Public Procurements: Should we or shouldn't we?

On 30 March 2016, the Complaints Board for Public Procurement made a partial decision adding to the number of decisions concerning the requirement that an agreement must be bilateral to be considered requiring a tendering procedure.

The City of Copenhagen had obtained price quotations on urology products. For this purpose, the City of Copenhagen had made a tender list reflecting essentially the products historically used by the city's citizens. The tenderer with the overall lowest price undertook an obligation to confirm its prices in a given period with the effect that the citizens could buy the products from this supplier at the prices offered.

The claimant stated that by choosing this procedure, the City of Copenhagen intended in fact to conclude a supplier agreement requiring a tendering procedure under section 112 (2) of the Social Services Act.

The City of Copenhagen stated the following:

  • The purpose of the price quotations was not to conclude a supplier agreement under section 112 (2) of the Social Services Act. The only purpose in this respect was to identify the best qualified and cheapest product with the effect that the City of Copenhagen could fix the subsidy amount under section 112 (3), last sentence.
  • The City of Copenhagen did not become the owner of the device and the contractual relationship was solely between the citizen and the supplier.

THE GROUNDS OF THE COMPLAINTS BOARD

The Board concluded:

"It appears from the original as well as the revised "price quotation requirements" that the purpose is that the prices are to form the basis of the municipality's grant for urology products, that the company with the overall lowest price is not guaranteed any minimum turnover/sale, that the citizen makes the purchase of the urology product, and that the product is the property of the citizen.

It further appears from the municipality's notification to the "tenderers" of 19 February 2016 and the Executive Order according to section 4 of the Act on the Review Board that this is a "price agreement determining the grant for urology products". There are thus no indications that the municipality has decided to conclude a supplier/framework agreement with Mediq according to which the municipality can or must purchase urology products.

On the present basis, the municipality is therefore not considered to receive a service against consideration, in which the municipality has a direct financial interest.

The fact that Mediq for instance undertakes to provide consumption statistics to the Hjælpemiddelcenter under section 16 and 82-84 of the Executive Order on the act on due process and administration with the social area no. 1052 of 8 September 2015, cf. the executive order of 19 February 2016, may on the present basis not result in a bilateral agreement."

As the requirement concerning "fumus boni juris" had not been met, a stay of execution was not granted in respect of the complaint. Subsequently, the complaint has been withdrawn from and concluded by the Complaints Board.

COMMENTS

The decision leans against the Complaints Board's previous decision of 21 August 2013 (Bandagist-Centret A/S etc. vs. the Municipality of Haderslev etc.) and the decision of 16 December 2014 (Handicare Auto A/S vs. the Municipality of Ringkøbing-Skjern) where the Complaints Board also concluded that the obtaining of price quotations did not require a tendering procedure.

At the same time, the decision confirms the Complaints Board's previous practice according to which the contracting entity must have a direct financial interest in a given service in order for this to be considered a bilateral agreement.  If a tender is obtained for the sole purpose of fixing a grant, this requirement has not been met.

The Complaints Board also seems to have accepted that a contracting entity may make certain requirements for the suppliers without this being considered a bilateral agreement.

Obtaining of price quotations, which does not require a tendering procedure, will of course open up for new possibilities of arranging a more flexible procedure. In particular, obtaining of price quotations could take place based on a tender list with specific products reflecting the citizens' historic purchases. 

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