contracting authorities to cancel arbitrary the procedure when it is not ‘satisfied by the successful tenderer’, which will ultimately discourage economic operators from participating in public procurement procedures. Therefore, such a decision does not fully fall within the margin of discretion of the contracting authority and should therefore be examined on merits by the NCSA.
- (iii) Two equal tenders – leads to the cancellation of the procedure
In the present case, NCSA concluded that two equally ranked tenders, which have the same price, had been submitted. In this respect, art. 26 (18) of Law 131/2015 provides that where two or more tenders are equivalent, the contracting authority shall apply an additional award criterion explicitly mentioned in the contract notice. In this context, the PSA has used the additional evaluation criterion set, namely, the number of violations found by the NCFM during the period 2017-2018. But even afterwards, the tenders were equally ranked. In this context, NCSA agreed with the contracting authority that there had been committed errors that cannot be remedied without violating the principles of public procurement set in art. 7 (art. 71 (1) letter g) of the PPL).
I share the solution reached by NCSA, however, I would have motivated a little differently (in the Romanian version of this post I shared how I would have motivated this part).
It is clear from this NCSA Decision that PPL may also apply to micro value procurements below the thresholds in art. 2 (1) at the discretion of the contracting authority. The option of voluntary applying of Law 131/2015 creates an opportunity for contracting authorities to comply with the principle of transparency and to stimulate competition since the thresholds for micro value procurements are very high for a small country like Moldova. What is less clear is the exact rules for determining in what cases the micro value procurement is covered by PPL. We are waiting for the NCSA to clarify this.
The NCSA should, through its case-law, develop the institution of the acts amenable to complain to the NCSA, referring to the four conditions mentioned above (see paragraph C (ii) above). The implicit deduction of the right to contest the contracting authority’s decision to cancel its procedure does not help to clarify this issue.