Embed Size (px)
Citation preview
________________________________________________________________
HANDBOOK
KEY JUDICIAL SKILLS
AND
COMPETENCIES
for
REVIEW COMMISSION ON PUBLIC PROCUREMENT
IN ALBANIA ___________________________________________________________________________
___________________________________________________________________________ ........................... 1 CHAPTER 1 PROCEDURAL FAIRNESS........................................................................................................ 6
1.1 WHAT IS PROCEDURAL FAIRNESS? ....................................................................................................... 6 1.2 WHICH RIGHTS ARE COVERED BY PROCEDURAL FAIRNESS? ................................................................. 6
1.2.1 Right to be heard ............................................................................................................................ 7 1.2.2 Right to be informed ....................................................................................................................... 7 1.2.3 Right to representation ................................................................................................................... 8 1.2.4 Right to present and challenge evidence......................................................................................... 8 1.2.5 Right to a reasoned decision........................................................................................................... 9 1.2.6 Right to applicable law................................................................................................................... 9 1.2.7 The right to equal treatment ........................................................................................................... 9 1.2.8 The right to be heard by an independent/impartial review body .................................................. 10
CHAPTER 2 CONFLICTS OF INTEREST.................................................................................................... 11 2.1 IMPARTIALITY AND CONFLICTS OF INTEREST...................................................................................... 11 2.2 WHAT IS A CONFLICT OF INTEREST? ................................................................................................... 12
2.2.1 Actual Conflict of Interest............................................................................................................. 13 2.2.2 Apparent Conflict of Interest ........................................................................................................ 13 2.2.3 Potential Conflict of Interest......................................................................................................... 13
2.3 WHAT IS A PRIVATE INTEREST? .......................................................................................................... 13 2.3.1 Types of private interest................................................................................................................ 15 2.3.2 Personal interests ......................................................................................................................... 16 2.3.3 Political interests .......................................................................................................................... 16 2.3.4 Social interests.............................................................................................................................. 17 2.3.5 Gifts .............................................................................................................................................. 18
2.4 PREJUDICE AND PREDETERMINATION ................................................................................................. 19 2.5 DEALING WITH CONFLICTS OF INTEREST ............................................................................................ 19
2.5.1 How to identify a conflict of interest............................................................................................. 20 2.5.2 How to disclose a conflict of interest ............................................................................................ 20 2.5.3 How to avoid/mitigate conflicts of interest ................................................................................... 20 2.5.4 Legal impact of not-dealing with conflict of interest .................................................................... 22 2.5.5 Appointment and employment after leaving office........................................................................ 22
2.6 CASE STUDIES .................................................................................................................................... 23 CHAPTER 3 EVIDENCE AND PROCEDURE.............................................................................................. 28
3.1 INVESTIGATIVE CHARACTER OF THE REVIEW PROCEEDINGS............................................................... 28 3.2 ROLE AND NATURE OF EVIDENCE ....................................................................................................... 28 3.3 TYPES OF EVIDENCE ........................................................................................................................... 28
3.3.1 Written statements ........................................................................................................................ 29 3.3.2 Expert opinions............................................................................................................................. 29
3.4 RELEVANCE OF EVIDENCE .................................................................................................................. 30 3.5 OBTAINING EVIDENCE ........................................................................................................................ 31
3.5.1 Evidence obtained from the complainant...................................................................................... 31 3.5.2 Evidence obtained from the contracting authority........................................................................ 32 3.5.3 Evidence obtained by the tribunal ................................................................................................ 32
3.6 DISCLOSURE OF EVIDENCE ................................................................................................................. 33 3.7 WEIGHT OR PROBATIVE VALUE – ASSESSING THE EVIDENCE .............................................................. 33 3.8 ADMISSIBILITY OF EVIDENCE ............................................................................................................. 35 3.9 BURDEN OF PROOF ............................................................................................................................. 35
CHAPTER 4 PROTECTING CONFIDENTIAL INFORMATION.............................................................. 37 4.1 CONFIDENTIAL INFORMATION AND THE TRIBUNAL’S ROLE ................................................................ 37 4.2 WHAT INFORMATION IS CONFIDENTIAL? ............................................................................................ 38
4.2.1 Confidential information – designation by law............................................................................. 38 4.2.2 Confidential information – designated by third parties ................................................................ 39
4.2.3 Confidentiality test........................................................................................................................ 39 4.3 EXAMPLES OF CONFIDENTIAL INFORMATION...................................................................................... 40 4.4 INFORMATION CONSIDERED AS NON-CONFIDENTIAL .......................................................................... 41 4.5 HOW TO DESIGNATE INFORMATION AS CONFIDENTIAL ....................................................................... 41 4.6 ACCESS TO CONFIDENTIAL INFORMATION .......................................................................................... 42 4.7 INFORMATION SECURITY .................................................................................................................... 42 4.8 CASES STUDIES .................................................................................................................................. 44
CHAPTER 5 APPROACH TO REMEDIES ................................................................................................... 51 5.1 TYPES OF AVAILABLE REMEDIES ........................................................................................................ 51
5.1.1 Interim measures .......................................................................................................................... 51 5.1.2 Set-aside........................................................................................................................................ 53 5.1.3 Standstill period............................................................................................................................ 57 5.1.4 Ineffectiveness of the contract....................................................................................................... 58 5.1.5 Damages ....................................................................................................................................... 59
CHAPTER 6 DISCRETION ............................................................................................................................. 60 6.1 WHAT IS DISCRETION ......................................................................................................................... 60 6.2 HOW TO APPLY DISCRETION ............................................................................................................... 60
6.2.1 Recommendation........................................................................................................................... 60 6.2.2 General recommendations for tribunals ....................................................................................... 62
6.3 STEPS TO BE CONSIDERED WHEN EXERCISING DISCRETION................................................................. 66 6.4 DISCRETION UNDER THE PPL ............................................................................................................. 67
6.4.1 Issue of interim order.................................................................................................................... 67 6.4.2 Decision on oral hearings............................................................................................................. 67 6.4.3 Decision on request for an evidence............................................................................................. 67 6.4.4 Decision on the remedy................................................................................................................. 68 6.4.5 Determination of the issues of a complaint................................................................................... 68
CHAPTER 7 WRITING DECISIONS ............................................................................................................. 70 7.1 HOW TO APPROACH WRITING?............................................................................................................ 70 7.2 HOW SHOULD THE DECISIONS BE STRUCTURED?................................................................................. 70
7.2.1 Introduction .................................................................................................................................. 71 7.2.2 Description of the issues ............................................................................................................... 73 7.2.3 Description of the material facts................................................................................................... 75 7.2.4 Summary of applicable law........................................................................................................... 75 7.2.5 Analysis – application of law........................................................................................................ 75
7.3 STYLE AND REVISION ......................................................................................................................... 77 7.3.1 Conciseness................................................................................................................................... 77 7.3.2 Paragraphs ................................................................................................................................... 78 7.3.3 Use of headings............................................................................................................................. 79 7.3.4 Steps for revisions......................................................................................................................... 79
3
Foreword The purpose of this handbook is to provide the commissioners and inspectors of the Albanian Public Procurement Review Commission with guidance in their decision-making process. The handbook focuses on various procedural phases and instruments of the proceedings and key judicial skills and competencies which should be applied by the commissioners and inspectors in their everyday work. It provides general advice, practical tips and recommendations and case studies which should help the commissioners and inspectors to better understand the underlying principles of the review proceedings, facts they have to focus on and consider and the content of the rights and obligations of the tribunal and participants to the proceedings. The handbook addresses the following topics:
Procedural fairness; Conflict of interest; Evidence and procedure; Protecting confidential information; Approach to remedies; Discretion; and Writing of decisions.
The handbook is based on the Albanian legal framework governing the review procedure such as the Act No. 9643 on Public Procurement, Act No. 8485 on Administrative Procedure Code and Instruction, but at the same time it draws from the best practices of quasi-judicial and judicial authorities in other countries including European as well as common law countries especially Australia, New Zealand, Canada or USA. Although the practice of quasi-judicial and judicial authorities in common law countries may seem to be very different from practice of authorities from the civil law countries, due to their different legal systems, the basic and underlying principles of administrative procedure and skills which decision makers should apply in the decision making process are in fact very relevant. These skills, approaches to the decision-making process and principles applied in administrative procedure are to a great extent common to both legal systems. In addition, our research showed that materials for quasi-judicial and judicial authorities in the common law countries provide very comprehensive, clear and practical guidance on the best practice to be followed by decision makers. Therefore, we drew heavily from these common law sources while respecting the Albanian legal framework. It is intended that commissioners and inspectors should study the handbook and apply approaches, processes, methods and interpretations suggested in the handbook in the review proceedings. However, the advice and recommendations contained in the handbook do not represent the only possible alternative and commissioners and inspectors should still use their own judgment, knowledge, common sense, and experience. This handbook was prepared within the framework of the European Bank for Reconstruction and Development (EBRD) capacity building program in cooperation with the EBRD, White and Case, Bratislava, Slovakia and Kalo and Associates, Tirana, Albania and was funded by the EBRD Slovak Republic Technical Cooperation Fund.
4
List of used abbreviations Instruction refers to Instruction on Functioning and Organization of the Review
Commission approved by the Council of ministers decision No. 184
PPL refers to Act No. 9643 on Public Procurement
Tribunal refers to the Review Commission on Public Procurement in Albania or to a general procurement review body if key judicial skills and competencies are described in the context of best practices
Tribunal member refers to the commissioners and inspectors of the Review Commission on Public Procurement or to members of general procurement review body if key judicial skills and competencies are described in the context of best practices
5
Chapter 1 PROCEDURAL FAIRNESS
This chapter addresses the basic principles of procedural fairness, description of procedural fairness rules and their application to the review proceedings.
1.1 What is procedural fairness?
Procedural fairness (or the right to a fair trail) can be defined as a party’s right to be heard and to make its arguments in the review proceedings. Principles of procedural fairness in the review procedure should ensure that both the complainant and the contracting authority have a genuine and equal opportunity to influence the tribunal.
The tribunal is an administrative body to which procedural fairness obligations apply. As the tribunal decides on the rights and obligations of the parties to the review proceedings, it is important to recognize that the tribunal members perform a quasi judicial role and, therefore, the tribunal members should see themselves more as independent decision makers than mere administrators of the public procurement review process.
1.2 Which rights are covered by procedural fairness?
The European Convention on Human Rights (the “ECHR”) and its relevant case law is considered as the leading standard for procedural rights of parties to legal proceedings. Article 6 of the ECHR states that “everyone is entitled to a fair and public hearing within a reasonable time by an independent and impartial tribunal established by law”.1
The case law relevant to Article 6 of the ECHR defines procedural fairness as a combination of the following rights:
(i) The right to a public hearing (which generally includes the right to an oral hearing, if there are not any exceptional circumstances);
(ii) The right to be heard within a reasonable time; (iii) The right to be heard by an independent and impartial tribunal; (iv) The right to a fair hearing which includes:
• The right of access to a court (right for a court review of the administrative decision);
• The right to be present at the proceedings (only extends to certain kind of cases);
• The right to a principle of equality of arms (everyone who is a party to proceedings must have a reasonable opportunity to present his case to the court under conditions which do not place him at a substantial disadvantage against his opponent);
• The right to adversarial proceedings (to have knowledge of and comments on all evidence stated);
• The right to a reasoned decision.2
1 Based on established case law to ECHR, administrative proceedings fall under Article 6 regime 2 Prepared on the basis of The Right to a Fair Trail; A Guide to the Implementation of Article 6 of the European Convention on Human Rights, Human Rights Handbook No. 3, 2006.
6
Albanian Code of Administrative Procedure reflects the ECHR case law. Therefore, the main parties’ rights which must be respected by the tribunal in order to guarantee procedural fairness include the following:
(i) the right to be heard;
(ii) the right to be informed;
(iii) the right to be represented;
(iv) the right to present and challenge evidence;
(v) the right to a reasoned decision;
(vi) the right to applicable law;
(vii) the right to equal treatment; and
(viii) the right to be heard by an independent/impartial review body.
1.2.1 Right to be heard
The tribunal not only has a duty of fairness to the complainant, but also must ensure that the contracting authority (and other persons who may be affected by the decision, if applicable under Albanian law) is given an adequate opportunity to present its case. It should be noted that under the provisions of the Albanian Code of Administrative Procedures the parties to a dispute have the right to be heard in writing or orally. However, the PPL does not require the holding of oral hearings.
In the public procurement context, the hearing usually consists of the complainant’s submission of written material to the tribunal and contracting authority. Following the receipt of the complaint, the contracting authority should provide the tribunal with its statement and address the subject of the complaint.
Many public procurement tribunals do not provide the complainant with the right to comment on the contracting authority’s statement, mainly due to the process economy and the significance of the timeliness in the procurement process. However, some states (e.g. Germany) provide for oral hearings, which allow the complainant to challenge all of the contracting authority’s statements before the tribunal. Oral hearings definitely present a better option for both parties to address the other party’s position.
A useful alternative to the oral hearing and a complementary option to the current Albanian written hearing is an extended application of the written hearing which provides the complainant with the right to receive and comment on the contracting authority’s response to its complaint within a specified period of time.
1.2.2 Right to be informed
Each party should have the right to be informed on the hearings to be held and about the development of the proceedings, in order to adequately prepare its argument or to have access to files to familiarize with the other party’s statement.
The PPL does not expressly provide for oral hearings in the review procedure, neither does it provide the parties with the right to access files. In general, the tribunal does not provide any information on the progress of the review proceedings to the parties or on the other party’s
7
position. The exception being the fact that the contracting authority is provided with the complaint as the complainant files the complaint with the tribunal and the contracting authority.
Thus, Albanian law does not allow the complainant to receive and respond to the contracting authority’s statement to its complaint. Although the complainant is provided with the decision of the contracting authority which can be challenged by a complaint, it is not allowed to comment/respond to the contracting authority’s statement which may include new information or evidence.
The adequate respect for the right to be informed would be observed (i) if the tribunal decided to hold an oral hearing with the presence of both the complainant and the contracting authority or (ii) would provide both parties with the right to access the review proceedings file. If the oral hearing is held, the complainant and the contracting authority should have the right to attend the whole hearing in order to respond to all evidence and arguments brought by the other party.
1.2.3 Right to representation
The complainant and the contracting authority have the right to present their case or to have their case presented in the review proceedings by a lawyer or another representative of their choice. The tribunal may not impose any restrictions on the parties’ right to representation, unless otherwise provided in the applicable law. Currently, this is not the case in Albania and thus, this right is fully respected
1.2.4 Right to present and challenge evidence
The purpose of the right to call evidence is to establish the facts. Only after the facts are clear is it possible to determine how the law will apply to those facts. A corollary of the right to call evidence is that the tribunal should have an appropriate mechanism that a party can use to require other persons who have relevant information to provide it to the party or tribunal.3
The parties are entitled to present any evidence that can prove their case in the review proceedings. It is the tribunal’s responsibility to properly assess and evaluate any evidence that is submitted by the parties and to decide if it helps to establish the basic facts of the case, or if other evidence may be needed.
Each party should also have the right to challenge the evidence submitted by the other party and thus, respond to the evidence which is unfavorable to its claims. In the review proceedings, the contracting authority is provided with the complaint and, thus, has a reasonable understanding of the complainant’s arguments and can adequately challenge the complainant’s position. On the other hand, the complainant is only provided with the tender documentation or the contracting authority’s decision, which forms the basis for its complaint. However, as the contracting authority can present new arguments in its response to the complaint, the complainant is deprived of its full right to challenge evidence of the contracting authority.
The Albanian procurement review procedure is not the only review system which limits the complainant’s right to challenge the contracting authority’s response. The public procurement laws of some EU Member States apply same or similar rules. 3 A Manual for Ontario Adjudicators, Society for Ontario Adjudicators and Regulators, 2000, p. 46.
8
For more on evidence please refer to Chapter 3 .
1.2.5 Right to a reasoned decision
The parties have a right to be informed about the reasons for the tribunal’s decision. Stating reasons requires summarizing the results of the investigation procedure, the arguments determining the evaluation of the evidence and the considerations of the legal issues which have been relevant for the decision.
Therefore, the tribunal should base its decision solely on facts which have been proven by evidence presented by the parties or requested by the tribunal or available within the public domain (e.g., applicable legal regulations, technical norms, market practice, information available on internet, basic information about a particular industry).
1.2.6 Right to applicable law
It is the basic duty of tribunal members to follow the applicable law and apply it consistently in every case that comes before it in compliance with the basic public procurement principles: the equal treatment and non-discrimination of tenderers, the transparency of procurement procedures and the effectiveness and economy of the procurement. The tribunal should also consider the intent of the PPL which aims to enhance the value-for-money, open and effective competition, accountability, and due process of law.
The tribunal will not commence the review proceedings if the required fee has not been paid, the submitted documents are incomplete or if another technical deficiency in the complaint does not allow the tribunal to do so. Best practices in some of the states provide the complainant with the right to be informed by the tribunal that such deficiency exists and be provided with the opportunity to correct such deficiency within a specified time.
However, under Albanian law (and also under law of many EU Member States), the tribunal will declare the complaint as inadmissible due to non-compliance with the formal requirements of the PPL, inform the complainant about it within 3 days and indicate its right to appeal such decision in the court and inform the contracting authority about the restarting of the contract award procedure.
Different rules apply if the complaint can not meet the basic legal requirements – i.e., if the complaint was filed after the lapse of the review period or the complainant was not entitled to file the complaint. In such scenario, the tribunal is entitled to dismiss the complaint as non-admissible.
1.2.7 The right to equal treatment
Article 14 of ECHR provides for equal treatment of the parties. The ECHR court protects the parties against discrimination when states treat differently persons in analogous situations without providing an objective and reasonable justification. However, the right not to be discriminated against under Article 14 in the enjoyment of the rights guaranteed under the ECHR is also violated when states without an objective and reasonable justification fail to treat differently persons whose situations are significantly different.4
4 ECHR court case - Thlimmenos v. Greece, Judgment of 6 April 2000, para. 44.
9
Thus, the tribunal should not only treat the parties equally if the nature of the case is similar or in order to provide both parties in the review proceedings with the same rights, but it should also differentiate among the parties whose situation is significantly different when deciding on the merits of the complaint or applying procedural rules against the parties to the same proceedings (e.g. if two complainants challenge the same contract award procedure, the tribunal needs to assess the situation of each complainant separately based on the applicable evidence and position of particular complainant). 1.2.8 The right to be heard by an independent/impartial review body
Each party is entitled to a hearing by an independent tribunal whose members have no conflict of interest in the reviewed matter.
The tribunal should meet the ECHR test for an independent tribunal where the court considers (i) the manner of appointment of its members, (ii) the duration of their office, (iii) the existence of guarantees against outside pressures and (iv) the question whether the body presents an appearance of independence.5
The impartiality and the various types of conflicts of interest that may apply to tribunal members and the rules for dealing with conflicts of interest are addressed in Chapter 2
5 The Right to a Fair Trail; A Guide to the Implementation of Article 6 of the European Convention on Human Rights, Human Rights Handbook No. 3, 2006, p. 30.
