Keystone Column 84 – Challenging a decision – the pros and cons

Keystone Column 84 – Challenging a decision – the pros and cons

Welcome to the Keystone Column. This week, we look at specific actions a company can take should they lose a bid. We also have an update on the Keystone tenders report. This post was originally published in June 2016 and concludes this series of three blogs on how to deal with losing bids.

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In previous posts, we have dealt with scenarios where companies have submitted a deficient or defective losing bid and with scenarios where they submitted a good bid and were hoping to be successful (but weren’t and wanted to know what they could do about it). In this posting, we will outline three options for companies seeking to take specific action following a contract award process. We will deal with three scenarios that have varying degrees of formality and outline the pros and cons of each.

Les mots justes – the diplomatic route

This is the most common approach used in Ireland to challenge decisions. There is a real fear (based on genuine grounds) of being blacklisted as a supplier if a company is too forthright in contesting a decision. Companies that are very dissatisfied with a decision can seek to express the reasons for their dissatisfaction to the contracting authority. They can also ask what they could have done to persuade the contracting authority that they could do at least as good a job as the company awarded the contract. Sometimes, this can provide valuable lessons and insights that determined suppliers can use to improve future bids.

Supplier relations endure peaks and troughs so where a company ensures its erstwhile customer knows it has improved its abilities in the areas they lost out on, it can position them to win next time out. You are only a mistake away from getting back in the game.

The benefits of this approach is that the buyer is aware of the supplier’s grievances but also their willingness to work hard to gain their trust. The downside is that this assumes the buyer takes supplier management seriously, thinks strategically and wants to keep their supplier options open. Some buyers are like this but others are not.

 

Instigating formal review mechanisms

The next step that companies looking to challenge decisions can take is to lodge a formal challenge. This must be done during the standstill period (or Alcatel period after the telecoms company that won a case to get this right established). This period allows unsuccessful suppliers to lodge an appeal during a 10 calendar day period after they have been notified of the outcome. It is important to understand that the process of challenging the decision will concern public buyers, especially those that have no formal training in this area (the vast majority of people in decision-making roles). They may feel compelled to contact legal advisors and fear the worst about a technical flaw being exposed in their tender process. It is important to tread lightly while carrying the stick marked “challenge”.

There are often good grounds for challenging a decision but at present Ireland is not very open to facilitating reviews. Conflict between the losing party and the contracting authority can ensue and there is the potential for this to have enduring consequences.

Once this option is exhausted, companies start to move into legal terrain (in some cases, companies will already have retained advice for a challenge).

 

Going legal and living with the consequences

On high value concessions contracts (like mobile phone licenses or operating motorways) or a large one-off construction contract, legal challenges can be a compelling option. The downside risks of going legal are lower than when there may be a desire for an ongoing relationship. For reasons outlined at the start of this post, companies hoping to maintain a commercial relationship should retain good advice before threatening let alone engaging in legal action.

This option to challenge decisions initially entails a judicial review of the process. It is rarely triggered in Ireland although numbers are on the rise (from a low base). Some recent cases have been noteworthy like that of RPS Consulting Engineers Ltd. vs Kildare County Council. J. Humphreys presiding outlined some principles that may put a spring in the step of any company looking to challenge decisions in the future. We will do a separate posting on these principles in due course but the ruling is a landmark one for Ireland that requires individual reasons to be given to unsuccessful bidders in the future.

Where a Judge decides to set aside a process because they find that it was:

  • operated in a flawed or defective manner that frustrated principles of facilitating competition,
  • failed to treat suppliers equitably,
  • failed to ensure transparency in the approach,
  • was not proportionate in its construction,

the tender process is normally ordered to be rerun from scratch.

Where something more nefarious is found in a review, other remedies can apply which can include awarding the contract to a party that would have won the contract had it been run fairly (this is only one of many possible outcomes). A legal route can be slow and costly. Litigation can drag on for a long time so it is not for the faint hearted. The State also has very deep pockets so suppliers should proceed with caution.

We hope that the series of posts on dealing with a losing bid provide clear and constructive advice to companies reviewing their options.We have received extensive feedback on these posts and we know that they have struck a chord with many companies in Ireland.

 

The Weekly tenders report

We have been monitoring our tenders report and are discontinuing it. This is because the quality of tender postings and listings has improved significantly obviating, in our view, the need for the report. We will continue to issue this report with links to relevant listings for the latest tenders each week.

Over 100 tenders issue every week, we have been tracking these tenders for nearly two years now and know that almost all industries and sectors have opportunities.

Keystone recommends:

www.etenders.ie – the latest tenders from State bodies

www.supplygov.ie – the latest lower value tenders for trades / supplies from local authorities

www.tenderscout.com – a tender engine highlighting opportunities in Ireland and overseas