The question of when and how a procuring authority, when procuring framework agreements under the Public Procurement Act (2016:1145) (LOU) or the Act on Public Procurement in the Utilities Sectors (2016:1146) (LUF), must specify what is referred to as a “ceiling volume” in the procurement document has been frequently discussed in recent years.
A ceiling volume must be specified regardless of the type of framework agreement
The Supreme Administrative Court finds that the obligation to specify a ceiling volume applies to framework agreements with both one supplier and multiple suppliers. This seems reasonable since the tenderer should be equally interested in knowing the total volume in both cases.
According to the Supreme Administrative Court, it is also not sufficient to specify the ceiling volume as an estimated annual volume. Instead, the ceiling volume must be specified as a maximum over the total term of the agreement, i.e. a maximum quantity or a maximum value.
Stringent requirements for the supplier in the case of damage assessment
In addition to expressing an opinion on the matter of a ceiling volume, the Supreme Administrative Court also issues interesting statements regarding the damage assessment to be carried out in the case of an application for review of a public procurement. In order for a supplier to succeed with an application for review, it is required to have suffered or risked suffering damage from defects existing in the procurement.
Firstly, the Supreme Administrative Court establishes relatively stringent requirements for the supplier’s description of the way in which a defect in the procurement caused damage. According to the Supreme Administrative Court, it is not sufficient to describe the damage in general terms. Instead, the supplier must explain clearly and specifically how the defect affected the supplier’s ability to compete in the procurement. None of the suppliers was successful in doing that in the reviews in question, even though they had stated, inter alia, that they could have achieved cost savings through more accurate estimates of materials, personnel, etc. had a ceiling volume been specified.
Secondly, the Supreme Administrative Court states that the damage assessment must take into consideration whether the supplier has done whatever may be required to avoid the occurrence of damage. According to the Supreme Administrative Court, a supplier who considers the procurement documents to be incomplete or unclear should request supplements and clarifications during the tender period. If the supplier fails to do that for no acceptable reason and instead waits to point out any defects until after the award decision has been made, the supplier cannot normally be considered to have suffered damage from the lack of clarity.
In the cases in question, the suppliers had not requested any clarification regarding the maximum scope of the framework agreement during the tender period and were therefore not considered to have suffered any damage because no ceiling volume had been specified.
Has the Supreme Administrative Court introduced a “duty to complain”?
Through the rulings, the Supreme Administrative Court appears to impose on the supplier a certain duty to complain, in other words an obligation to point out unclear points in the procurement document during the tender period. If the supplier fails to do this, the supplier cannot use those unclear points – that the supplier could have remedied by means of a question – within the framework of a review process as a basis for claiming that the supplier’s ability to compete was adversely affected.
The question of such a duty to complain has previously been discussed in the context of draft legislation, but has not led to any amendment of the LOU or the LUF. The Supreme Administrative Court’s decision is therefore to some extent surprising. In any case, it is clear that it gives tenderers greater responsibility during the tender period and an incentive to point out and clear up any unclear points at an early stage of the procurement. This greater responsibility for the tenderers may lead to reviews being avoided in some cases.
However, the Supreme Administrative Court leaves us with a question, i.e. that this duty to complain does not apply if the supplier has an “acceptable reason” for not requesting supplements and clarifications during the tender period. It remains to be seen what constitutes those acceptable reasons in future case law.
Do you want to know more about the judgment or did the article raise other questions? You are very welcome to get in touch with one of the contact persons below in public procurement or your ordinary contact at Lindahl.