10
Chapter 2 CONFLICTS OF INTEREST
This chapter addresses conflict of interest issues. It defines conflicts of interest and specifies the basic types of conflicts of interest that can arise for members of the tribunal. It also provides guidance on the identification and disclosure of conflicts of interest and proposes actions which may be taken in order to avoid or mitigate them. The chapter concludes with case studies which provide practical insight into daily dealings with conflict of interest.
2.1 Impartiality and conflicts of interest
A central requirement of administrative justice is the decision maker’s impartiality. Impartiality is a principle of justice holding that decisions should be based on objective criteria, rather than bias, prejudice, or the preference of one person over another for improper reasons.6 Impartiality is a fundamental principle of all judicial, quasi-judicial and administrative institutions, and the obligation to be impartial can be found in many codes of ethics for public servants and judges all around the world.7
This also applies to the tribunal members, where under the Albanian Code of Ethics of Public Officials, public servants are obliged to be honest, impartial and not to allow their private interests to conflict with their public position and to avoid conflicts of interest and never use their public position for private interests. 8
Conflicts of interest9 may occur when there is a predisposition to not approach a case with an impartial mind and there is a real danger that the tribunal member might unfairly regard with favor (or disfavor) the case of a party that is subject to the review proceedings.
Every tribunal member has a number of professional and personal interests and roles. Sometimes, conflicts of interest cannot be avoided and can arise without anyone being at fault. This is almost inevitable in a small country like Albania where communities, organizations and individuals are often closely connected.
Therefore, as suggested by the OECD Guidelines, it is necessary to set a clear conflict of interest policy and approach that will cover the following issues:
• Definition of the general features of conflict of interest situations;
• Identification of specific occurrences of unacceptable conflict of interest situations;
• Leadership and commitment to the implementation of a conflict of interest policy;
6 http://en.wikipedia.org/wiki/Impartiality7 See e.g., Guidance for Promoting Judicial Independence and Impartiality prepared by USAID, January 2002, http://www.usaid.gov/our_work/democracy_and_governance/publications/pdfs/pnacm007.pdf, see e.g. also Model Code of Conduct for Public Officials, Recommendation No. R (2000)10, adopted by the Committee of Ministers of the Council of Europe Available at http://www.coe.int/t/dghl/monitoring/greco/documents/Rec(2000)10_EN.pdf. Codes of Ethics of OECD countries can be found at OECD webpage http://www.oecd.org/document/12/0,3343,en_2649_34135_35532108_1_1_1_37447,00.html. Other sources for the codes of conduct of CEE and EE countries can be found in the the work of Jolanta Palidauskaite, Ph.D., Codes of Conduct for Public Servants in Eastern and Central European Countries, Comparative Perspective, or European principles for public administration/SIGMA papers Nr. 27 available at http://www.oecd.org/dataoecd/26/30/36972467.pdf. 8 Act No. 9131 on the rules of ethics in public administration. 9 For the purpose of this guide we use the term “conflict of interest” to also cover bias. ”Bias” is a common legal description of some types of conflicts of interest, especially those situations that involve predetermination.
11
• Awareness that assists compliance with and the anticipation of at-risk areas for prevention;
• Disclosure of a conflict of interest as soon as it arises;
• Partnership with other stakeholders.
• Identification of actions necessary to avoid any effects of a conflict of interest and to meet their mandatory obligations.10
2.2 What is a conflict of interest?
The Organization for Economic Co-operation and Development (OECD), in its Guidelines for managing conflicts of interest in the public service (2005), defines conflict of interest as “a conflict between the public duty and private interests of a public official, in which the public official has private-capacity interests which could improperly influence the performance of their official duties and responsibilities.”11
The Albanian Act on the Prevention of Conflicts of Interest in the Exercise of Public Functions12 defines a conflict of interest as “a conflict between the public duty and the private interest of a public official, in which he/she has a private interest, direct or implicit, that affect, could affect or seems to affect the performance of his/her public duties and responsibilities in an unfair manner.”
Thus, a conflict of interest is not only the situation where in fact there is an unacceptable conflict between a public official’s interests as a private citizen and his/her duty as a public official, but also those situations where there is an apparent conflict of interest or a potential conflict of interest. The distinguishing element is whether the effect on the exercise of the duties has occurred or could have occurred or in fact the effect has not occurred, is not occurring or cannot occur.13
Albanian law distinguishes between:
• an actual conflict of interest - a situation in which the private interests of a tribunal member affect, have affected or might have affected the performance of his/her duties and responsibilities as a tribunal member in an incorrect way;
• an apparent conflict of interest - a situation in which the private interests of a tribunal member, prima facie or by their form, seem to affect, have affected or might affect the performance of his/her duties and responsibilities as a tribunal member in an incorrect way, but, in fact, the effect has not occurred, is not occurring and cannot occur;
• a potential conflict of interest - a situation in which the private interests of a tribunal member might in the future cause an actual or apparent conflict of
10 OECD Recommendation on Guidelines for Managing Conflict of Interest in the Public Service (2003), p. 4 available at http://www.oecd.org/dataoecd/17/23/33967052.pdf, p. 6, or www.oecd.org/gov/ethics/conflictofinterest.11 See OECD Recommendation on Guidelines for Managing Conflict of Interest in the Public Service (2003), p. 4. See also OECD/SIGMA Conflict of Interest Policies and Practices in Nine EU Member States: A comparative Review (2005), Sigma papers No. 36 available at http://www.oecd.org/officialdocuments/displaydocumentpdf/?cote=gov/sigma(2006)1/REV1&doclanguage=en and http://dx.doi.org/10.1787/5kml60r7g5zq-en.12 Act No. 9367, On the Prevention of Conflicts of Interest in the Exercise of Public Functions. 13 Act No. 9367, On the Prevention of Conflicts of Interest in the Exercise of Public Functions.
12
interest to appear, if the official were to be included in certain duties or responsibilities.
Like Albanian law, the OECD Guidelines also distinguish between actual, apparent and potential conflicts of interest and state that an apparent conflict can be said to exist where it appears that a public official’s private interests could improperly influence the performance of their duties but this is not in fact the case. A potential conflict of interest arises where a public official has private interests which are such that a conflict of interest would arise if the official would become involved in the relevant (i.e., conflicting) official responsibilities in the future.14
In addition to actual, apparent and potential conflicts of interest, Albanian law further recognizes case by case conflicts of interest and continuing conflicts of interest.
The OECD Managing Conflict of Interest in the Public Sector Toolkit (“OECD Toolkit”) suggests three tools for identifying actual, apparent and potential conflicts of interest.15
2.2.1 Actual Conflict of Interest
This occurs where the private interest of the tribunal member is of such a quality (e.g., due to a relationship to one of the parties to the proceedings) or quantity (e.g., profits that can be gained by the tribunal member) that it is reasonable to believe that the private interest could improperly influence the decision-making of the tribunal member. An actual conflict of interest is inadmissible and must be avoided. Otherwise a decision affected by the conflict of private interest of a tribunal member could be challenged before a court.
2.2.2 Apparent Conflict of Interest
As suggested in the OECD Toolkit, an apparent conflict of interest can be as damaging as an actual conflict of interest and thus should be treated as an actual conflict of interest until all doubts regarding the personal interests involved are known.16
2.2.3 Potential Conflict of Interest
As the definition of the potential conflict of interest suggests, the personal interest of a tribunal member exists but because he/she is not involved in the decision making, this conflict of interest is not an issue. It would become an issue if the tribunal member’s role changes and he/she becomes involved in the matter.
2.3 What is a private interest?
A key term that determines conflict of interest is a “private interest”. An “interest” in this context means anything that can have an impact on an individual or group. The term “private interest” includes not only a tribunal member’s own personal, professional or business interests, but also the personal, professional or business interests of individuals or groups
14 OECD Recommendation on Guidelines for Managing Conflict of Interest in the Public Service (2003), p. 4. 15 OECD Recommendation on Guidelines for Managing Conflict of Interest in the Public Service Toolkit (2005), p. 23-25. 16 OECD Recommendation on Guidelines for Managing Conflict of Interest in the Public Service Toolkit (2005), p. 23-25.
13
with whom they are closely associated. This can include relatives, friends or even rivals and enemies.17
Albanian law defines private interests as those interests that conform with, contain, are based on or come from:
(a) property rights and obligations of any kind of nature;
(b) every other juridical civil relationship;
(c) gifts, promises, favors, preferential treatment;
(d) possible negotiations for future employment by the official during the exercise of his/her function or negotiations for any other form of future relationship with a private interest for the official after leaving his/her position;
(e) engagements in private activity for the purpose of profit or any kind of activity that creates income, as well as engagements in profit-making and non-profit organizations, syndicates or professional, political or state organizations and every other organization;
(f) relationships:
(i) within a family or among individuals who live together;
(ii) in a community;
(iii) ethnic;
(iv) religious;
(v) recognized [relationships] of friendship or enmity;
(g) prior engagements from which the interests mentioned in the above letters of this article have arisen or could arise.
In our opinion, the above definition of private interests gives clear guidance on situations in which conflicts of private interests exist. Thus, it is in line with the recommendation contained in the OECD Guidelines.18
17 In whose interests? Preventing and managing conflicts of interest in the APS, Australian Public Service Commission, 2009, p. 2. Copyright Commonwealth of Australia reproduced by permission. 18 OECD Recommendation on Guidelines for Managing Conflict of Interest in the Public Service (2003), p. 7.
14
2.3.1 Types of private interest
As defined under the Albanian law, private interests can be divided into the following categories19:
Personal interests
• being in a family relationship with the complainant’s or contracting authority’s representative involved in the procurement in question;
• having a personal relationship with the complainant’s representatives or the contracting authority’s representatives involved in the procurement in question.
All of the types of private interests apply to tribunal members if their relative or close friend has one of these private interests or if such relative/close friend could be personally affected by a decision of the tribunal.
Political interests
• holding another public office (applies to a relative or a close friend, as the tribunal member may not hold another public office);
• holding or expressing strong political or personal views that may indicate prejudice or predetermination for or against a person or issue.
Financial interests
• being an employee, advisor, director, or partner of another business or organization;
• having a professional or legal obligation to complainant or contracting authority;
• owning assets which may be directly or indirectly influenced by the decision (ownership of land, shares in a company or other investments);
• having a promise of future employment;
• receiving a gift, hospitality or other benefit from the complainant or the contracting authority or from someone related to them.
Social interests
• being a member of a club, society or association;
• being a member of a particular religious or ethnic group;
• deciding on a matter which deals with the tribunal member’s town/village of residence.
Some of the specific types of private interests are addressed below. Please note that this is not an exhaustive list of examples of private interests. 19 Examples used in Managing conflicts of interest: Guidance for public entities, Controller and Auditor General, New Zealand, 2007, p. 6-7, have been adjusted to the tribunal’s situation.
15
2.3.2 Personal interests
One of the most problematic issues is to assess what constitutes a personal relationship which must be taken into account in deciding on the existence of a conflict of interest.
Family members
If the decision should have an affect on immediate family members (spouse or dependent children) of the deciding tribunal member, this would obviously constitute a conflict of interest for the tribunal member and thus, he/she should abstain from deciding that matter.
Relatives
With relatives it is a bit different. Generally, it will depend on the closeness of the relationship and the degree to which the tribunal’s decision or activity could directly or significantly affect them. A relationship could be close because of the directness of the blood or marriage link, or because of the amount of association. There are no clear rules because these questions involve matters of degree, but it is usually wise not to participate if relatives are seriously affected.20
Friends and other associates
Similar qualifications apply to friends and other associates. It is unrealistic to expect a member or official to have absolutely no connection with or knowledge of the person concerned. Albania is a small and interconnected society. Thus, simply knowing someone or having worked with them, or having had official dealings with them will not usually create any problem. However, a longstanding, close, or very recent association or dealing might. If the tribunal’s decision or activity affects an organization that a relative or friend works for, it may be legitimate to take into account the nature of their position – for instance, whether they are a senior executive or owner, or whether they are a junior staff member who is not personally involved in the matter and who would not be personally affected by the decision.21
2.3.3 Political interests
Political activities
There are no firm rules about the extent to which a tribunal member may properly maintain links with groups and activities outside the tribunal. The public interest should take priority in any potential conflict with private activities, and a tribunal member should consider how a third party would view his/her behavior and how the activity or association might tarnish the integrity of the tribunal.
The overriding principle could be that: “a public office holder should not participate in a political activity where it may reasonably be seen to be incompatible with the public office holder's duty or impair his or her ability to discharge his or her duties in a politically impartial fashion or cast doubt on the integrity or impartiality of the office.”22 In the event that the tribunal member is a member or a strong supporter of a political party, his/her political views must remain separate from his/her decision making process as it is an important feature of professionalism and impartiality of the tribunal member (no matter if the contracting 20 Managing conflicts of interest: Guidance for public entities, Controller and Auditor General, New Zealand, 2007, p. 19. 21 Managing conflicts of interest: Guidance for public entities, Controller and Auditor General, New Zealand, 2007, p. 19. 22 Information Handbook for Employment Insurance Board of Referees, Employment Insurance Appeals Division, 2010, p. 16.
16
authority is under the control of his “favorite” party (preferential treatment) or the competing party (negative treatment)).
Generally, under the Albanian Code of Ethics, public officials are not allowed to be engaged in an outside activity that (i) impedes the performance of his official duty or asks for his commitment, mental or physical, so as to make difficult the performance of his duties, or (ii) is a continuation of this duty, that infringes in any manner the image of the employee of the public administration. In case of doubt about the qualification of an activity as permissible or not, the tribunal member should consult with the tribunal head. Therefore, the tribunal members may get involved in political activities only as long as it does not impede performance of their duty. The following activities, if kept to a permissible extent, could be allowed and thus would not create a conflict of interest issue:
• membership in a political party
• contributing funds a political party;
• attending political party’s events, displaying campaign materials, or expressing political views in a public setting.23
2.3.4 Social interests
Associations with community and other organizations
Membership in organizations by active and knowledgeable tribunal members is clearly of benefit to the tribunal. Nevertheless, a tribunal member needs to be aware of the potential problems that membership in such organizations may create. This may be the case in a situation where a tribunal member has expressed his/her views as a member of a non-governmental organization and such matter subsequently comes before the tribunal.24
An organization membership might not be the issue. In some circumstances, support for an organization could be equally compromising, particularly regarding public comments or written statements. Donations to a particular organization might also be of concern. Even anonymous donations could breach the principle. In assessing the character of their involvement, tribunal members should think about how ‘a reasonable well-informed observer’ might react if such interest or involvement were made public. Therefore, if the tribunal member provides donations to organizations and these organizations are involved in the review proceedings, he/she should refuse to participate as his/her donations to the organization in question could give a rise to a conflict of interest.
While tribunal members may belong to a committee or advisory body which deals with law reform or other legal issues, they should be mindful of any involvement that may include advising on issues which are controversial or inconsistent with their tribunal role. The expression of a conflicting view could diminish respect for such member and the authority of the tribunal.25
23 Information Handbook for Employment Insurance Board of Referees, Employment Insurance Appeals Division, 2010, p. 16. 24 Administrative Review Council, Commonwealth of Australia, Guide to Standards of Conduct of Tribunal Members, 2009, p. 30. Copyright Commonwealth of Australia reproduced by permission. 25 Administrative Review Council, Commonwealth of Australia, Guide to Standards of Conduct of Tribunal Members, 2009, p. 31. Copyright Commonwealth of Australia reproduced by permission.
17
2.3.5 Gifts
Under Albanian law, it is prohibited for a tribunal member to seek or accept, directly or indirectly, any gifts, favors, promises or preferential treatment, given because of his/her position, if it could create a conflict of interest.
A tribunal member, to whom a gift, favor, promise or preferential treatment is offered, should:
• refuse it and, if the offer was made without his/her knowledge or in advance, return it to the offeror or, if this is impossible, officially surrender it to the tribunal head or to the nearest superior institution;
• try to identify the person who offered it and his/her motives and interests;
• in any case, immediately inform the tribunal head or the nearest superior institution about the gift, favor, promise or preferential treatment offered or given, the identification of the individual who offered it, and the circumstances, as well as the possible reasons for this event and its relation to his/her duties as a tribunal member;
• continue the exercise of duty normally, especially regarding the problem for which the gift, favor, promise or preferential treatment was offered, and continually keep the superior informed about every possible development;
• if the offer is related to the commission of a criminal offense, report it to the organs competent for criminal prosecution.
Albanian law on the Prevention of Conflicts of Interest prohibits the acceptance of any gifts regardless of their value and thus, is even more restrictive than the OECD guidelines which allow for acceptance of certain gifts under special circumstance (e.g. gifts in accordance with social customs (such as birthdays or festivals) or gifts in recognition of services).26
Other best practices state that a tribunal member should not accept gifts of any kind where this could reasonably be perceived to compromise the impartiality of the public official.27
If Albanian law moves towards a more material test on gift restrictions, i.e., focuses on gifts which may give rise to a conflict of interest, the tribunal member would have to consider (i) the nature and value of the gift, (ii) the person giving the gift and his/her relationship with the tribunal and (iii) the context in which the gift is being given. This materiality approach has been also adopted by OECD which in its Guidelines suggests using the following questionnaire when deciding on the acceptance of the
G Genuine Is this gift genuine, in appreciation for something I have done in my role as a public official, and not requested or encouraged by me?
I Independent If I accept this gift, would a reasonable person have any doubt that I could be independent in doing my job in the future, especially if the person responsible for this gift is
26 OECD Recommendation on Guidelines for Managing Conflict of Interest in the Public Service Toolkit (2005), p. 45. 27 Administrative Review Council, Commonwealth of Australia, Guide to Standards of Conduct of Tribunal Members, 2009, p. 34. Copyright Commonwealth of Australia reproduced by permission.
18
involved or affected by a decision I might make?
F Free If I accept this gift, would I feel free of any obligation to do something in return for the person responsible for the gift or for his/her family or friends/associates?
T Transparent Am I prepared to declare this gift and its source, transparently, to my organization and its clients, to my professional colleagues, and to the media and the public in general?28
2.4 Prejudice and predetermination
Tribunal members are entitled to have their own personal views. Indeed, the tribunal members may often be expected to use their own particular opinions or ideas in carrying out their work. However, having strong views about a matter can create a risk of prejudice or predetermination. Tribunal members might be regarded as being involved in a conflict of interest (biased) if their behavior or beliefs indicate (especially, but not necessarily, when expressed in a public statement) that they have made up their mind about a matter before it came to be heard or deliberated on. In other words, that they have a “closed mind” or fixed position and are not willing to fairly consider all relevant information and arguments.29 Such type of prejudice and predetermination would violate their obligation to be impartial in their decision making process and, thus, would give rise to a conflict of interest.
General personal factors, such as a tribunal member’s ethnicity, religion, national origin, age, political or philosophical leanings, wealth, or professional background, will not often constitute predetermination (unless it gives rise to a strongly held personal belief that directly relates to the matter being considered and then, it should be considered as a conflict of interest).30
2.5 Dealing with conflicts of interest
Pursuant to Albanian law, the tribunal member has the duty to resolve a conflict of interest due to his/her private interest or other conflicting interest as soon as possible after he/she become aware of it. If the tribunal member is uncertain about the existence of a conflict of interest, he/she should consult the matter with the tribunal head.
