On 20 January 2022, the Government submitted a proposal referred to the Council on Legislation regarding more efficient review of public procurements. The legislative proposals aim to make court proceedings in public procurement cases faster and more predictable for both procuring authorities and for suppliers. It is proposed that the legislative amendments should enter into force on 1 July 2022.
A statutory requirement for urgency
The Government proposes that a requirement for urgency be introduced for cases on review of a procurement and cases on review of the validity of a contract in accordance with all four procurement laws. Cases that take a long time to settle give rise to difficulties for procuring authorities when planning their activities and anticipating the need for possible cover purchases during the period for which the review lasts. According to the Government, a requirement for urgency also benefits suppliers, particularly small and medium-sized suppliers, because their financial and organisational capacity to pursue court proceedings is often limited.
The purpose of the requirement for urgency in question is to ensure that cases are normally settled within a few months. A procurement case should therefore not be left without action for a long period. However, the fact that the cases must be prioritised does not mean any restriction of the court’s obligation to investigate – it is still the court that decides when a case has been sufficiently investigated so it can be settled. The proposal is therefore that the length of the processing periods that can be accepted will still be assessed on the basis of the circumstances and the complexity of each individual case in future. In view of this, the Government proposes only an obligation to deal with cases promptly instead of a fixed deadline.
Limitation periods at the Administrative Court and the Administrative Court of Appeal
A so-called limitation period means – in somewhat simplified terms – that after a certain moment, a party can no longer introduce new material into court proceedings, for example. The Government is now proposing that limitation periods be introduced in cases relating to public procurement with regard to review of the procurement and review of the validity of the contract.
It must be noted that the Government’s proposal contains no obligation for a supplier to point out errors in the procurement document at an early stage. The Supreme Administrative Court has already established that pointing out errors acquires significance when assessing whether the supplier has suffered or risks suffering damage (read more about the Supreme Administrative Court rulings in question here), which the Government considers to be sufficient incentive for suppliers to point out errors at an early stage.
However, the referral to the Council on Legislation contains proposals for limitation periods at both the Administrative Court and the Administrative Court of Appeal. As far as the Administrative Court is concerned, the Government proposes that the supplier may not cite new circumstances as a basis for its action more than two weeks from the date on which the application was received by the Administrative Court, unless the supplier credibly establishes that it was unable to cite the circumstance earlier or otherwise has a valid excuse for not doing so. The proposal means that the supplier needs to carry out reasonable investigation and adopt the measures that are possible within the time limit, otherwise it cannot cite a circumstance that later becomes known to the supplier.
No limitation is proposed for the procuring authority at the Administrative Court and the authority can therefore cite new grounds and circumstances in support of rejecting the application throughout the proceedings in the Administrative Court.
As far as the Administrative Court of Appeal is concerned, the Government proposes that a party may only cite a circumstance as a basis for its action at the Administrative Court of Appeal if the party has credibly established that it was unable to cite the circumstance at the Administrative Court or otherwise had a valid excuse for not doing so. The limitation period at the Administrative Court of Appeal thus applies to both the supplier and the procuring authority.
However, the limitation periods only apply to new circumstances and not when citing new evidence. Under the proposal, the limitation periods also do not apply if an authority – during an ongoing review – enters into an agreement in breach of the contractual block and the supplier then wishes to change its action so it relates to a review of the validity of a contract. Exceptions to the limitation periods are also proposed if an authority cites new circumstances before the Administrative Court of Appeal as a basis for arguing that a contract must continue to exist due to an overriding public purpose.
No introduction of an application fee and liability for procedural costs
In order to reduce the number of appeals, it has previously been proposed that a fee for applying for review and mutual liability for procedural costs should be introduced. Liability for procedural costs means that the losing party in review proceedings would be obliged to reimburse the winning party for its court costs.
However, the Government considers that an application fee and mutual liability for procedural costs are not appropriate measures for reducing the number of unwarranted applications for review in court. This is partly due to the fact that it may cause small suppliers and suppliers with fewer resources to refrain from applying for review.
Review of the validity of a contract not subject to the Directive
There is a proposal to shorten the time limit for applying for review of the validity of a contract not subject to the Directive from six months to 30 days if the authority has subsequently announced the results of the procurement.
Action for damages
There is a proposal to change the time limit for bringing an action for damages from within one year from the moment when a contract has been entered into between the procuring authority and a supplier to within one year from the date when the plaintiff became aware of or should have become aware of the fact that a contract had been entered into. However, if a contract has been declared invalid by a court, the action may nevertheless always be brought within one year from the moment when the ruling became firm and final.
Exclusion of suppliers
Under the proposal, a procuring authority may not allow a judgment older than five years or events older than three years to form the basis for excluding a supplier due to offences or misconduct in general. The current regulations contain no such time limit.
Do you want to know more or did the article give rise to other questions? You are very welcome to get in touch with one of the contact persons for public procurement below or your regular contact at Lindahl.