How are public contracts awarded?

Perhaps the area which interests most candidates who apply for public tenders is how they are awarded, and with good reason.

Athorough knowledge of the selection criteria and documents required will better the tenderer’s chances of making a successful bid. It would also allow the tenderer to scrutinise awards given to other candidates and to challenge these where required.

As a fundamental principle, requirements imposed by contracting authorities need to be appropriate to ensure that the tenderer has the legal, financial, technical and professional abilities to perform the contract. They must also be proportionate to the subject matter of the contract.

Tenderers are expected to be suitable to pursue the relevant activity and to this end contracting authorities may require tenderers to be enrolled in a professional or trade register. Tenderers are also expected to be of good economic and financial standing and to this end contracting authorities may impose requirements to ensure that tenderers possess the necessary economic and financial capacity to perform the contract, typically evidenced by bank statements or financial statements. They may also be required to have a minimum annual turnover, which however may not exceed twice the estimated contract value, except in duly justified cases. Additionally, they may be required to present their ratios of assets to liabilities and to procure professional risk indemnity insurance if deemed necessary.

As for technical and professional ability, contracting authorities will want to ensure that the tenderer possesses the necessary human and technical resources and experience to perform the contract up to standard. The authority should indicate the required minimum levels of ability, together with the appropriate means of proof it would require – typically demonstrated by suitable references from contracts performed in the past. It would also require detailed technical data depending on the type of works, services or supplies to be provided, which would include for example a list of works carried out over previous years, accompanied by certificates of satisfactory execution.

In certain cases, tenderers are allowed to use the European Single Procurement Document (ESPD), which document consists of an updated self-declaration as preliminary evidence in replacement of certificates issued by public authorities or third parties, and which confirms that the relevant economic operator is not excluded and fulfils the selection criteria, objective rules and criteria requested.

The law regulates in quite some detail the certifications to be provided, including as they relate to quality assurance and environmental standards. However, as a general principle, tenderers shall not be required to submit supporting documents or other documentary evidence where the contracting authority has the possibility of obtaining these directly by accessing a national database in any member state that is available free of charge.

In principle, contracts are awarded to the most economically advantageous (that is, cheapest) tender. This is determined on the basis of the price or cost, using a cost-effectiveness approach, such as life-cycle costing and may include the best price-quality ratio, which shall be assessed on the basis of criteria, including qualitative, environmental and, or social aspects, linked to the subject-matter of the public contract. In other words, contracts might not only be awarded on price alone, but might also consider criteria such as quality, including technical merit, aesthetic and functional characteristics, accessibility, design, social, environmental and innovative characteristics. Regard might also be made to organisation, qualification and experience of staff assigned to perform the contract, after-sales service and technical assistance and delivery conditions.

In all cases, award criteria must be linked to the subjectmatter of the public contract. Contracting authorities should also specify, in the procurement documents, the relative weighting which it gives to each of the criteria chosen to determine the most economically advantageous tender, except where this is identified on the basis of price alone.

Contracting authorities shall document the progress of all procurement procedures and shall ensure that they keep sufficient documentation to justify decisions taken in all stages of the procedure. This would include communications with tenderers, deliberations, preparation of the procurement documents, dialogue or negotiation (if any), selection and award of the contract.

The authority responsible for the tendering process shall inform each candidate and tenderer of decisions reached, including the grounds for any decision not to award a contract or where it has decided to recommence a procedure.

On request from the candidate or tenderer concerned, the authority responsible for the tendering process shall, as quickly as possible and in any event within 15 days from receipt of a written request, inform: (i) any unsuccessful candidate of the reasons for the rejection of its request to participate; (ii) any unsuccessful candidate of the reasons for the rejection of its tender, including the reasons for its decision of non-equivalence or its decision that the works, supplies or services do not meet the performance or functional requirements; (iii) any tenderer that has made an admissible tender of the characteristics and relative advantages of the tender selected as well as the name of the successful tenderer; (iv) any tenderer that has made an admissible tender of the conduct and progress of negotiations and dialogue with tenderers and (v) any unsuccessful tenderer of its right to appeal a decision.

This article is part of a series of articles on public procurement in Malta. Luca Amato is a senior associate within the Corporate and Commercial Law department of Fenech & Fenech Advocates.