There are two aspects to dealing with particular situations:
identifying and disclosing the conflict of interest (primarily the responsibility of the tribunal member) and registering or declaring in writing a potential conflict of interest to the tribunal head; and
deciding what action (if any) is necessary to best avoid or mitigate any effects of the conflict of interest (primarily the responsibility of the tribunal).
28 OECD Recommendation on Guidelines for Managing Conflict of Interest in the Public Service Toolkit (2005), p. 43. 29 Managing conflicts of interest: Guidance for public entities, Controller and Auditor General, New Zealand, 2007, p. 20. 30 Managing conflicts of interest: Guidance for public entities, Controller and Auditor General, New Zealand, 2007, p. 20.
19
2.5.1 How to identify a conflict of interest
It is important to focus on the overlap between the two interests – that is, whether the member’s other interest has something to do with the particular matter that is being considered by the tribunal.
It is better to err on the side of openness when deciding whether something should be disclosed. Many situations are not clear-cut. If a tribunal member is uncertain about whether or not something constitutes a conflict of interest, it is safer and more transparent to disclose the interest to the tribunal head or the other tribunal members at the board meeting (if recommended by the tribunal head). The matter is then out in the open, and the expertise of other tribunal members can be used to judge whether the situation constitutes a conflict of interest and whether it is serious enough to warrant further action.31
2.5.2 How to disclose a conflict of interest
Under Albanian law, every official, in the exercise of his/her public duties or competencies, on the basis of his knowledge and in good faith, is obliged to make a self declaration in advance (on case by case basis) of the existence of his/her private interests that might become a cause for the emergence of a conflict of interest. The case by case declaration of private interests is done by the official whenever this is requested by the superior or by the superior institution. As a rule, the declaration should be requested and made in advance.
Based on the provisions of the Instruction, in cases of conflict of interest as described under the Albanian law, a tribunal member is obliged to disclose the conflict of interest in advance and inform the tribunal head immediately who shall decide in this respect and exclude the tribunal member from the decision-making process.32
If the tribunal member is aware of the fact that a colleague or the tribunal head has an interest, he/she is obliged to inform the tribunal head or the office of the Prime Minister, if the tribunal head is involved.33
If a matter in which a tribunal member has an interest arises at a formal meeting, the tribunal member should declare at the meeting that he/she has an interest in the matter before the matter is discussed. The declaration should be recorded in the minutes of the meeting. In other situations, the matter should be raised and discussed with the relevant person as soon as the potential for a conflict of interest is identified.34
If the parties in the review proceeding (contracting authority/complainant) file a request for the exclusion of the tribunal member, the tribunal head shall decide on the matter. In the event that the parties request the exclusion of the tribunal head, this request will be evaluated by the tribunal which will be presided over by the deputy tribunal head.
2.5.3 How to avoid/mitigate conflicts of interest
Albanian law requires that tribunal members are excluded from participation in review proceedings whenever they have a private interest in the decision. For example, a tribunal member may be personally concerned or may be a relative of a person to be affected by 31 Managing conflicts of interest: Guidance for public entities, Controller and Auditor General, New Zealand, 2007, p. 27-28. 32 Such action is requested under the Albanian Act On the Prevention of Conflicts of Interest in the Exercise of Public Functions. 33 Requested under the Albanian Act On the Prevention of Conflicts of Interest in the Exercise of Public Functions. 34 Managing conflicts of interest: Guidance for public entities, Controller and Auditor General, New Zealand, 2007, p. 28.
20
review proceedings. In such case it is appropriate for the tribunal member to maintain his/her position but to not participate in any decision making process on the matters affecting him/her. This can be done by abstaining from voting on decisions, withdrawing from discussions of relevant proposals and plans and not receiving documents and other information related to his/her private interest.35
As there is a statutory prohibition from participating in a review proceeding if a conflict of interest exists, there are no alternative sanctions available and the prohibition to participate is the sole remedy.
However, in the event of future legislative changes, if any, or specific types of private interest that would not sanction a tribunal member’s conflict of interest with automatic exclusion from participation, the tribunal may have the right to determine the appropriate next steps (and to direct the affected member accordingly).
When deciding on appropriate steps, the tribunal member should carefully assess:
• the seriousness of the conflict of interest; and
• available mitigation options.
The options (listed roughly in order from lowest to highest in severity) include:
• taking no action;
• enquiring as to whether all affected parties (contracting authority and complainant) will consent to the member’s involvement;
• seeking a formal exemption to allow participation in the decision making (if such legal power applies);
• imposing additional oversight or review over the tribunal member
• withdrawal from discussion or voting on a particular item of business at a meeting;
• exclusion from a committee or working group dealing with the issue;
• re-assigning certain tasks or duties to another person;
• agreement or order of the tribunal head not to do something;
• withholding certain confidential information, or placing restrictions on access
to information;
• transferring the tribunal member (temporarily or permanently) to another position or project; or
• relinquishing the private interest.36
35 Requested under the Albanian Act On the Prevention of Conflicts of Interest in the Exercise of Public Functions. 36 The list of options was prepared on the basis of - Managing conflicts of interest: Guidance for public entities, Controller and Auditor General, New Zealand, 2007, p. 31. A similar list of options for the resolution of conflict of interest issues can be found in - OECD Recommendation on Guidelines for Managing Conflict of Interest in the Public Service (2003), p. 8.
21
2.5.4 Legal impact of not-dealing with conflict of interest
In the event that the tribunal does not address properly the conflict of interest issue and the tribunal’s decision is adopted in the context of actual or apparent conflict of interest, such decision may be challenged in court. If the existence of the conflict of interest is proved the court would declare such decision as invalid (i.e. the decision would have no legal effect).
2.5.5 Appointment and employment after leaving office
In compliance with the OECD toolkit37, the Albanian Code of Ethics provides that for a two-year period of time after leaving the tribunal, the former tribunal member should not represent any person or organization in a conflict or commercial relationship with the Albanian public administration for the duty that he/she has performed or in continuation of it.
37 OECD Recommendation on Guidelines for Managing Conflict of Interest in the Public Service Toolkit (2005), p. 41.
22
2.6 Case Studies
The following case studies illustrate how conflicts of interest can arise and be managed in practice. They should not be seen as prescriptive for any given situation. They are examples, not rules. In reality, sometimes a slight difference in context or detail can make be critical. Tribunal members will have to exercise their own judgment.
Case Study 1 - Family connection to a complainant38
Situation
Almir is a member of the procurement review tribunal. He deals with a complaint against the decision of a district health board (DHB). The DHB contracts out some functions to private providers.
The complaint was submitted by the unsuccessful tendering company whose managing director and significant shareholder is Almir’s brother-in-law.
Issues
A conflict of interest exists here. It is not a financial conflict of interest, because Almir is not involved in the complainant and is not dependent on his brother-in-law. But the family connection to the complainant is a reasonably close one, and the decision to be made by the tribunal directly relates to the complainant. Almir is likely to have feelings of loyalty to his brother-in-law (or at least this would be a likely perception).
Resolution
Almir should tell the tribunal head about his personal connection to the complainant immediately after he learns about the complaint being filed with the tribunal, and the tribunal head should exclude Almir from participation in any analysis and decision making of the case, as currently required under Albanian law. In the event that future conflict of interest law provides more discretion to the tribunal to decide on appropriate mitigation measures, the tribunal head could assign the particular complaint to someone else and ask Almir to abstain from voting. It may also be prudent to take steps to ensure that Almir does not have access to documents and information related to the challenged DHB tender, especially to confidential information submitted by the complainant’s competitors.
The fact that Almir’s relative has an important role as the complainant is relevant to the assessment of this situation. The answer might be different if the relative were in a much more junior position and were not personally involved in the complainant’s tender, especially if the complainant was a large company. The answer might also be different if the relative were a distant relative whom Almir had met only a few times in his life. Assessing the closeness of a personal connection to someone (or the appearance of such closeness) requires careful judgment.
38 Case study was adjusted for the purpose of this chapter on the basis of case study stated in - Managing conflicts of interest: Guidance for public entities, Controller and Auditor General, New Zealand, 2007, p. 34-35.
23
Case Study 2 - Personal connection to a complainant39
Situation
Elira, a tribunal member, is assigned to a complaint related to construction work procured by a government department. This complaint challenges a tender award to the company Constructions SA.
Elira has extensive personal knowledge about Constructions SA. She used that firm to build her own house last year, and she is currently using it to carry out structural alterations on other property that she owns. Because of this, she knows the directors of the company very well and has high regard for their work.
Issues
This situation may create a conflict of interest for Elira. She is expected to impartially and professionally assess a complaint, yet she could be regarded as being too close to one of the tenderers.
Resolution
In Elira’s case, it is probably unwise for her to play a role in the decision on the complaint, and she should be replaced. Her dealings with the firm are recent and significant. The risk is that, if the complaint is rejected, Elira’s personal connections to Constructions SA might allow someone to allege that the tribunal’s decision was tainted by favoritism.
These situations are not always clear-cut. In small or specialized industries, people often have some degree of personal knowledge of or previous dealings with other people or companies that they have to make decisions about. This is not necessarily wrong. Thus, sometimes these connections might be judged to be too remote or insignificant. For instance, in this case, the response would probably be different if the firm’s private work for Elira had been a single, smaller job carried out several years ago.
To take a similar example, careful judgment would also be necessary if the complainant or company to be affected by the complaint were run by a friend or acquaintance of Elira. For example, it might be improper for Elira to be involved in assessing complaints if the firm is run by a very good friend she has known for many years and who attended her wedding (a similar rule would apply if Elira had a close friend at the contracting authority who was responsible for the procurement). By contrast, there might not be any problem if Elira simply knows the person in a casual way through membership in the same sports club. Further careful judgments might be necessary if Elira had worked for the firm. For instance, the situation might be problematic if she had been a full-time employee within the last year. On the other hand, it might not be problematic if she had worked for the firm several years ago.
39 The case study was adjusted for the purpose of this chapter on the basis of the case study stated in - Managing conflicts of interest: Guidance for public entities, Controller and Auditor General, New Zealand, 2007, p. 41-42.
24
Case study 3 – Social connection to a complainant/contracting authority
Situation
On occasions, and often on their own time, the most senior officials of the tribunal attend lunches or dinners with a wide range of business people, including representatives of schools, churches, property developers and consultants or with representatives of the contracting authorities.
This is understood to be part of the activities of senior officials and there is no fee or other money involved. This activity has never been seen as a problem for the tribunal.
On one recent occasion, two of the tribunal members attended what was reported in a newspaper as a lunch hosted by a prominent local construction company. It occurred a week before the tribunal decided in favor of the complaint submitted by the construction company.
Issues
While some social contact between tribunal members and representatives of the private sector (or contracting authorities sector) is inevitable and may often be desirable, the provision and timing of the lunch is likely to raise suspicions about the integrity of the tribunal members involved in the decision making process and the integrity of the entire review proceedings at the tribunal. The lunch also creates, at minimum, an apparent conflict of interest for the tribunal members. In this example, it is irrelevant whether the lunch occurred during the free time of the tribunal members (they can not claim to be present at the lunch in a private capacity).
Resolution
The tribunal must be able to demonstrate that the review proceeding was appropriately free of improper or corrupt influences. If it cannot, this situation may be an example of a form of “state capture”, obtaining a favorable official decision by a covert influence through corrupt methods, and should be investigated.40
Therefore, the tribunal members should always carefully consider any participation at social events where the complainants or the contracting authorities may be present, and analyze whether such participation could be seen as improper influence at subsequent tribunal decisions in the review proceedings.
40 The case study was adjusted for the purpose of this chapter on the basis of the case study stated in - OECD Recommendation on Guidelines for Managing Conflict of Interest in the Public Service Toolkit (2005), p. 85.
25
Case study 4 - Personal interest
Situation
A computer company has donated old computers to the school which is attended by the nephew of the tribunal member’s good friend. Moreover, the computer company offers internships to selected students of the school. The selection of candidates is very competitive. The tribunal member is aware of this fact as he discussed this opportunity with his friend over dinner. The friend is confident that his nephew will get the internship as he his one of the best students.
The computer company has filed a complaint with the tribunal. The computer company is not aware of the relationship between one of the internship applicants and the tribunal member but it could learn about it. The case is complex and a slight change in interpretation of tender conditions could lead to either loss or victory of the complainant.
Issues
The tribunal member has a certain remote personal interest in the case as he knows very well the uncle of a student that would be applying for internship with the company. Given the relationship with the uncle, one could argue that he would like to help his friend by securing the internship for a nephew in exchange for a decision in favor of the computer company.
Resolution
The tribunal member should disclose this background to the tribunal head. However, taking into account the remoteness of the relationship between tribunal member and the nephew (who could be the person profiting from the decision in favor of the computer company) as well as the fact that the complainant – the computer company is not aware of the relationship between one of the applicant for internship and the tribunal member and moreover, the nephew does need to be “pushed” to the internship - such tribunal member could participate in the decision-making process.
Case study 5 - Political interest
Situation
A tribunal member is a regular member of a political party. The contracting authority’s head is the member of the same political party and both the head and the tribunal member are aware of this fact. The complainant is also aware of the fact that the contracting authority’s head and the tribunal member are members of the same political party.
Issues
The tribunal member might have a political interest in this case.
Resolution
If the tribunal member’s behavior indicates that he holds strong political views and is loyal to his political party what he has also demonstrated in public, such tribunal member could be considered a biased tribunal member and the tribunal head should ask him to abstain from voting in the matter in order not to create an atmosphere of political preferences. This holds
26
particularly true in cases where the complaint suggests that the contracting authority – the Ministry, has not followed the procurement rules and any negative news could impact election preferences for the political party to which the contracting authority’s head belongs.
On the other hand, if the tribunal member is only a regular party member, with no public profile in support of the party and no indication in his behavior that his political orientation can have a preference over the impartial application of the law, there should be no grounds for abstaining from the decision making process in the review proceedings.
27
Chapter 3 EVIDENCE AND PROCEDURE
This chapter addresses the types of evidence the tribunal may be using in its practice, the methods of obtaining evidence, burden of proof and the evidence assessment, admissibility and weight of such evidence.
3.1 Investigative character of the review proceedings
Nature of the review proceedings requires the tribunal to be more active and apply investigative approach, i.e. to gather and evaluate all relevant tender documentation, not only contracting authority’s response and the complainant’s complaint. Evaluation of the whole tender documentation and request for other evidence, if needed, is necessary for the tribunal’s decision, as different findings may lead to cancellation of the whole tender and different findings to the cancellation of qualification criteria or contract condition
3.2 Role and nature of evidence
As in any other proceedings, evidence plays a crucial role in the public procurement review procedure. As indicated in the Albanian Code of Civil Procedures, the evidence are facts obtained in a lawful manner serving to support or object the claims or counterclaims of the parties engaged in a legal dispute. If a tribunal makes a decision without having considered all necessary evidence, its decision could be quashed in the court review due to the breach of the fundamental principle that a tribunal's decision must be based on evidence submitted by the parties and otherwise admissible evidence.
In other words, the evidence must be tendered to or validly admitted by the tribunal.41
To make a decision based on the evidence means to use reliable information that tends to logically show the existence or non-existence of facts relevant to the issue to be determined. Evidence can be defined as an instrument that a party uses in proceedings to support and prove its statement or to rebut the other party’s statement. Evidence is further used to objectively establish the facts of the case to which the law will be applied.
3.3 Types of evidence
Evidence can be divided into the following main categories: documentary, testimonial or circumstantial. It can also be categorized as expert evidence, physical evidence, representative evidence, confessions, etc. Evidence can be further direct or indirect. Direct evidence (writings, material evidence – e.g. tender documentation) is directly and closely linked to what one desires to demonstrate. Indirect evidence (testimony, writings, etc.) may be used to infer what one desires to demonstrate. The common types of indirect evidence include hearsay, circumstantial evidence, similar fact evidence and factual presumptions. Circumstantial evidence involves the use of clues of time, place or people to infer a fact or occurrence. Similar fact evidence involves presenting facts or situations that are comparable to the disputed fact.42
41 Patrice Garant and Philippe Garant; The Tribunal Proceedings Relating to Employment Insurance, 2001, Chapter 3.1. http://www.ae-ei.gc.ca/eng/board/tribunal/chapter_3-1.shtml 42 Patrice Garant and Philippe Garant; The Tribunal Proceedings Relating to Employment Insurance, 2001, Chapter 3.4. http://www.ae-ei.gc.ca/eng/board/tribunal/chapter_3-4.shtml
28
The evidence which will be presented to the tribunal in the review proceedings will mainly consist of documentary evidence such as written statements, tender documentation (including photographs and technical documents) minutes from meetings and expert opinions. Oral testimonies may also become evidence should the tribunal decide to question the parties or experts in the oral hearing. In addition, everything that will be discovered by the tribunal members themselves in the case will be considered as evidence.
Under Albanian law, evidence known publicly and evidence known by the tribunal because of its function do not have to be verified. Such evidence known by the tribunal because of its function includes e.g. reference to laws, by-laws, ministerial orders, officially published general acts of the public administration, any reference to the decisions of the Constitutional Court, European Court of Human Rights, Supreme Court decision setting a unified position in court practice, precedent decision of the tribunal.
Given the fact that documentary evidence represents the core evidence based on which the tribunal shall render its decision, we will focus only on this type of evidence.
3.3.1 Written statements
There are two main sources of written statements which form the basis for tribunal decisions: The documentation submitted by the complainant (the complaint and all of its relevant annexes as provided by the complainant) and the documentation submitted by the contracting authority (All of the tender documentation and the contracting authority’s response to the complaint). Other information which is publicly available and may be obtained by the tribunal includes the contract notice as published by the contracting authority and the bids of the complainant and other tenderers.
It may happen in practice that the contracting authority refuses to provide the tender documentation in time. Should it be the case, and the statutory period for the tribunal decision on complaint is about to pass, the tribunal is entitled to decide solely on the basis of the complaint and evidence submitted in the proceeding.
In order to get the relevant evidence, tribunal shall cooperate with the public administration and require the necessary information from the Public Procurement Agency in relation to a specific tender procedure43 Furthermore, the tribunal is also entitled to request explanations and information from any central or local public authority and to obtain any document or evidence of relevance for the review proceedings. In order to get the relevant evidence on time, the tribunal shall impose deadlines on public authorities, with possible administrative sanctions (penalties) if the public authority fails to respond on time.
3.3.2 Expert opinions
The use of expert opinions in the administrative proceedings, including public procurement review proceedings, is governed by the Albanian Administrative Procedure Code.44 Basically, both the complainant and the contracting authority are allowed to submit an expert opinion or appoint its expert. In addition, the tribunal may appoint its own expert.
43 Article 9 of the Instruction on the Functioning and Organization of he Public Procurement Commission, Council of Ministers Decision No. 184. 44 Act No. 8485, The Code of Administrative Procedures of the Republic of Albania, Articles 89 et seq.
29
As a general rule, experts have some specialized knowledge and their purpose is to provide the tribunal with impartial assistance on special, mostly technical matters. Their uncontradicted opinion cannot be disregarded arbitrarily, and the tribunal should accept it. Experts testify to facts they have observed, but the opinions they express can carry considerable weight.
The tribunal approves an annual list of experts selected on the basis of a competitive process. The tribunal must decide ex-officio whether an expert is needed in order to evaluate evidence or to establish facts, where the tribunal is unable to do so due to their scientific, legal, or technical nature. The tribunal must appoint the expert or the experts (using its list of selected experts) on the basis of their area of expertise. Selected expert may be challenged due to conflict of interest by the complainant or the contracting authority. Should it be the case, it is the tribunal’s responsibility to decide if it rejects the challenge or if the conflict of interest exists and a new expert must be selected.
The tribunal shall ask the parties to submit questions for the expert and (i) select the questions that will be addressed to the expert, (ii) determine which techniques and procedures the expert(s) will apply, (iii) regulate any other aspect of the tests, examinations, and research the expert will make and (iv) determine whether the expert will respond orally or in writing. The tribunal shall consult with the experts as well as the parties the determination of tests, examinations, and other methods and procedures to be used by the experts.
The tribunal’s expert must be impartial and independent from the parties and from other influence. If the advice does not appear reasonable, the tribunal must reject it or appoint another expert or adopt the findings of the parties expert, if applicable. Should the tribunal reject the expert advice it shall provide sufficient reasons for non-acceptation of the expert opinion. The tribunal may also order experts to confer with each other in order to clarify the issues and to try to reach the same conclusion.
Expert evidence usually consists of a factual component and opinion evidence. The factual component can be evaluated by examining the expert’s research and the reasonableness of its interferences and conclusions. The opinion component can be evaluated by considering the factual basis for the opinion, the expert’s evaluations, area of expertise and objectivity.45 In general, the ordinary rules of admissibility and relevance apply. The tribunal must consider the nature and purpose of the expert testimony, the qualifications and objectivity of the expert (when evaluating the expert evidence, the tribunal should keep in mind that each party will always try to find an expert that shares its opinion for which it is paying) the scope and seriousness of his/her research, and the relationship between the opinions he or she proposes and the evidence.46
3.4 Relevance of evidence
Even if otherwise admissible, evidence must be relevant to be admitted in the proceedings. Evidence is relevant if it pertains, directly or indirectly, to a fact or issue to be determined
45 Decision Making: Evidence, Facts and Findings, Best-practice guide 3, Administrative Review Council, August 2007. p. 9. Copyright Commonwealth of Australia reproduced by permission. 46 Patrice Garant and Philippe Garant; The Tribunal Proceedings Relating to Employment Insurance, 2001, Chapter 3.7.2.2. http://www.ae-ei.gc.ca/eng/board/tribunal/chapter_3-7-2.shtml
30
and moves the inquiry forward. The evidence must tend to make more or less probable the existence or non-existence of a fact or situation that must be proved.47
Relevance is a matter for the tribunal to decide. The tribunal must consider the extent of its jurisdiction, the object of the proceedings and the powers granted by the law. The Administrative Procedure Code is more concise: "The competent body requires and examines all the necessary evidence to take the final decision, using for this purpose all the evidence methods allowed by law".48 Refusal to admit relevant evidence is a violation of the principles of natural justice.49
There is no precise definition of relevance. For this reason, it is occasionally confused with weight. Facts that are not relevant have no real connection to the issues and tend to give rise to confusion, unduly prolong the debate or prejudice the opposing party. This is what some call logical relevance, whereas insufficient probative value is called legal relevance. We believe it is best to limit the use of the term "relevance" to situations in which the tribunal is excluding evidence because it is unrelated to the issues to be determined.50
Evidence is considered relevant if it is helpful in determining the answers to the issues that must be addressed in a decision. Thus, evidence is relevant if it tends to prove or disprove a matter, or if it can reasonably and fairly influence the tribunal member’s belief about such matter.51 The tribunal should not focus on evidence that does not solve the issues at hand. Therefore, the key task before evaluating/searching for evidence is to establish the issues of the complaint which need to be proved. The issues should be as specific as possible. Instead of focusing on general questions such as “the legality of the procurement method,” the tribunal should focus on the details of the case and ask questions related to facts of the case “may a restricted procedure be announced with a 10-day notice for a tender submission?” or “must the tender notice be published?” or “what is the relevant technical criterion for the provision of security services?” or “what are the formal criteria that must be met by the submitted documents?”.
3.5 Obtaining evidence
Before rendering a decision, the tribunal must clearly establish the facts of the case. As the tribunal has an investigative role in the review procedure, it may not decide solely on the evidence submitted by the parties. The tribunal must take an active role in obtaining evidence, if the situation so requires. The tribunal may obtain evidence through (i) the complainant, (ii) the contracting authority and/or (iii) its own efforts.
3.5.1 Evidence obtained from the complainant
The tribunal shall render its decision based on information and evidence contained in the complaint.
The complainant should provide all grounds for challenging contracting authority’s decision in its objection addressed to the contracting authority. Nevertheless, should the complainant 47 Patrice Garant and Philippe Garant; The Tribunal Proceedings Relating to Employment Insurance, 2001, Chapter 3.5. http://www.ae-ei.gc.ca/eng/board/tribunal/chapter_3-5.shtml 48 Act No. 8485, The Code of Administrative Procedures of the Republic of Albania, Article 81(1). 49 Patrice Garant and Philippe Garant; The Tribunal Proceedings Relating to Employment Insurance, 2001, Chapter 3.5. http://www.ae-ei.gc.ca/eng/board/tribunal/chapter_3-5.shtml 50 Patrice Garant and Philippe Garant; The Tribunal Proceedings Relating to Employment Insurance, 2001, Chapter 3.5. http://www.ae-ei.gc.ca/eng/board/tribunal/chapter_3-5.shtml 51 A Manual for Ontario Adjudicators, Society for Ontario Adjudicators and Regulators, 2000, p. 105.
31
support its complaint with any new information that could not be included in the objection, the tribunal should take it into account. Although it may have adverse affect on the process economy of the public procurement review, predictability of the system (e.g. contracting authority could have decided in favor of the complainant should it be aware of the information) and it can frustrate contracting authority in the decision making process if its decision is revised not on the basis of its error but because of new information, it is important to note, that merits review in the review proceedings involves reconsideration of the original decision, not review of the reasonableness of the action of the contracting authority.52 However, the tribunal should only asses that new information which could not be provided by the complainant earlier in the objection proceedings due to objective grounds.
The most common evidence to be obtained from the complainant is the bid submitted in the tender and other tender documentation, if available to the complainant. In addition, the complainant may also submit expert statements, descriptions of market practice in a particular industry, technical studies, information from previous procurements for similar tender subjects or legal analyses of relevant procurement law provisions. The complainant will also submit documentation submitted with objections addressed to the contracting authority (the exception being complaints in concession procurement) and the contracting authority’s response to the objection.
The complainant could also ask the tribunal to secure certain evidence from a third party, which must be a public authority (either central or local), e.g. in cases where the complainant has not ability, right, power to obtain it or has faced the refusal of the public authority. The tribunal should have secured such document only if it believes such evidence would be relevant to the case.
3.5.2 Evidence obtained from the contracting authority
When the complaint is filed with the tribunal and the contracting authority, the contracting authority shall provide the tribunal with whole tender documentation. This material provides the initial basis for the tribunal’s reconsideration of the merits of the complainant’s case.53
Upon request of the tribunal, the contracting authority must provide the tribunal with all of the tender documentation and its response to the complaint. The extent of the documentation that must be provided by the contracting authority to the tribunal is set by the law. It is important that the contracting authority includes in the material provided to the tribunal any information that it has relied on in making the decision that is subject of the review. Like the complainant, the contracting authority may submit other documentary evidence supporting its arguments.
3.5.3 Evidence obtained by the tribunal
In addition to the evidence submitted by the parties to the review proceedings, the tribunal should effectively obtain evidence from the eProcurement platform which provides tribunal members with access to all tender documents produced by tender participants as well as evaluation decisions and recommendations of the contracting authority.
52 Administrative Review Council, Better Decisions: review of Commonwealth Merits Review Tribunals, Report 39, 1995, p. 42. Copyright Commonwealth of Australia reproduced by permission. 53 Administrative Review Council, Better Decisions: review of Commonwealth Merits Review Tribunals, Report 39, 1995, p. 39. Copyright Commonwealth of Australia reproduced by permission.
32
Upon its evaluation of the evidence submitted by the complainant and the contracting authority, the tribunal may need additional information in order to decide on the merits of the complaint and to establish the facts of the complaint. In such case it may request expert statements or statements from the state/local public authorities in order to qualify aspects of the tender, in particular the economic and technical criteria or conditions.
The tribunal should avoid obtaining evidence through private meetings with one party without the other party being present. However, in certain cases which require a deeper investigation or in complex procurement procedures, it may be practical to obtain documentary evidence through visits to the premises of the contracting authority, for example if the contracting authority refuses to submit the requested documents. The written minutes as well as copy of the documents taken from such visit should be made available to the complainant. The tribunal should always keep in mind the rule of transparency when obtaining evidence. As explained in section 3.3.1 above, the tribunal is entitled to request explanations and information’s from any central or local public authority and also to obtain any document or evidence connected with the administrative investigation.
When obtaining evidence, the admissibility of evidence should be always kept in mind.
3.6 Disclosure of evidence
In general the parties have a right to access tribunal’s files in the review procedures with the exception of the confidential information.
However, similarly as under the law of some EU Member States, under Albanian law the tribunal has no obligation to disclose to the parties the evidence which it has gathered through its own search or which was provided to the tribunal by the other parties. In the event that the tribunal decides to disclose evidence to the parties, it must protect sensitive information which may not be disclosed to the parties. Sensitive information include (i) personal data, (ii) state secrets and (iii) business secrets provided either by the complainant or contracting authority. As evidence with personal data and state secret is not used very frequently in the practice of the review proceedings, the tribunal members should mainly focus on the protection of business secrets which qualify as confidential information. For more information on what constitutes confidential information and what are the appropriate disclosure and security measures, please refer to Chapter 4.
3.7 Weight or probative value – assessing the evidence
Evidence should be analyzed closely and evaluated to determine whether there is any conflict in relation to a material fact. As a general rule, the evidence obtained from the complainant and evidence submitted by the contracting authority should be treated equally, fairly and transparently. Assessment of the weight of evidence involves the application of logic, common sense and experience.
The question to be decided is whether on the basis of the logical evidence the tribunal is reasonably satisfied that a particular fact is more likely than not to be true.54 If a particular fact has a significant impact on the final decision, additional evidence may be required to prove the fact.
54 Decision Making: Evidence, Facts and Findings, Best-practice guide 3, Administrative Review Council, August 2007. p. 7-8. Copyright Commonwealth of Australia reproduced by permission.
33
Weight of evidence should be determined in light of all of the circumstances/evidence of the particular case. The tribunal must evaluate the evidence which was obtained from the complainant, the contracting authority and its own search. It follows from the character of the review procedure that the parties’ statements will be contradictory and thus, the tribunal will need to weigh the evidence in order to decide which facts to accept.
For example, the complainant will claim that the qualification criteria are discriminatory; the contracting authority will claim that the qualification criteria meet the legal requirements and such qualification is needed for the supply of goods or services. If the complainant submits a market analysis or expert opinion showing that only one or two market participants meet the required qualification criterion while other entities providing the tendered services can provide such services without meeting such criterion, and at the same time the contracting authority solely attempts to rebut such evidence by its statement, the evidence of the first party should be given more weight.
However, it has to be kept in mind that market analyses may also be biased. Thus, the tribunal will have to take into account a number of factors when weighing the evidence. These factors include market analysis, e.g. – the qualification and reputation of the author of the market analysis, facts and research on which the market analysis is based, the definition of the market, its applicability to the industry in question, etc.
While assessing evidence, the tribunal must respect the basic procurement principles such as transparency, non-discrimination, proportionality, equality of treatment and the duty to protect the proper application of procurement law.
Other factors that will need to be considered include the following:
• the date of the evidence (is the evidence applicable and relevant? - e.g., evidence on a previous market practice in the industry);
• the source of the evidence (complainant, contracting authority, third party);
• the qualifications/expertise of the source of the evidence, knowledge of the subject matter (what is his/her background and how relevant is this evidence, e.g., a statement from a state authority or professor in a particular field);
• the reputation of the author (previous dealings with the author and his/her position in the market);
• the potential bias of the author (his/her relationship with the parties);
• information on which the document is based (does the document reflect the relevant case information?);
• the consistency of the document with other reliable evidence in the case (does the document fit with facts which have been already established by the tribunal?);
• the source of the author's information (references);
• the opportunity to examine (can the tribunal address questions to the author in order to verify some information/findings?);
• the "tone" of the document (is it impartial?);
34
• the extent to which the document is based on opinion (are there any facts or it is just an opinion?);
• the extent to which the document is based on observable facts (can you verify the findings? e.g., if the contracting authority says that it is non-discriminatory, such statement should rely on some facts);
• the purpose for which the document was prepared (is it a statement which already existed before the dispute arose or is it document prepared solely for the purpose of the review proceedings?);
• comparison of the document to a known genuine document (comparison with other existing documents on a similar subject).55
3.8 Admissibility of evidence
The issue of whether evidence is admissible or relevant can be regarded as one of natural justice. Each party should have an equal opportunity to present evidence and the tribunal cannot refuse to admit the evidence of a party in order to punish that party for a delay.56 If a tribunal admits one party's evidence, it must always allow the other to submit relevant evidence to contradict it.57Admissibility is often confused with relevance. Not all evidence that is relevant is also admissible. However, the tribunal may consider evidence that is not only relevant but also reliable and there is no reason why it would be unfair to put it before the tribunal, i.e., this information must be admissible. Admissibility is determined by the rules of evidence.58
In the public procurement review procedure, the issue of the admissibility of evidence may occur with respect to hearsay evidence. Hearsay which can be understood as a statement of facts or events based on a report or record that a person heard, read or saw on TV,59 such as on alleged manipulation of the qualification criteria by the contracting authority to fit one particular tenderer, is relevant but under the Albanian rules, such evidence would not be admissible.
Evidence may be thrown out if it was unlawfully or improperly obtained.
3.9 Burden of proof
Fact-finding is the role of the parties and the tribunal must ground its decisions based on the facts presented by the parties (i.e. the complainant and the contracting authority). It is for the parties to allege the facts and to prove such facts as they carry the burden of proof. However, this only requires from the parties to submit the relevant evidence to the tribunal which shall base its decision on such evidence.
No one doubt that, at a theoretical level, distinctions exist between, first, facts, secondly evidence or proofs and, thirdly, law. Under the Albanian Code of Civil Procedure, the facts are considered as human behaviors, social events or natural phenomenon’s for which the law
55 Weighting Evidence, Legal Services, Immigration and Refugee Board, 2003, Chapter 5.1. Adjusted for the purpose of this handbook. 56 Patrice Garant and Philippe Garant; The Tribunal Proceedings Relating to Employment Insurance, 2001, Chapter 3. http://www.ae-ei.gc.ca/eng/board/tribunal/chapter_3.shtml 57 Patrice Garant and Philippe Garant; The Tribunal Proceedings Relating to Employment Insurance, 2001, Chapter 3. http://www.ae-ei.gc.ca/eng/board/tribunal/chapter_3.shtml 58 A Manual for Ontario Adjudicators, Society for Ontario Adjudicators and Regulators, 2000, p. 105. 59 Patrice Garant and Philippe Garant; The Tribunal Proceedings Relating to Employment Insurance, 2001, Chapter 3.3.6. http://www.ae-ei.gc.ca/eng/board/tribunal/chapter_3-3-6.shtml
35
provides legal consequences. The Albanian Civil Procedure Code, for example, provides that `the parties must pose the facts on which their claims or defenses are founded', and this, demonstrates what a “fact” is, as distinct from evidence or proof. A rule of law - any rule of law - must take as its premise a fact or a complex of facts.
As a general rule in administrative proceedings, the complainant should be able to prove its case. The complainant not only has the obligation to present the facts on which it grounds its claim, but it is also obliged to prove the facts which support its claim. On the other hand, if the contracting authority disagrees with the position of the complainant, it should prove that its position is right. Thus, the burden of proof can be shifted between the parties.
In practice, it means that although it is the tribunal’s responsibility to establish whether the tender conditions have been discriminatory or the procedural rules have been violated, it is the complainant who must provide evidence to support its claim. This may be especially true where the complainant claims that the market practice proves that the contracting authority’s tender conditions violate the procurement rules. On the other hand, formal violations, such as the submission of the tender documentation in the requested format or the failure to submit the proper documentation, is less burdensome for additional evidence and is more based on an evaluation of the formal evidence - procurement rules and tender conditions.
36
Chapter 4 PROTECTING CONFIDENTIAL INFORMATION
This chapter addresses the protection of confidential information in the review proceedings, the ways to determine information as confidential, the confidentiality test, basic types of confidential and non-confidential information in public procurement, access to confidential information, the physical security of confidential information as well as case studies on the application of the confidentiality test.
4.1 Confidential information and the tribunal’s role
In procurement review procedure, it is the tribunal’s responsibility to protect confidential information. This may include information on individuals, public interest, or sensitive information which is related to commercial interests of the contracting authorities or tenderers. This chapter deals with commercially sensitive information which must be protected by the tribunal either because the law requires it or because they were designated as confidential by any of the parties involved in the proceedings (“confidential information”).
A tribunal’s duty to protect confidential information means that while handling complaints and analyzing tender documentation (including, without limitation, submitted tenders and information produced by the contracting authority) and other documentary evidence, the tribunal must be able to determine which information is confidential and treat such information accordingly (i.e., not to disclose it, provide physical security of the documents or limit access to confidential documents). For example, if the tribunal fails to protect confidential information, the role of the contracting authorities as purchasers could be compromised as suppliers could withhold sensitive information in the future (to the detriment of the purchasing process) or the contracting authority’s ability to negotiate effectively to secure the best value for money could be frustrated.60
Protection of the confidential information may become particularly an issue with respect to drafting of the decisions and their publication on the tribunal’s webpage. When drafting a decision, the tribunal member should keep in mind which of the information provided to the tribunal can be disclosed to third parties and thus, can appear in the decision. The case could be that certain information can appear in the version of the decision to be delivered to the parties to the review proceedings but will have to be deleted in the version to be published on internet. This can be in cases where parties agree to disclose the confidential information to other party to the proceedings but not to a third party generally.
Confidential information in the review procedure context may include information:
(i) used by the tenderers to prepare a submission (e.g., information about a secure infrastructure);
(ii) included as part of a submission (e.g., details of an original business methodology);
(iii) contained in a contract (e.g., specifications for a secure facility).61
60 Freedom of Information Act (Civil Procurement) Policy and Guidance, Office of Government Commerce, 2008, p.9. 61 Guidance on Confidentiality in Procurement, Financial Management Guidance No. 3, Commonwealth of Australia, 2007, p. 8. Copyright Commonwealth of Australia reproduced by permission.
37
4.2 What information is confidential?
The information can have the status of confidential information if:
(i) the law requires it;
(ii) it is determined as such by the tribunal; or
(iii) it is determined by the contracting authority, tenderer; or complainant.62
4.2.1 Confidential information – designation by law
Some states have incorporated into the law an obligation for the tribunals to protect information that are sensitive for the public authorities and its disclosure could be contrary to the public interest.
Under Albanian law, the information which is designated by law as confidential is the information classified as “state secret”63 or the personal data.64
State secret
Generally, the Albanian law is mostly consistent with international practices. The law sets out reasonably narrow categories of information that can be classified as state secrets. It requires that for information to be classified as a state secret, it must be classified in accordance with the law and “might endanger national security.” “National security” is defined as “the protection of the independence, territorial integrity, constitutional order and foreign relations of the Republic of Albania.” The law also provides for categories of information that should not be classified for reasons of important public interests. The information cannot be classified as state secret when it: (i) hides a violations of law, ineffectiveness or mistakes of the administration; (ii) deprives a person, organization or institution of the right to know or (iii) hinders or delays the giving of information that does not require protection in the interest of national security.
Personal data
The tribunal members can refer to the personal data protection law when dealing with certain ‘sensitive data’ in the review proceedings. The law defines the sensitive data as any piece of information related to a natural person in relation to his racial or ethnic origin, political opinions, trade union membership, religious or philosophical beliefs, criminal prosecution, as well as with data concerning his health and sexual life.
The personal data has to be treated in accordance with the personal data protection act.65 Given the fact that decisions of the tribunal are published, the personal data contained in the decision have to be omitted in the published version of the decision.
62 Guidance on Confidentiality in Procurement, Financial Management Guidance No. 3, Commonwealth of Australia, 2007, p. 8. Copyright Commonwealth of Australia reproduced by permission. 63 Act No. 8457, on the Information Classified as State Secret. 64 Act No. 9887, on Personal Data Protection. 65 Act No. 9887, on Personal Data Protection.
38
4.2.2 Confidential information – designated by third parties
Complainant or the contracting authority will usually designate their business secrets as confidential information. Under Albanian Company Law66 the business secret is defined as “data’s and documents, which would significantly damage the business interests of the company if they were disclosed to unauthorized persons.” The law further provides that the information which is required to be disclosed by law or relates to a violation of law(s), good business practices and principles of business ethics, will not be regarded as a business secret. Disclosure may be legitimated if it is intended to protect the public interest. Other main categories of confidential information will include intellectual property rights (e.g. copyrights, patents, licenses).
The tribunal must assess on a case-by-case basis whether the designation of the information as confidential by the contracting authority or complainant is justified. When deciding on the confidentiality of the information, the tribunal should not be influenced by decisions on confidentiality in other review procedures.67 Even if the contracting authority classifies the information as confidential, the tribunal should have the right to come to a different conclusion. It is important for the tribunal to determine which information is confidential. For this reason, the tribunal should run a Confidentiality Test.
4.2.3 Confidentiality test
The Confidentiality Test consists of the following four criteria, based on the legal principles, which must be met in order to determine that a tenderer’s/contracting authority’s commercial information is confidential.
Criterion 1: The information to be protected must be specifically identified
The tribunal must consider which specific information, if any, is legitimately protected from disclosure. A request for the inclusion of a provision in a contract that states that all information is confidential does not pass this test. Individual items of information, such as pricing, must be separately considered. Furthermore, the information should be consistently identified as confidential. Information that was already disclosed as a part of the tender documentation cannot be classified as confidential in the review procedure.
Criterion 2: The information must be commercially ‘sensitive’. This means that the information should not generally be known or ascertainable
The specific information must be commercially ‘sensitive’ and it must not already be in the public domain. A request by a party to maintain the confidentiality of commercial information would need to show that there is an objective basis for the request and demonstrate that the information is sensitive.
Criterion 3: Disclosure would cause significant detriment to the owner of the information or another party
A party seeking confidentiality would normally have to identify a real risk of damage to commercial interests due to disclosure which would cause unreasonable detriment. For
66 Act No. 9901, on Entrepreneurs and Companies. 67 Guidance on Confidentiality in Procurement, Financial Management Guidance No. 3, Commonwealth of Australia, 2007, p. 9. Copyright Commonwealth of Australia reproduced by permission.
39
example, the disclosure of Internet price lists would not harm the owner, but the disclosure of pricing information that reveals a tenderer’s profit margins may be detrimental.
Criterion 4: The information was provided under the understanding that it would be kept confidential
This criterion requires consideration of the circumstances in which the information was provided and a determination of whether there was a mutual, express or implied understanding that confidentiality would be maintained. The terms included in request documentation and in draft contracts will impact on this. For example, a request for tender and draft contract which included specific confidentiality provisions would support an assertion by a tenderer that the contracting authority agreed to accept information on the understanding that it would remain confidential.68
4.3 Examples of confidential information
Categories of information that may meet the requirements of the Confidentiality Test include:
(i) internal costing information or information about profit margins;
(ii) (proprietary information, such as information about how a particular technical or business solution is to be provided;
(iii) pricing structures – price breakdowns (where this information would reveal whether a complainant was making a profit or loss on the supply of a particular good or service);
(iv) information obtained from suppliers and not generally available (future product information, research plans, financial details);
(v) financial models (for more complex work, detailed models of how a cash flow for both the authority and supplier would be managed over the life of the contract (e.g., recovering low initial capital charges through incentivised support work));
(vi) artistic, literary or cultural secrets. These may include photo shoots, historic manuscripts, or secret indigenous culture; and
(vii) intellectual property including trade secrets and other intellectual property matters where they relate to a potential supplier’s competitive position.69
Other categories may include:
(viii) trade secrets and other commercially sensitive information that is not commonly known or ascertainable on the market, that provides a commercial advantage, whose disclosure would harm the tenderer’s or the contracting authority’s commercial interest and is protected by a tenderer and that would be seen as business secret and, thus, could qualify as a commercially sensitive information. Tenderers may also seek protection of other commercial information (e.g., a tenderer’s plan for future investments);
68 All four criteria were taken from - Guidance on Confidentiality in Procurement, Financial Management Guidance No. 3, Commonwealth of Australia, 2007, p. 10. Copyright Commonwealth of Australia reproduced by permission. 69 Guidance on Confidentiality in Procurement, Financial Management Guidance No. 3, Commonwealth of Australia, 2007, p. 11 (Copyright Commonwealth of Australia reproduced by permission) and Freedom of Information Act (Civil Procurement) Policy and Guidance, Office of Government Commerce, 2008, p. 28-30.
40
(ix) intellectual property rights; and
(x) commercially sensitive information held by the state.
For intellectual property or other commercially sensitive information that belong to the state of Albania, the contracting authority should consider whether this information should be treated as confidential in a particular procurement. If the contracting authority fails to do so, it is the tribunal’s responsibility to protect this information by determining it as confidential.
4.4 Information considered as non-confidential
Below are examples of commercial information that would not generally be considered confidential:
(i) information that can be obtained from widely available sources;
(ii) performance and financial guarantees;
(iii) indemnities;
(iv) the price of an individual item or group of items;
(v) rebates, liquidated damages and service credits;
(vi) performance measures;
(vii) clauses which describe how intellectual property rights are to be dealt with; and
(viii) payment arrangements.70
4.5 How to designate information as confidential
Although in recent practice, the complainants and contracting authorities do not classify documents and information as confidential, it would be advisable to be prepared for such request and to compile general guidance on the designation of the confidential information for parties to the proceedings.
The tribunal could advise the parties to the proceedings that if they wish to label certain information as confidential, they must submit two versions of their submissions to the tribunal. A confidential version containing all of the information, including confidential information, and labelled “Confidential”, and a non-confidential version of the same documents with the confidential information excluded. The confidential version should identify all confidential parts of the document by using shading, boldface characters or square brackets (you can use sample versions which form an annex to this chapter as an example for the parties).
The tribunal could refuse to assign the confidentiality status in whole or in part, if the information does not meet the Confidentiality Test (please see section 4.2.3 of this chapter). If the tribunal so decides, the party providing the information would be given an opportunity to provide an acceptable explanation of why the designation is appropriate or to withdraw the document. If an adequate explanation is provided, the information should be treated as confidential in the tribunal’s administrative case file. If the justification is not sufficient and 70 Guidance on Confidentiality in Procurement, Financial Management Guidance No. 3, Commonwealth of Australia, 2007, p. 11 (Copyright Commonwealth of Australia reproduced by permission) and Freedom of Information Act (Civil Procurement) Policy and Guidance, Office of Government Commerce, 2008, p. 28-30.
41
the information/document is not withdrawn by the party, such information could be made part of the administrative record.
However, it is most likely that the confidential information and its designation as confidential would already be provided to the contracting authority with the complainant’s objection or in its bid filing. If the contracting authority respects the confidentiality, the tribunal should also respect it and act accordingly to protect the confidentiality.
4.6 Access to confidential information
Pursuant to confidential information requirements, such information should not be disclosed to third parties other than the tribunal member provided that an expressed permission from the owner or the person designated by law has been previously obtained. This rule does not, however, extend to persons which by operation of law have a duty to keep the information confidential and to cases where disclosure is required by law. The expressed permission of the owner of the information to disclosure would obviously give a green light to the tribunal and this tool could be very practical, particularly in cases where certain information must be disclosed to the expert. To this end the law also provides for the non-disclosure agreement which can be used to secure the confidential information disclosed to the expert upon the expressed permission of the owner.
Therefore, the confidential information should be visibly distinguished from other documents in the file and should be sealed (e.g., in an envelope) or should be shaded in the document.
Therefore, if the tribunal is requested to provide access to confidential information, such request should be denied, unless the person is covered by any of the exemptions mentioned above.
Furthermore, the confidential information should not be contained in the tribunal’s decision. The decision may refer to it but its content should not be disclosed.
In some jurisdictions, access to the confidential information can be granted to a legal counsel to the parties to the proceedings, who is also subject to a professional confidentiality obligation and, who is not in a business or legal relationship with the parties (other than provision of particular legal services), as there is a limited likelihood that the counsel could use this information for his or another party’s benefit. However, the use of this right may be seen as limited as the legal counsel would not be allowed to disclose the information to his/her client and would be only allowed to rely on such information in his/her arguments.
4.7 Information security
The physical security of documents is an important aspect to ensure that no information is leaked. A lack of confidence in security could deter tenderers or reduce the detail or volume of information they include in their bids, both of which are poor outcomes for the contracting authorities.71
If the tribunal does not have measures in place for the security and storage of the submissions, it can create a variety of problems. Documents can be misplaced, requiring the companies involved to supply extra copies of their documents and bringing into question the
71 Guidance on Ethics and Probity in Government Procurement, Financial Management Guidance No. 4, Commonwealth of Australia, 2005, p. 21. Copyright Commonwealth of Australia reproduced by permission.
42
tribunal’s processes and professionalism. Another problem arises if various copies are made of commercial-in-confidence documents and no secure area or file is created. It can become impossible to keep track of the documents and their location.
To avoid the above, the tribunal should establish clear physical security measures for the handling of documents related to the review proceeding. The following rules should be applied:
(i) Two separate case files - public and protected - should be kept in the review proceedings. No confidential information should be located in the public files,72 or if there is only one case file, the confidential documents should be sealed in an envelope.
(ii) Access to the documents should be limited, allowing access to authorized staff only; and ensuring documents or copies are not removed from the tribunal’s premises;73
(iii) Records of access to documents with confidential information should be in place;
(iv) Introduction of electronic security measures and documented processes and strategies for electronic storage and communication should be considered. The tribunal should ensure it has control over the electronic delivery of submissions, and the protection of data stored on networks, including the segregation of hard drives storing confidential information and the allocation of secure passwords to those authorized to access this information.74 A more strict approach to the electronic transmission of documents is to prohibit sending any confidential information by facsimile or e-mail. E-mail should only be used to transmit public documents, that is, documents that do not include any third-party confidential information.75
While holding office or being employed in the public service, tribunal members should be under a mandatory obligation not to knowingly disclose, or allow to be disclosed, confidential information that comes into their possession to any other person in any manner that is calculated or likely to be made available for the use of any business competitor or rival of a person to whose business or affairs the information relates. This mandatory obligation should continue to bind tribunal members after they no longer hold office or are employed by the tribunal.76
72 Guideline, Designation, Protection, Use and Transmission of Confidential Information, Canadian International Trade Tribunal, 2006, p. 4. 73 Guidance on Ethics and Probity in Government Procurement, Financial Management Guidance No. 4, Commonwealth of Australia, 2005, p. 21. Copyright Commonwealth of Australia reproduced by permission. 74 Guidance on Ethics and Probity in Government Procurement, Financial Management Guidance No. 4, Commonwealth of Australia, 2005, p. 21. Copyright Commonwealth of Australia reproduced by permission. 75 Guideline, Designation, Protection, Use and Transmission of Confidential Information, Canadian International Trade Tribunal, 2006, p. 4-5. 76 Guideline, Designation, Protection, Use and Transmission of Confidential Information, Canadian International Trade Tribunal, 2006, p. 6.
43
4.8 Cases Studies77
The following case studies analyze the application of the Confidential Test to situations in which the tenderer/contracting authority has designated some of its commercial information as confidential. When applying the Confidential Test, all four criteria must be met in order to determine such commercial information is confidential.
Criterion 1: The information to be protected must be specifically identified.
Criterion 2: The information must be commercially sensitive and not generally known or ascertainable.
Criterion 3: Disclosure would cause unreasonable detriment to the owner of the information or another party.
Criterion 4: The information was provided under an understanding that it would remain confidential.
Case study 1 - Business/Delivery Methodology
In its submission, a tenderer has designated as confidential the specification of how it delivers its services. The tenderer claims that the methodology has been developed using its “smart” (original or innovative) solution and disclosure is likely to result in competitors adopting the methodology, thus diminishing its commercial value and adversely affecting the tenderer’s competitive position in the market. Only the tenderer and a small number of its employees know the methodology. In the approach to the market, tenderers were invited to specify what, if any, information they sought to protect as confidential.
Assessment of the information against the confidentiality criteria:
Criterion One – Met
The information is specifically identified, comprising information on the service delivery methodology for the services.
Criterion Two – Met
The information has the quality of confidentiality as it is known only to a small number employees and the continued non-disclosure of the “smart” methodology provides the tenderer with a competitive advantage.
Criterion Three – Met
Disclosure of the information is likely to adversely impact the tenderer’s commercial interests as its competitors would be able to compete for work either using or adapting the methodology, which would remove the tenderer’s competitive advantage in this area.
77 All case studies are adopted from - Guidance on Confidentiality in Procurement, Financial Management Guidance No. 3, Commonwealth of Australia, 2007. Copyright Commonwealth of Australia reproduced by permission.
44
Criterion Four – Met
Since the contracting authority has invited tenderers to specify what information is to be kept confidential and the service delivery methodology has been specified, it appears that the information was provided on the understanding that it would be keptconfidential.78
Case study 2 - Service level measures
Service based contracts often contain measures to reward good service delivery andtoreduce payments for poor service delivery. The measures set the levels for a reward/reduction regime.
A tenderer requests that service level measures be treated as confidential on the basis that disclosure would enable competitors to estimate its cost structure and therefore damage its commercial interests. The service level measures have been specifically developed for the proposed contract and are not known to anyone except the tenderer and the contracting authority. The contracting authority has not made any representations, either in the tender documentation, or verbally, to the effect that the service level measures would be treated as confidential.
Assessment of the information against the confidentiality criteria:
Criterion One – Met
The information identified as confidential is specific in so far as it includes the service level measures in the contract.
Criterion Two – Not met
Although the information is not widely known, the tenderer’s pricing structure could not be estimated by reference to these measures alone. The relevant clause merely sets targets for the tenderer.
Criterion Three – Not met
Disclosure of the service level measures is unlikely to cause unreasonable detriment to the tenderer, taking into account the conclusions in the previous point.
Criterion Four – Not met
A mutual understanding of confidentiality of the service level measures does not exist at this point.
While the service level measures in this simplified example would not be confidential based on the above analysis, the tribunal should be conscious that the quantum of financial penalties or rewards raises similar issues to those applicable to pricing information.79
78 Guidance on Confidentiality in Procurement, Financial Management Guidance No. 3, Commonwealth of Australia, 2007, p. 31. Copyright Commonwealth of Australia reproduced by permission. 79 Guidance on Confidentiality in Procurement, Financial Management Guidance No. 3, Commonwealth of Australia, 2007, p. 31. Copyright Commonwealth of Australia reproduced by permission.
45
Case study 3 - Pricing information
Each request for confidentiality of pricing information should be considered on its merits.
Generally, the fact that disclosing pricing information would make life more difficult for the supplier is not a sufficient reason. For example, a tenderer may claim confidentiality on the basis that it does not want its competitors to know its prices. However, the transparency of such information could, potentially, lead to increased competition and better value for money outcomes for the contracting authority.
The examples below focus on assessing whether individual elements of a pricing methodology would be confidential. The tribunal should note that although a specific element may be assessed as not meeting the confidentiality criteria, the complete methodology may nevertheless warrant protection if it meets the test for confidentiality
because it provides sufficient information to make a reasonable estimate of a tenderer’s profit margin.
Case Study 3.1 - Total price
In contract negotiations, a tenderer of human resource services asks a contracting authority to maintain the total price of a proposed contract as confidential on the basis that the release of such information would enable its competitors to estimate future bids by the organization. In previous discussions with the tenderer, the contracting authority indicated that pursuant to the applicable law, the contracting authority is required to report the contract price. Therequest for the tender also highlighted this requirement.
Assessment of the information against the confidentiality criteria:
Criterion One – Met
The information identified as confidential is specific, being the total price of the contract.
Criterion Two – Not met
The total price does not have the quality of confidentiality after a contract is signed. Despite the tenderer’s claim, the information is not commercially sensitive in a contract because it does not provide sufficient detail to enable competitors in the market to determine the tenderer’s cost structures and profit margins.
Criterion Three – Not met
Disclosure of the total price would not damage the tenderer’s commercial interests given the issues raised in the previous point. In relation to the tenderer’s claims, future bids by the organization would need to address the statement of requirements, which may involve the provision of different services, service levels, and possibly the use of different service delivery methods. Accordingly, the disclosure of the total price in this case is unlikely to provide sufficient information for the tenderer’s competitors to determine the likely price of future bids by the tenderer.
46
Criterion Four – Not met
An understanding of confidentiality does not exist between the contracting authority and tenderer at this point.80
Based on this analysis, should such information be present in the documentation in the review procedure, the tribunal would not be obliged to treat it as commercially sensitive and keep its confidentiality.
Case Study 3.2 - Price of individual items or groups of items
While prices for individual items or groups of items of property or services would not generally be confidential, there may be some exceptions. Confidentiality would not be appropriate if the pricing information is generally known. However, if individual prices for items forming part of the contractual requirements disclose the underlying costs and profit on that item or other commercially sensitive information such as special discounts, (see below) a tenderer may legitimately claim that the information is confidential.
A simple example of a case where a unit price would not be confidential is where a tenderer has advertised the price that will be charged in a catalogue.
Assessment of the information against the confidentiality criteria:
Criterion One – Met
The information identified as confidential is specific information.
Criterion Two – Not met
The information on the price of the item is publicly advertised and, as such, non�disclosure would not provide the tenderer with any ongoing benefit.
Criterion Three – Not met
Disclosure of the information is unlikely to adversely affect the commercial interests of the tenderer, as the price is already publicly available.
Criterion Four – Not met
In the absence of any explicit agreement that the unit price would be maintained as confidential, there would not be a mutual understanding of confidentiality.81
Based on this analysis, should such information be present in the documentation in the review procedure, the tribunal would not be obliged to treat it as commercially sensitive and keep its confidentiality.
80 Guidance on Confidentiality in Procurement, Financial Management Guidance No. 3, Commonwealth of Australia, 2007, p. 32-33. Copyright Commonwealth of Australia reproduced by permission. 81 Guidance on Confidentiality in Procurement, Financial Management Guidance No. 3, Commonwealth of Australia, 2007, p. 33-34. Copyright Commonwealth of Australia reproduced by permission.
47
Case Study 3.3 – Discounts
A tenderer may claim confidentiality of pricing information for reasons other than those discussed above. For example, it may be providing the contracting authority with a considerable discount. The tenderer may properly seek confidentiality of the discount information if it can establish that it would suffer unreasonable detriment if the level of discount offered were disclosed. For example, the tenderer may be able to demonstrate that its financial interests would be prejudiced if its other customers were to know of and seek similar levels of discount as those available to the contracting authority, or that disclosure of discount information would enable competitors to determine the actual cost of the property or services.
As discounts may or may not be confidential, depending on the circumstances, tribunal members should consider requests to maintain confidentiality of such information on a case-by-case basis.82
82 Guidance on Confidentiality in Procurement, Financial Management Guidance No. 3, Commonwealth of Australia, 2007, p. 34. Copyright Commonwealth of Australia reproduced by permission.
48
Annex
A. Sample Confidential Version of Submission83
During the period from 2000 to 2002, Company A’s net profits (as a percentage of sales) declined from 17.8 to 10.2 percent. During the first quarter of 2003, profitability showed improvement, increasing from 5.6 to 12.6 percent. Table 1 reports Company A’s standard costs for domestic sales of Product X on a dollar per unit basis. Total standard costs increased by 1.5 percent in 2001 and then rose by a further 1.1 percent in 2002. Comparing the first quarter of 2002 with that of 2003, total standard costs declined by 17 percent.
During the period of inquiry, material costs represented close to 50 percent of total standard costs. Material costs showed the widest fluctuations among the standard cost components. In 2001, the 2 percent drop was followed by a 16 percent increase in 2002 and a 22 percent decline in the first quarter of 2003, when compared to the first quarter of 2002.
Table 1 COMPANY A
STANDARD COST BREAKDOWN—DOMESTIC SALES ($/unit)
January to March 2000 2001 2002 2002 2003 LEVELS Volume of Goods Sold (net tons) 4,339 4,926 4,291 953 1,575 Materials 1,595 1,571 1,816 1,525 1,183 Labour 781 782 599 834 652 Overhead 491 558 529 542 586 Total Standard Costs 2,867 2,911 2,944 2,901 2,421
83 Sample confidential and non-confidential version are taken from - Guideline, Designation, Protection, Use and Transmission of Confidential Information, Canadian International Trade Tribunal, 2006, p.11-12.
49
B. Sample Non-Confidential Edited Version (Public)
During the period from 2000 to 2002, Company A’s net profits (as a percentage of sales) declined from to percent. During the first quarter of 2003, profitability showed improvement, increasing from to percent.
Table 1 reports Company A’s standard costs for domestic sales of Product X on a dollar per unit basis. Total standard costs increased by percent in 2001 and then rose by a further percent in 2002. Comparing the first quarter of 2002 with that of 2003, total standard costs declined by percent.
During the period of inquiry, material costs represented close to percent of total standard costs. Material costs showed the widest fluctuations among the standard cost components. In 2001, the percent drop was followed by a percent increase in 2002 and a percent decline in the first quarter of 2003, compared to the first quarter of 2002.
Table 1 COMPANY A
STANDARD COST BREAKDOWN—DOMESTIC SALES ($/unit)
January to March 2000 2001 2002 2002 2003 LEVELS Volume of Goods Sold (net tons) Materials Labour Overhead Total Standard Costs
50
Chapter 5 APPROACH TO REMEDIES
The first part of this chapter addresses both the remedies that are available to the tribunal as well as the remedies that are available to review bodies in EU Member States. It further describes the purpose of the individual remedies and situations in which the particular remedies are used.
5.1 Types of available remedies
As Albanian law is not yet fully harmonized with the EU procurement rules, the remedies available under Albanian law are slightly different from the remedies available under EC law. However, it can be expected that in the future the EU procurement rules will be fully available in Albania. Therefore, in this chapter we address not only the remedies available to the tribunal under Albanian law but also remedies available under EC law.
EU remedies include – (i) interim measures, (ii) setting aside, (iii) ineffectiveness of the contract and (iv) damages. Remedies available under Albanian law include: (i) interim measures, (ii) setting aside, (iii) ineffectiveness of the contract (available only to the court) and (iv) damages.
Procurement remedies allow the tribunal to correct deficiencies in the behavior of contracting authorities. Although the tribunal can not “step into the shoes” of the contracting authority and decide who is the tender winner or select the relevant contract award procedure, it is entitled to reject any contracting authority’s act which violates procurement law and thus, indirectly influences the conduct of procurement. In order to properly execute its role, tribunal members should be aware of their specific position regarding the first level decision makers (contracting authorities) which affects the way they should approach the remedies.
5.1.1 Interim measures
5.1.1.1 What are interim measures?
Unlike other remedies, the purpose of the interim measures under Albanian law is different from their purpose pursuant to Directive 2007/66 EC84 (“Remedy Directive”) where interim measures are provisional measures used by the review body to:
(i) correct an alleged infringement of procurement law; or
(ii) prevent further damage to the concerned interest (e.g. the complainant's interest).
Albanian law does not provide the tribunal with the right to issue interim measures to stop an ongoing procurement procedure. On the contrary, the tribunal may only issue an interim measure if it wants to allow the contracting authority to continue with the tender after the complaint was filed which should automatically result in the suspension of the procurement procedure (Article 64(2) of PPL). Thus, the nature of interim measures under Albanian law is different due to the automatic suspension effect of the objection and the complaint. On the other hand, the tribunal is entitled to send a notice to the contracting authority where it
84 Directive 2007/66/EC amending Council Directives 89/665/EEC and 92/13/EEC with regard to improving the effectiveness of review procedures concerning the award of public contracts.
51
informs the contracting authority that the contract award procedure is suspended by operation of law due to filing of the complaint with the tribunal.
Under the Remedy Directive, interim measures are issued by the review body before the final decision on the merits of the case is issued and if the immediate protection of the concerned interest is necessary. For example, if the contracting authority plans to move to the second stage of the award procedure, despite its failure to properly evaluate the submitted tenders for qualification for the second stage, and the fact that the complaint does not automatically trigger the suspension of the procedure, the review body should issue an interim measure in order to suspend the procedure. Otherwise, the commencement of the second stage would be irreversible and the only remedy in a later stage would be the cancellation of the tender.
Under Albanian law, the interim measure is used for the opposite purpose, i.e. to protect the procurement procedure where its suspension would “cause disproportionate harm to the public interest, the contract authorities or the tenderer” or “if it appears likely that the complainant will not succeed in the complaint.” (Article 64(2)(a), (b) of PPL). A typical example for application of such interim measure could be a situation where there is a tender for the provision of medical equipment, and such equipment is urgently needed to provide treatment for patients. The urgency should not be caused by the contracting authority’s failure to procure the medical equipment on time.
However, when deciding on an interim order, the tribunal member has to ask the following questions which are the same as the questions to be answered by the review body deciding on a suspension order:
1. What would happen if the procurement procedure is suspended?
2. What impact would the suspension have on the contracting authority, other tenderers and the complainant?
3. Is the result of the contracting authority’s action subject to the complaint irreversible?
4. Will any damages be incurred by anyone if the procurement is suspended or continued; if yes, what is the likely extent of such damages?
5. What public interest is involved in this procurement procedure? Would it be harmed if the procurement is suspended?
6. Am I likely to conclude that the contracting authority breached public procurement rules?
Such analysis may not always be straightforward or even possible according to the information available to the tribunal, and although the tribunal is not obliged to decide on the interim order of “continuation” but rather may use its discretion, it is advisable to carry out such analysis to avoid the negative economic impact of suspension and delay on the contracting authority and tenderers. While applying its discretion, the tribunal should base its decision on basic procurement principles.
5.1.1.2 What measures can be ordered?
Under EU law the following interim measures can be ordered:
52
(i) suspension of the implementation of any decision taken by the contracting authority;
(ii) suspension of the entire contract award procedure.85
The issuance of an interim measure shall not be subject to a prior complainant’s request to set-aside the contracting authority’s decision.
Obviously, since the interim measure under Albanian law has a different purpose, this does not apply to Albania. Under Albanian law, an interim order seeks the continuation of the procurement procedure, not its suspension, since the suspension occurs automatically.
5.1.1.3 What is the procedure?
The procedure for interim measures is not regulated under the Remedy Directive. Since the aim of the interim measures is to provide a quick provisional resolution to a dispute, the time limits are usually tight. For the same reason, procedural rules (for example, concerning evidence that needs to be submitted by the complainant or obtained by the review body on the irreversibility of the contracting authority's action) should be light.86
The conditions for interim measure awards include the following:
• a prima facie case should exist indicating that there is a breach;
• it should be demonstrated that the potential harm to the tenderer if the interim measure is not granted is irreparable or at least serious; and
• there should be no other interest overriding the private interest of the applicant to obtain the measure.87
The situation under Albanian law is again different, although PPL does specify detailed rules of the procedure. It provides for two situations where interim orders may be issued:
(i) if it appears likely that the complainant will not succeed in the complaint; or
(ii) if suspension would cause disproportionate harm to the public interest, the contract authorities or the tenderers (Article 64(2)(a), (b) of PPL).
As regards the time limits, the law stipulates only generally that an interim order must be issued after the receipt of the complaint but before the conclusion of the tender. But given the tight deadlines for the decision on the complaint itself, the analysis of the applicability of the interim order should be carried out simultaneously with the preliminary analysis on the breach of public procurement law by the action/decision of the contracting authority.
5.1.2 Set-aside
5.1.2.1 What is a set-aside remedy?
The set-aside remedy cancels or renders ineffective a contracting authority’s decision taken unlawfully or otherwise corrects an unlawful decision.
85 Article 2(1)a of the Remedy Directive, Public Procurement Training for IPA Beneficiaries, Module F, Sigma, 2010, p. 11. 86 Public Procurement Training for IPA Beneficiaries, Module F, Sigma, 2010, p. 10. 87 The Effectiveness of Bidder Remedies for Enforcing the EC Public Procurement Rules: a Case Study of the Public Works Sector in the United Kingdom and Greece, Despina Pachnou, PhD Theses, 2003, p. 72.
53
Both under EU and Albanian law, the complainant must apply for a set-aside remedy, and if the review body/tribunal comes to the conclusion that the contracting authority has violated the procurement rules, it has the discretion to choose from the available set-aside measures. The complainant may not apply for a set-aside remedy after the conclusion of the contract awarded by the contracting authority.
5.1.2.2 What set-aside measures may be ordered?
Under EU law, the following set-aside measures may be ordered:
(i) removal of discriminatory technical, economic or financial specifications in the contract notice, tender documents or any other document relating to the contract award procedure;
(ii) annulment of an unlawful contracting authority decision or cancellation of a contract award procedure;
(iii) positive correction of any unlawful document or contracting authority decision, for example an order to cancel the whole tender if it violates the procurement rules, to amend or delete an unlawful clause in the tender documents or to reinstate a complainant that has been unlawfully excluded.88
Pursuant to the PPL, the tribunal may order the following set-aside remedies:
(i) annul part or all of any contracting authority’s unlawful decision. This includes the power to remove any discriminatory technical, economic, financial or legal criteria (Article 64(3)(b) of PPL);
(ii) instruct the contracting authority to correct any breach and to proceed with the contract award procedure after such correction (Article 64(3)(c) of PPL); or
(iii) order the cancellation of the contract award procedure (Article 64(3)(d) of PPL).
These remedies should allow the tribunal to exercise some (albeit limited) control over the contracting authority’s use of its discretion (e.g., whether it misused its discretion in selecting a tender procedure, disqualification of the tenderer or contract specification). This role is consistent with the aim of the Remedy Directive, which is to allow review bodies to determine whether a contracting authority’s decisions are well-founded and supported by evidence, but not to ‘re-decide’ a contracting decision, which is within the scope of the contracting authority’s discretion. The review of reasonableness is particularly important in the context of procedures where the contract is awarded to the most economically advantageous offer. In such case, the discretion of the contracting authority is wide, since it decides and applies the criteria constituting an advantageous offer, and therefore increased the probability of abuse of discretion. However, such review must be limited to a ‘reasonableness’ test, as otherwise it might lead to speculative litigation aimed at convincing the review body to second-guess the decision of the contracting authority.89
Before choosing one of the set-aside remedies, the tribunal members should answer the following questions:
88 Article 2(1)b of the Remedy Directive. Public Procurement Training for IPA Beneficiaries, Module F, Sigma, 2010, p. 13. 89 Public Procurement Training for IPA Beneficiaries, Module F, Sigma, 2010, p. 14.
54
1. Has the contracting authority violated public procurement law?
2. How severe is the violation? Does it materially affect basic public procurement law principles and/or decrease the possibility of tenderers from successfully participating in the contract award procedure?
3. How can such violation be remedied in order to provide tenderers with the possibility of successfully participating in the contract award procedure? Which decision must be adopted by the tribunal in order to remove the violation?
Furthermore, the tribunal must take into account the type of violation and the procurement stage at which the violation occurred. A violation discovered in the early stages of the procurement can be remedied, e.g., by the cancellation of the contracting authority’s decision and/or the issuance of instructions to the contracting authority to change the tender documentation or to re-evaluate/re-consider the contracting authority’s previous decision in accordance with the tribunal findings. Frequently, violations that are discovered later on and can not be remedied through a “return” to a previous procurement stage, can only be remedied by the cancellation of the whole contract award procedure.
5.1.2.3 What is the procedure?
The procedure for set-aside measures depends on the local legislation which sets out the filing rules, deadlines, and notifications to other candidates or tenderers. A complainant usually files a complaint with the contracting authority, and if the contracting authority does not provide an adequate remedy, the complaint files the complaint with the review body.
A similar procedure is followed in Albania and generally precedes any decision of the tribunal on the complaint, not just the setting aside of the decision. The complainant must file an objection with the contracting authority within 7 days from the day the complainant became aware or should have become aware of the alleged breach of PPL (Article 63(2) of PPL).
If the contracting authority fails to examine the objection within 7 days or rejects the objection, the complainant must file a complaint with the tribunal within 7 days from the first working day after the expiry of the 7-day period for the contracting authority’s decision, or within 7 days from the day the complainant was informed about the rejection of its complaint (Article 63(6) of PPL).
If this condition is met, the tribunal will accept the complaint after the payment of the relevant fee.
The complainant shall specify the set-aside measure which it requests in the complaint. However, the tribunal is not bound by such request and may order the set-aside measure which it considers appropriate in the given case.
5.1.2.4 When should the set-aside remedy be used?
In terms of the lawfulness of the award procedure, the set-aside is a useful remedy, as it can correct an infringement, provided however, that the tribunal uses its powers reasonably.90
90 Public Procurement Training for IPA Beneficiaries, Module F, Sigma, 2010, p. 14.
55
Set-aside remedies protect complainants’ rights if they can demonstrate the violation of procurement rules by the contracting authority.
Cancellation of the contract award procedure
The tribunal should decide on the cancellation of the contract award procedure when other milder measures cannot correct the public procurement law violation and when it is the only reasonable option for remedying the irregularities in the tender.
This mainly applies to a situation in which the contract award procedure from its beginning is affected by the violation of the public procurement law; for example, when:
• it is not possible to return the procedure to its previous stage (e.g., return from the award stage to the qualification stage);
• it is not possible to evaluate tenders in accordance with public procurement principles and thus award the contract in accordance with the law;
• there is an unclear description of (i) the subject of the tender, (ii) the pricing background or (iii) the criteria for the tender award, due to which the tenderers can not submit appropriate bids;
• an improper procurement method is selected;
• unreasonable qualification criteria are selected.
Instructions to the contracting authority
Instructions to correct a breach of public procurement law should apply in a situation where the tribunal has successfully proved that the contracting authority has violated the law, the breach of law is not so material that it would require a cancellation of the contracting authority’s decision or the contract award procedure and only the contracting authority can adequately provide a remedy.
For example, the tribunal instructs the contracting authority to extend the deadline for tender submission, due to the late provision of the technical specifications for the contract which prevented the tenderers from having sufficient time to prepare adequate tenders (i.e., if the real time for the bid preparation is shorter than the period stated in the public procurement law or a period which may be reasonable for such bid preparation).
However, in practice, “instructions” are rarely used as a sole remedy and are often accompanied by another set-aside remedy, mainly the cancellation of the contracting authority’s decision.
Cancellation of the contracting authority’s decision/removal of tender documentation conditions
In the event of the violation of public procurement law, the most typical remedy is the tribunal’s decision to cancel the contracting authority’s decision or to remove the tender specifications. Such tribunal decision is generally connected with the “instruction” remedy, e.g., to change the tender documentation in a specified way.
56
The following remedies may be applied by the tribunal upon the cancellation of the contracting authority’s decision/removal of the tender specifications:
• to set new qualification criteria and repeat that part of the procurement as of the announcement of the new criteria;
• to evaluate the complainant’s bid, if the contracting authority’s failure to do so has violated procurement law;
• to enable all tenderers to submit new bids in order to remedy the prior public procurement law violation;
• to enable all tenderers that have already submitted bids to adjust the bids in an additional period as determined by the contracting authority;
• to properly define the tender subject and repeat the contract award procedure from that stage;
• to return the contract award procedure to a stage before the bid submission and to allow tenderers to prepare bids on the basis of the adjusted tender documentation which is “product neutral” (i.e., not discriminatory regarding the type or conditions of goods or services that shall be the subject of the procurement);
• to re-evaluate the submitted bids while respecting the tribunal’s legal guidance on how to evaluate them in a particular contract award procedure;
• to repeat the bid evaluation if the evaluation is defective and the bid evaluation documentation is unreasonable (i.e., unclear, insufficient explanations, lacking grounds for the contracting authority’s decision);
• to enable the complainant, whose bid was lawfully rejected, to challenge the evaluation of the bids from other tenderers which also should have been rejected and thus, preventing the other tenders from being entitled to receive the contract award.
5.1.3 Standstill period
In order to provide tenderers with an effective remedy to challenge all award decisions by contracting authorities, the Remedy Directive has introduced a standstill period between the contract award decision and the conclusion of the contract with the successful tenderer.91 Pursuant to the Remedy Directive, EU Member States may call for a standstill period in the following cases:
• if Directive 2004/18/EC92 does not require the prior publication of a contract notice;
• if there is only one tenderer left in the tender at the award stage
• in the case of a contract based on a framework agreement or specific contract based on the dynamic purchasing system of Directive 2004/18 EC.
91 Article 2a of the Remedy Directive. 92 EC procurement directive which sets substantive procurement rules.
57
Unfortunately, Albanian public procurement law does not provide for a standstill period and the contracting authority may conclude the contract within 30 days after the publication of the award in the PP-Bulletin.
Although the contracting authority must suspend an ongoing contract award procedure if the complainant files an objection, this does not prevent the contracting authority from concluding a contract with the successful tenderer prior to the filing of the objection. The same applies to the review proceedings as the obligation to suspend a contract award procedure lasts only until the conclusion of the review proceedings.
5.1.4 Ineffectiveness of the contract
5.1.4.1 What is ineffectiveness of the contract?
This remedy is not available to the tribunal under Albanian law. However, Article 58(6) of PPL states that if the contracts is considered null and void if is concluded (i) prior to the publication of the contract notification award by the contracting authority in the PP Bulletin or (ii) prior conclusion of the review proceedings. Although the tribunal could issue declaration on nullity of the contract it would have no legal affect, only the court’s decision on nullity of the contract has legal consequences for the parties. Therefore, the below stated analyses discuss the remedy as regulated under the Remedy Directive.
In EU Member States this remedy is vested with courts or review bodies. Depending on the national law, the court or review body may order:
(i) the retroactive cancellation of all contractual obligations, or
(ii) the prospective cancellation of all contractual obligations and limit the scope of the cancellation to those obligations which have yet to be performed. In the event of a prospective cancellation, the review body shall be authorized to impose fines on the contracting authority.93
5.1.4.2 Who can seek ineffectiveness?
• any person who could have an interest in obtaining a particular contract and who has been harmed or risks being harmed by the infringement.
5.1.4.3 When may a contract be declared ineffective?
• failure to publish the contract notice - the contract was awarded directly without the prior publication of a contract notice where the procurement rules require tender notification;
• failure to comply with the standstill/suspension periods – the contract was awarded in violation of the standstill period, if this infringement
- deprived the tenderer from applying for a review of the possibility of pursuing pre-contractual remedies (interim measure or setting-aside of contracting authority’s decision);
- was an infringement of substantive procurement rules (not remedy rules) by the contracting authority; and
93 Article 2d of the Remedy Directive.
58
- affected the chances of the tenderer to apply for a review to obtain the contract.
• failure to comply with the procedural rules – the contract was awarded in violation of rules applicable to a framework agreement or dynamic purchasing system and the value of the contract is above the applicable value threshold as stated in the procurement rules.
A review body does not have the right to declare a contract ineffective, if there are overriding reasons of general interest that require the contract to remain in place. However, such discretion may only be used under exceptional circumstances.94
5.1.5 Damages
Under the Remedy Directive, local law may provide damages on the grounds that the decision of the contracting authority was unlawful.95 This remedy is also available under Albanian law.
The role of the tribunal is limited to the confirmation of the violation of the public procurement law by the contracting authority. The tribunal does not decide on the amount of the compensation and is not obligated to establish the damages incurred by the complainant. It is the role of the court to ultimately decide on the amount of damages. In order to claim damages, the complainant/petitioner would have to prove to the court that there was a breach of the public procurement law, that it has suffered harm and there is a causal link between the breach and suffered harm. The breach would be established based on a decision of the tribunal. Thus, the complainant would “only” have to prove that it has suffered harm due to such violation.
This remedy is not used very often because it is difficult to grant compensation.96 On the other hand, the successful award of damage claims can serve as an effective deterrent to the violation of procurement law.
94 Article 2d(3) of the Remedy Directive. 95 Article 2(1)(c) of the Remedy Directive. 96 Public Procurement Training for IPA Beneficiaries, Module F, Sigma, 2010, p. 19.
59
Chapter 6 DISCRETION
This chapter addresses the situations in which the tribunal members may apply discretion and the factors and basic steps to be considered when exercising discretion.
6.1 What is discretion
In the Recommendation No. R (80) 2 Concerning the Exercise of Discretionary Powers by Administrative Authorities (the “Recommendation”), the Council of Europe defines "discretion" as a power which leaves a tribunal some degree of latitude as regards the decision to be taken, enabling it to choose from among several legally admissible decisions the one which it finds to be the most appropriate. In the implementation of these principles the requirements of good and efficient administration, as well as the interests of third parties and major public interests, should be duly taken into account.97
6.2 How to apply discretion
If a tribunal member is granted discretion, just applying the law to the facts will often not provide the right answer. It may also be necessary to determine which of several possible applications of the law is the most fair and reasonable under the circumstances of the particular case.98 Discretion must be exercised reasonably, in good faith and on proper grounds. It must not be exercised for improper purpose or on the basis of irrelevant considerations such as personal beliefs or values.99
We illustrate the use of discretion on (i) the general theoretical basis for the use of discretion under the Council of Europe Recommendations and (ii) basic principles and rules on how to apply discretion which both reflect the Council of Europe Recommendations and more detailed best practice guidelines developed in common law countries.
6.2.1 Recommendation
The Recommendation sets basic principles which shall be respected by the tribunal when exercising discretionary powers. The main principles require that the tribunal:
(i) does not pursue a purpose other than that for which the power has been conferred (purpose of the discretionary power);
This principle underlines that the tribunal on which a discretionary power has been conferred should observe as a principal purpose the only purpose or one of the purposes for which this power was created.
If, however, the decision is such as to produce secondary effects that are not in conformity with the purposes for which the discretionary power has been conferred,
97 Recommendation No. R (80) 2 Concerning the Exercise of Discretionary Powers by Administrative Authorities, adopted by the Committee of Ministers on 11 March 1980, the Council of Europe. 98 A Manual for Ontario Adjudicators, Society for Ontario Adjudicators and Regulators, 2000, p 53. 99 B. McLachlin, Rules and Discretion in the Governance of Canada, 56 Sask L. Rev., 1992, p. 174.
60
these secondary effects should not enter into consideration when the lawfulness of the decision is assessed.100
(ii) observes objectivity and impartiality, taking into account only the factors relevant to the particular case (objectivity and impartiality);
Objectivity and impartiality in the exercise of a discretionary power include the obligation placed on a tribunal to consider all the factors relevant to the particular case and only those factors, giving to each of them its due weight; no factor should be unduly taken into account or disregarded and any improper consideration which has no relation to the decision to be taken should be avoided.
The term "factors" shall include both the facts and the legal basis for the decision. "Relevant factors" comprise the facts, considerations and legal basis which it is incumbent upon the tribunal to take into account in the specific case.
The tribunal should endeavour to acquaint itself, if necessary of its own accord, with the factors which it deems relevant in the particular case, e.g. with the aid of pertinent documents, information from the parties concerned or third parties, and expert opinions.101
(iii) observes the principle of equality before the law by avoiding unfair discrimination(equality before the law);
The purpose of this principle is to prevent unfair discrimination by ensuring that persons in the same de facto or de jure situations enjoy similar treatment where the exercise of a given discretionary power is concerned.
If a distinction in treatment is based on reasonable grounds whereby it can be objectively justified having regard to the purpose to be pursued, there is no infringement of the principle of equality before the law. There is unfair discrimination only where the distinctive treatment has no reasonable justification having regard to the purpose and consequences of the measure envisaged.
This principle does not exclude the possibility that a tribunal will change its course of conduct for reasons of general interest or because former practice has been found illegal or inappropriate.102
100 Recommendation No. R (80) 2 Concerning the Exercise of Discretionary Powers by Administrative Authorities, adopted by the Committee of Ministers on 11 March 1980, the Council of Europe, paragraph 17. 101 Recommendation No. R (80) 2 Concerning the Exercise of Discretionary Powers by Administrative Authorities, adopted by the Committee of Ministers on 11 March 1980, the Council of Europe, paragraph 19-21. 102 Recommendation No. R (80) 2 Concerning the Exercise of Discretionary Powers by Administrative Authorities, adopted by the Committee of Ministers on 11 March 1980, the Council of Europe, paragraphs 22-23.
61
(iv) maintains a proper balance between any adverse effects which its decision may have on the rights, liberties or interests of persons and the purpose which it pursues (proportionality);
This principle applies specifically where a decision taken in the exercise of a discretionary power adversely affects the rights, liberties or interests of an individual; its aim is to ensure a reasonable balance between the interests at stake, for example the public interest on the one hand and the private interests of individuals on the other. It underlines that a tribunal on which discretion is conferred should not place on the individual any burdens which would be excessive with regard to the purpose to be pursued.103
(v) takes its decision within a time which is reasonable having regard to the matter at stake (reasonable time);
The aim of this principle is to protect the parties from the tribunal arbitrariness with respect to the time. As the Albanian law sets reasonable time in the PPL for the review proceedings, the tribunal only needs to comply with the set time periods.
(vi) applies any general administrative guidelines in a consistent manner while at the same time taking account of the particular circumstances of each case (consistency);
This principle highlights the importance of consistency in administrative practice. It lies within the scope of the general principle of equality and is intended to promote predictability and certainty, but it underlines also the need for an individual examination of the particular circumstances of each case.104
6.2.2 General recommendations for tribunals
The following rules are recommended for a daily use of discretion:
• Respect the purpose of the statute;
• Consider only relevant factors;
• Provide logical arguments for the use of discretion;
• Be consistent;
• Ignore personal prejudices;
• Choose one of the options;
• Consider each option;
• Lawfulness prevails over consistency;
• Discuss with your colleagues.
103 Recommendation No. R (80) 2 Concerning the Exercise of Discretionary Powers by Administrative Authorities, adopted by the Committee of Ministers on 11 March 1980, the Council of Europe, paragraphs 24. 104 Recommendation No. R (80) 2 Concerning the Exercise of Discretionary Powers by Administrative Authorities, adopted by the Committee of Ministers on 11 March 1980, the Council of Europe, paragraph 30.
62
6.2.2.1 Respect the purpose of the law
Discretion must be exercised within the boundaries of the law. Decisions must be both consistent with the purpose and intent of the law and its wording.105
When applying discretion under public procurement law, the tribunal decisions must respect basic procurement principles:
(i) equality of treatment – identical situations treated in the same way or different situations treated differently.
Example:
If two tenderers submit identical documents for qualification to the second stage of a restricted procedure, both documents must be accepted (if the tender criteria are met) or both documents must be rejected (if the tender criteria are not met). If the tribunal comes to the conclusion that both tenderers should be excluded due to their failure to provide adequate documents, the tribunal must cancel the contracting authority’s decision on the evaluation of the qualification of the tender and order a new evaluation.
If the contracting authority failed to properly evaluate the complainant’s documents and thus, the tenderer did not advance to the second stage of a restricted procedure, the tribunal must order the contracting authority to include the tenderer in the second stage of the restricted procedure.
(ii) transparency – ensuring for the benefit of any potential tenderer, a degree of advertising that is sufficient to enable the opening of the services market to competition and the review of the impartiality of procurement procedures.106
Example:
Information on announced tenders must be accessible for all tenderers (depending on the procurement procedure) and must contain all of the relevant requirements. If the contracting authority violates this obligation, the tribunal must cancel the whole tender.
(iii) non-discrimination – tenderers must not be discriminated against due to nationality.
Example:
The contracting authority must not limit tenders to tenderers from a particular town or region. If this is the case, the tribunal must cancel the discriminatory tender/contract condition or cancel the whole tender if the cancellation of the discriminatory condition is not possible.
(iv) proportionality – requirements chosen for tender qualification must be appropriate for the tender object. In evaluating the proportionality of tender qualification criteria, the tribunal must analyze their appropriateness for the
105 A Manual for Ontario Adjudicators, Society for Ontario Adjudicators and Regulators, 2000, p 53. 106 ECJ Case C-324/98, Telaustria, p. 60.
63
particular tender and not their general suitability.
Example:
A tender for the provision of cleaning services may not require as a qualification criteria, a reference with a value which significantly exceeds the value of the tender. If the tribunal finds that the qualification criteria violates the principle of proportionality, it must either cancel such criterion, or cancel the whole tender if the existence of such criterion could significantly affect the number of tender participants.
While applying the basic principles the tribunal shall consider the type of the contract award procedure, the way of the publication of the contract award procedure notice, the qualification and selection criteria, the type of the services or goods to be provided under the contract award procedure and the materiality of the alleged public procurement law violation. 6.2.2.2 Consider only relevant factors
In making choices, the tribunal members must consider only relevant factors, in other words, those that are consistent with the purpose and wording of the statute. Tribunal members should not take into account inappropriate or irrelevant factors.107 108 While reviewing the complaints, the tribunal must address the facts of the particular procurement procedure. It should not take into account any information from previous dealings with such contracting authority or complainant.
6.2.2.3 Provide logical arguments for the use of discretion
The tribunal should also base its decisions on material that can be logically demonstrated and give reasons for its decision.109 In a situation where it is appropriate for the tribunal to decide between the cancellation of the whole tender and the cancellation of one or two tender requirements, the tribunal must provide evidence and/or arguments that led to its decision. Such reasons should be clear and reasonable.
6.2.2.4 Be consistent
Similar cases should be treated in the same way. There should be no discrimination between persons on the basis of irrelevant considerations.110
The tribunal should follow its previous practice, if earlier decisions were rendered in accordance with the law. If the tribunal decides on the reinstatement of a excluded tenderer to the tender (i.e., the tribunal annulled the contracting authority’s decision on the exclusion of the tenderer from the tender due to its “alleged” failure to meet the qualification criteria) those grounds for the reinstatement of the tenderer should apply to all tenderers who filed complaints on similar grounds in different procurement procedures.
107 A Manual for Ontario Adjudicators, Society for Ontario Adjudicators and Regulators, 2000, p 53. 108 B. McLachlin, Rules and Discretion in the Governance of Canada, 56 Sask L. Rev., 1992, p. 173. 109 Exercising discretion, Guiding Development – Practice Notes, New South Wales, 2001, p. 3. 110 A Manual for Ontario Adjudicators, Society for Ontario Adjudicators and Regulators, 2000, p 53.
64
6.2.2.5 Ignore personal prejudices
Discretion must be exercised in good faith. It is bad faith when a tribunal member ignores the limits set out above for improper purposes. For example, if the tribunal member’s exercise of discretion is influenced by outside pressure or personal feelings towards a party, his/her choice is made not only on the basis of an irrelevant factor but in bad faith.111
While reviewing complaints, the tribunal must address the facts of the particular procurement procedure.
6.2.2.6 Choose one of the options
The possibility to use discretion must not be ignored. The tribunal member is required to select one of the available options.112
6.2.2.7 Consider each option
A tribunal member must consider all factors that are relevant in deciding which option to choose from within the discretion. The tribunal member must not restrict his/her discretion. As long as the law provides the tribunal with a choice, a tribunal member must never refuse to give genuine consideration to each of these choices.113
6.2.2.8 Lawfulness prevails over consistency
Other options must also be considered even if it leads to a situation in which the tribunal is not consistent in its decisions (e.g., due to the fact that in the past, the tribunal was more focused on one of the options and had not really considered other available options).
For example, the tribunal should be consistent in its approach to dealing with a contracting authority that fails to provide tender documentation for review on time. However, should specific factors come into play, i.e., the contracting authority has expressly declined to provide documentation to the tribunal, it could choose another option (if the law provides for this).
6.2.2.9 Discuss with your colleagues
Even though each case is assigned to an individual tribunal member, the internal decision making process should include discussion with all tribunal members before a final decision on the merits is reached. It is advisable for the tribunal members to consult among themselves regarding the options in order to assess different options in line with the purpose of the statute and the purpose of the particular section that needs to be addressed.
111 A Manual for Ontario Adjudicators, Society for Ontario Adjudicators and Regulators, 2000, p 53. 112 A Manual for Ontario Adjudicators, Society for Ontario Adjudicators and Regulators, 2000, p 54. 113 A Manual for Ontario Adjudicators, Society for Ontario Adjudicators and Regulators, 2000, p 54.
65
6.3 Steps to be considered when exercising discretion114
Step Description
Determine that the tribunal has the power
Check the relevant legislation to ensure that the tribunal member has the power to act or to make the decision.
Follow statutory and administrative procedures
It is important that tribunal members who are responsible for exercising discretion follow statutory and administrative procedures. For example, there may be pre-conditions to the exercise of discretion, such as a request for complaint evidence or discussion among the tribunal members at the board meeting.
Gather information and establish facts
Before exercising discretion, it is necessary to gather information and establish the facts. Some facts might be submitted with a complaint. Others might be obtained through inquiries or investigation.
Evaluate the evidence It is important to evaluate and weigh the evidence to determine the relevant considerations and key facts. A key fact is something whose presence or absence can affect the decision. The evidence must be relevant to the questions before the tribunal and accurate so that any material facts can be established. When evaluating the evidence, the tribunal member must ignore irrelevant considerations.
Consider the standard of proof to be applied
The tribunal must be aware that the parties to the review proceeding must prove the facts which present the basis for their claims.
Act reasonably, fairly and without conflict of interest
Tribunal members must act reasonably in their action/decision making process. They need to act impartially and must not handle matters which constitute an actual or apparent conflict of interest.
Observe the rules of procedural fairness
Before acting or deciding, the tribunal member may be required to provide procedural fairness to anyone who is likely to be adversely affected by the outcome.
Consider the merits of the case and make a judgment
Although policies, previous decisions, and court decisions may exist to guide the tribunal member, it is still important to consider the complaint on its merits and to make a judgment about the matter under consideration.
Provide reasons for decision
Tribunal members must provide reasons for their decisions.
Create and maintain records
It is vital that records be created and maintained about the issues that were taken into account in the process and the weight given to the evidence and the reasons for the decisions.
114 Adjusted to the purpose of this handbook on the basis of Exercise of Discretion in Administrative Decision-Making, Ombudsman Western Australia, 2009, p. 4.
66
6.4 Discretion under the PPL
Under the PPL, the tribunal is granted with the discretion in the following principal situations:
(i) decision on the interim order;
(ii) decision on whether oral hearings will be held;
(iii) decision on request for an evidence from expert or local/state authorities;
(iv) decision on the remedy for a public procurement law violation (e.g. to cancel the contract award procedure, bid evaluation, contract conditions or qualification criteria); and
(v) determination of the issues of a complaint.
6.4.1 Issue of interim order
As discussed in Chapter 5 of this handbook, the tribunal may issue the interim order to allow continuation of the procurement procedure after submission of the complaint with the tribunal. The tribunal shall consider the following factors when deciding on the interim order:
(i) if it appears that the complainant will not succeed in the complaint (i.e. the tribunal must make a pre-evaluation of the complaint to see if the complainant can success on its merits or not); or
(ii) if suspension of the procurement procedure would cause disproportionate harm to the public interest, the contract authorities or the tenderers (e.g. the tribunal must consider the nature of goods or services to be provided in the tender and evaluate what effects will have the delay in their procurement to the public interest).
6.4.2 Decision on oral hearings
Although not frequently used in the tribunal’s practice, the tribunal has the right to hold oral hearings. In determining whether to held an oral hearing the tribunal should consider:
(i) the complexity of the case;
(ii) what can the tribunal gain through examining the parties orally in comparison with traditional submission of evidence in writing; and
(iii) impact on the procedural deadlines which must be respected by the tribunal.
The tribunal should also be aware that as the oral hearing are not part of its standard review proceedings, and the tribunal would set a precedent that the contracting authorities and contractors may be relying on in the future. Therefore, the reasons for holding an oral hearing in a particular case should be clearly formulated.
6.4.3 Decision on request for an evidence
The tribunal should always consider whether the standard of proof has been met and whether a well reasoned and fair decision can be issued based on the facts available to the tribunal.
The Code of Administrative Procedures does not have any explicit standard of proof. It only provides that the public administration is entitled to require any facts and evidence needed for
67
rendering its final decision. However, the tribunal could rely on the general doctrine used in most civil and common law countries, which provides, basically, for two standard of proofs:
(i) Superiority of the evidence: the greater weight of evidence, not necessarily established by the greater number of witnesses testifying to a fact but by evidence that has the most convincing force;
(ii) Clear and convincing evidence: evidence indicating that the thing to be proved
is highly probable or probably certain. This is a greater burden than preponderance of the evidence, the standard applied in most civil trials, but less than evidence beyond a reasonable doubt, the normal in criminal trials.
As stems from the above, the tribunal may request any evidence, including an expert statement or any information/document from local or state authorities. However, the tribunal should be keeping in mind relevance of the evidence and also time and costs related with obtaining the evidence when deciding whether and what evidence is to be requested.
For example, the expert opinion should always be asked for if the issues of the complaint are too complex to be evaluated by the tribunal members themselves or if the evidence submitted by the parties is not sufficient and the tribunal wants to base its decision on an independent opinion of a reputable third party. The tribunal should explain to the parties the grounds for its decision to order the expert statement as obviously this will add time delay and costs to the proceedings. Such explanation should be clear and persuasive as it will serve as the future guidance for the parties to the review proceedings as to when they may expect that the tribunal will decide on the use of an expert statement.
6.4.4 Decision on the remedy
Upon evaluation of the evidence, establishment of the facts of the case, the tribunal shall decide on the merits of the complaint. The tribunal has no discretion to decide if the public procurement law was violated if the established facts clearly prove this case. However, the tribunal has discretion to decide on the type of the applicable remedy. There is several elements the tribunal has to take into account when deciding on individual remedy to be applied. The key elements are stage of the procurement procedure affected by alleged violation of PPL, and gravity of the violation. On remedies and situations in which individual remedies are likely to be applied please see Chapter 5.
6.4.5 Determination of the issues of a complaint
As stated in Section 7.2.2 of this handbook, determination of the issues is the most important part of the decision making process as it determines which factors will be crucial for the tribunal in the complaint review. In other words, “issues” represent the real substance of the dispute between the contracting authority and the complainant. Although in this case the tribunal is not exercising discretion per definition in the Recommendation as the tribunal is not choosing from several options available, we believe that when establishing issues of the complaint, the tribunal should be applying some of the principles applicable to per se discretion.
Although the parties will state in the complaint/in the response to the complaint what they consider as the issues in the review proceedings, determination of the issues of the complaint is the tribunal’s right and tribunal’s review is not restricted only to the issues raised in the
68
complaint. However, tribunal is limited by the circumstances of the particular contract award procedure. Tribunal will need to assess what is relevant in order to decide on the complaint. It will need to carefully evaluate whether the acts and/or decisions of the contracting authorities challenged in the complaint amount to violation of PPL or whether the procurement procedures failed PPL law in some other respects not mentioned in the complaint. In any case, the tribunal should clearly justify its conclusion. Such assessment may not be arbitrary and must be applied consistently in all review proceedings.
69
Chapter 7 WRITING DECISIONS
This chapter addresses the approaches to decision writing, the basic structure of the decision, the use of headings in decisions, the style of writing and methods for the revision of draft decisions. In addition, the annex to this chapter provides decisions of the review tribunal from the USA. Despite being from a common law system, they are very relevant examples of clear, concise, well structured, well-reasoned decisions which deal effectively with the issues, and may serve as an inspiration for the tribunal.
7.1 How to approach writing?
Both the board members and the inspectors should participate in the writing of a decision. The extent of participation of the inspectors can vary from research and preliminary legal analysis to the drafting of the decision from the very first draft. The extent of involvement may depend on the complexity of the case and of course, the workloads of the tribunal member and the inspector.
Before beginning to write, the author should think about what he/she wants to say in the decision and how he/she wants to say it. Furthermore, the extent of the decision and the audience to whom the decision is addressed should be considered. Then the material facts should be ordered, issues to be decided or identified together with the applicable law. Last but not the least, a conclusion should be reached. It does not mean that a tribunal member may not change his/her mind about the issues of applicable remedy. However, the preparation for writing is necessary to provide a basis which will serve as the outline or first basis for the decision.
In order to organize it his/her thoughts, author can prepare an outline of important facts, issues and points. The best time to prepare the outline is upon the first review of the complaint and the tender documentation from the contracting authority.
The outline should briefly address the following: (i) the issue or issues in the review procedure, (ii) the findings of the facts in respect of identified issues based upon available evidence, (iii) the determination of the law that applies to the facts and (iv) the application of the law to the facts to reach the decision.115
7.2 How should the decisions be structured?
Pursuant to the Albanian Administrative Procedure Code, the tribunal must provide reasons for its decision, and such reasons must be clear and include an explanation of the legal and factual basis for the decision.116 In addition to the legal requirements for the content of the administrative decision, we understand that there is an established practice for decision writing in Albania. However, since the purpose of this handbook is to provide the tribunal members with examples of best practices, the decision structure we describe below does not necessarily reflect the established decision structure. It rather provides examples of decision writing practice of the procurement review bodies in other countries which we consider clear and concise.
115 A Manual for Ontario Adjudicators, Society for Ontario Adjudicators and Regulators, 2000, p. 152. 116 Act No. 8485, The Code of Administrative Procedures of the Republic of Albania, Articles 108 and 109.
70
A common recommended structure of a full-dress decision of a public procurement review body in civil law countries is usually as follows:
(i) introduction including the identification of the parties, the administrative body, the subject matter of the proceedings, the procedural posture of the case and the decision;
(ii) identification of the issues to be decided on117;
(iii) description of the material facts of the case;
(iv) summary of applicable law;
(v) analysis - application of law to the facts of the case and resolution of the issues;
(vi) necessary instructions.
Although tribunal’s decisions do not follow the same pattern, the current tribunal’s practice covers most parts of the recommended structure and can be improved easily by the tribunal members.
7.2.1 Introduction
The purpose of the introduction is to orient the reader. It should briefly describe the case, the challenged tender procedure, the legal subject matter and the decision itself, which will state the violation by the contracting authority’s act, if the complaint is confirmed, or the absence of a violation claimed by the complainant (the tribunal specifies the challenges) and thus, a confirmation of the contracting authority’s act.
It should further cover the procedural and jurisdictional status and composition of the tribunal, the parties involved and the issues to be decided on (unless they are so complex that they are better treated in a separate section).118 The introduction serves as the case/complaint summary.
Decision writer is not in the position to write an introduction until he/she knows what the conclusion will be. Sometimes the author does not know what the issues are or how many or how they should be resolved until the decision writer has drafted legal analysis for each issue.119 The final version of the introduction is best written after the decision is complete, when the tribunal member has finally determined the issues, the conclusions and supporting analysis.120
A typical introduction may read as follows:
“Pursuant to Section [●] of Act No. [●] on Public Procurement, as amended, the review tribunal, acting in its proceedings commenced on [●] 2011, with respect to Complaint No. [●], filed by [●] with respect to the procurement on “Provision of financial services for the
117 Although there are not many countries which have a specific section on issues, its incorporation in the decisions makes it easier for the parties to the case and other tenderers and contracting authorities to know what is the case about. 118 Edward Berry, Writing Reasons, A Handbook for Judges, E-M Press, 2007, p. 31. 119 J.C. Raymond, The Architecture of Argument, The Judicial Review: Journal of the Judicial Commission of New South Wales, 7, 2004, p. 49. Please see section on LOPP/FLOPP analysis below. 120 Judicial Writing Manual, Federal Judicial Center, 1991, p. 10.
71
municipality [●]” having its object the cancellation of the decision of the contracting authority on evaluation of the tender due to breach of non-discrimination principle, has decided:
• to accept Complaint No. [●] filed by [●] with respect to the procurement on “Provision of financial services for the municipality [●]”;
• to order the contracting authority to cancel its decision on the evaluation of the tender due to its violation of the non-discrimination principle, which prohibits the application of selective criteria to different tenderers. “
or
“Pursuant to Section [●] of Act No. [●] on Public Procurement, as amended, the review tribunal, acting in its proceedings commenced on [●] 2011, with respect to Complaint No. [●], filed by [●] with respect to the procurement on “Supply of laptops, desktops and monitors for the state agency [●]” having its object the cancellation of the tender requirement due to its restrictive character which violates the procurement principle of proportionality, has decided:
• to accept Complaint No. [●] filed by [●] with respect to the procurement on “Supply of laptops, desktops and monitors for the state agency [●]”;
• to order the contracting authority to cancel the requirement for a single manufacturer of laptops, desktops and monitors as such requirement is unsubstantiated and overly restrictive due to the contracting authority’s failure to demonstrate a reasonable basis for the requirement and to set new technical requirements that will correspond to the legitimate needs of the contracting authority. “
or
“Pursuant to Section [●] of Act No. [●] on Public Procurement, as amended, the review tribunal, acting in its proceedings commenced on [●] 2011, with respect to Complaint No. [●], filed by [●] with respect to the procurement on “Construction services for the ministry [●]” having its object the cancellation of the contracting authority decision on rejection of the complainant bid due to alleged low price, has decided:
• to accept Complaint No. [●] filed by [●] with respect to the procurement on “Construction services for the ministry [●]”;
• to reject the complaint which claimed that the contracting authority failed to reasonably evaluate complainant’s low fixed price due to the fact that pursuant to the tender documentation the contracting authority has a right to reject a complainant’s proposal where its price was “unreasonably” low which fact suggests that tenderer failed to comprehend the complexity and risks of the program. , and the record reflects that the contracting authority considered the complainant’s low price and raised the matter with the complainant during discussions.
72
However, stating a summary of the issues raised in the complaint may seem impractical if the issues are too numerous or complex. In such case, it is advisable to avoid a summary of the issues in the introduction and address them in the description of issues section.
When writing an introduction, you should:
• avoid excessive detail about dates, times, places and procedural matters (this kind of detail may be presented later in the decision if needed);
• avoid stating issues in lengthy sentences;
• avoid quoting the text of the complaint or other legal phrases;
• keep the introduction brief;
• state the decision clearly and visually distinguishable.
7.2.2 Description of the issues
The determination of the issues to be decided on is the most important part of the decision making process. How the issues are formulated determines the material facts and governing legal principles. The tribunal members are not required to consider issues stated in the complaint if some or all of them are not material to the outcome or adhere to the legal qualification suggested by the complainant.121 They are free to describe the issues as they see them even if this differs from the description of the issues in the complaint. It is the tribunal member’s responsibility to decide on the issues and adjust the analysis accordingly.
The first step is to determine the decision or action that is being disputed by the complainant, the grounds for that decision or action, and the reasons for the dispute.122 Unless each disputed issue is clearly separated from the other, the decision will not be clear and convincing. However, the decision may address not only issues raised by the complainant, but also the issues that are dispositive and important according to the tribunal.
Issues which the tribunal believes are not necessary to be addressed but which were seriously urged by the complainant, should be discussed only to the necessary extent in order to prove that they were considered. 123
The following are examples of cases where certain issues could be omitted:
The complainant was excluded from the tender due to the late filing of the tender. Therefore, its tender was not considered by the contracting authority. The complainant files a complaint with the tribunal providing a number of reasons to support the consideration of its tender. As long as the procurement law does not provide the option to extend the deadline for tender submission, the tribunal shall only address the issue of the late tender filing. Addressing any other issue would make the decision less persuasive.
or
The complainant was excluded from the tender due to its failure to meet the qualification
121 Judicial Writing Manual, Federal Judicial Center, 1991, p. 14. 122 A Manual for Ontario Adjudicators, Society for Ontario Adjudicators and Regulators, 2000, p. 152. 123 Judicial Writing Manual, Federal Judicial Center, 1991, p. 17.
73
criteria. The complainant claims that the contracting authority has not evaluated its document properly and that the qualification criteria are discriminatory. As the period for challenging the qualification criteria has already passed, the tribunal should only address the manner in which the contracting authority has evaluated the qualification documents submitted by the complainant but not the criteria itself.
The next step is to identify the applicable law that governs the dispute and directs how such dispute should be resolved.124
The statement of issues may come before or after the statement of facts. Stating the issues first will make the statement of facts more meaningful to the reader and help focus on material facts.125 The statement of issues should not be confused with the quoting parties’ contentions. The tribunal should avoid reproducing lengthy statements of the parties.126
Here are some examples of the description of the issues:
The tribunal must decide if the description of the tender subject as provided by the contracting authority is sufficient for the tenderers to adequately assess the extent of work that will be needed for the performance of the contract. (If not, the tribunal must cancel the entire tender.)
or
The tribunal must decide if the technical specifications for the provision of services as stated in the contract notice violate the technical norms and therefore, may not form part of the tender conditions. (If the violation is proven, the relevant criterion needs to be set aside.)
or
The tribunal must decide if it is proper to use the negotiated procedure without publication as a procurement method in the tender for the provision of services with a value over EUR 100,000. (If not, the entire tender must be cancelled.)
or
The tribunal must decide if the failure to state reasonable grounds in the contracting authority’s decision on its rejection of the complainant’s bid renders the contracting authority’s decision unreviewable. (If yes, the contracting authority’s decision on non-acceptance of complainant’s bid must be cancelled and the contracting authority must re-evaluate the complainant’s bid.)
124 A Manual for Ontario Adjudicators, Society for Ontario Adjudicators and Regulators, 2000, p. 153. 125 Judicial Writing Manual, Federal Judicial Center, 1991, p. 10. 126 Judicial Writing Manual, Federal Judicial Center, 1991, p. 11.
74
7.2.3 Description of the material facts
The decision shall describe all necessary facts which are important for the decision. As the decisions will be available online and affect the future behavior of tenderers and contracting authorities, the decisions should provide a sufficient description of the case so that any third party can understand the nature of the tender and complaint.
A precise definition of the issues will reduce the amount of facts that need to be described in the decision as it will only focus on the relevant facts related to the issues at hand. Therefore, only the facts (evidence) that are necessary in order to reach the decision should be included. Irrelevant facts should be omitted. Do not get trapped by the structure used by the parties.
7.2.4 Summary of applicable law
There is no need to have a specific section on the law. Most tribunals state the law which was applied for the determination of their jurisdiction and the basis for their decision in the analysis section itself. However, some tribunals have a separate section on law where they evaluate whether the complaint has met the legal criteria for admissibility, i.e., whether the tribunal has jurisdiction over the complaint and if the formal requirements have been met – e.g., an objection was filed with the contracting authority, the complaint was filed within the applicable legal period and the complaint fee was paid on time.
7.2.5 Analysis – application of law
The analysis is the main part of the decision. It must demonstrate that the tribunal’s decision is based on reason and logic. It should persuade the parties of the correctness of the tribunal’s conclusions by the power of reasoning, not by arguing. Although the decision does not have to address every argument of the parties, the analysis must be sufficient to demonstrate to the losing party that the main arguments of its position were fully considered.127
It is up to the tribunal to decide on the order in which it address the issues. Naturally, the tribunal should only address the issues which are relevant for the case and which have been identified in the introduction (the first part of the decision). If there are multiple issues, it is advisable to arrange the issues in a sequence that makes sense.128 Normally, the decision must first address the issue of the jurisdiction and admissibility of complaint, i.e., whether the tribunal may decide on the complaint, whether the complaint is within its jurisdiction, whether the prior request with the contracting authority was filed, the time limit for filing review, the necessary requirements to be met in order to accept the complaint, etc.
If necessary, the tribunal may also refer to its previous decisions which may be relevant for the case. Since the tribunal decision making process is not precedence-based, the tribunal should only use such reference in support of an argument already presented in the decision.
7.2.5.1 Prepare an analysis for each issue
If the arguments of the complainant and contracting authority are followed as a basis for the structure of the decision, the decision may become unclear and the decision and tribunal’s arguments may be lost. One solution to this general problem is to take control over the case
127 Judicial Writing Manual, Federal Judicial Center, 1991, p. 16. 128 J.C. Raymond, The Architecture of Argument, The Judicial Review: Journal of the Judicial Commission of New South Wales, 7, 2004, p. 46.
75
by creating a logical framework for the issues and giving space to the arguments of the parties only within that framework. 129
The easiest way to organize the analysis of each issue is to follow this pattern:
• LOPP (Losing Party's Position).
• FLOPP (Flaw in Losing Party's Position).
• CONCLUSION.130
Example:
LOPP: The contracting authority contends that the qualification criterion that was challenged by the complainant is not discriminatory.
FLOPP: The evidence and market practice shows that this is the first time that this criterion was applied and that it has no substantial basis for the assessment of the tenderer’s abilities to perform that type of the contract and the only reason for the inclusion of such criterion was to exclude the majority of participating tenderers.
CONCLUSION: Therefore the contracting authority’s claim that the qualification criterion is not discriminatory has no merit.
A conclusion can be omitted if it is obvious from the analysis. The LOPP/FLOPP analysis reflects the basic pattern of the tribunal/court arguing where one party argues X, the other party argues Y in response to the first party position. The usual structure of arguments in the decisions is:
• One party says X.
• The other party says Y.
• The tribunal says X (or Y, or possibly Z).131
However, the tribunal does not need to repeat the parties’ arguments since it is in the position to decide and, thus, may skip one of the steps in the argumentation by using the LOPP/FLOPP analysis.
• LOPP: One party says X.
• FLOPP: But the tribunal says Y because…
There is no reason to say what the winning party has argued since the tribunal has adopted that position as its own.132
129 Edward Berry, Writing Reasons, A Handbook for Judges, E-M Press, 2007, p. 53. 130 J.C. Raymond, The Architecture of Argument, The Judicial Review: Journal of the Judicial Commission of New South Wales, 7, 2004, p. 44. 131 J.C. Raymond, The Architecture of Argument, The Judicial Review: Journal of the Judicial Commission of New South Wales, 7, 2004, p. 45. 132 J.C. Raymond, The Architecture of Argument, The Judicial Review: Journal of the Judicial Commission of New South Wales, 7, 2004, p. 45.
76
An exception to this may be when the tribunal is finding facts. In such case, it is appropriate to start with the statement of the complainant, followed by the contracting authority response, and finally with the tribunal’s position on the existence of the fact (e.g., the value of the requested tender qualification references is appropriate for the particular contract procurement or not). When making the decision on a particular issue, the tribunal members should present their mental processes which were important for reaching the decision.
The LOPP/FLOPP pattern should help tribunal members in thinking clearly about the application of facts to law.133
7.3 Style and revision
7.3.1 Conciseness
Good decisions are questions of time. As the saying goes “The letter would not be so long, if I had more time to think about it.” Although it may sound contradictory to a general belief, well thought decision are shorter than hastily written decisions which have lot of ballast and many sentences with no added value for the decision. To avoid it, revisions of the draft decision are needed in order to make it more concise.
Conciseness, however, is not the same as brevity. Brevity is only about saving words, conciseness is about making every word count. Sometimes readers need more words, not less, to understand a difficult concept or to accept a difficult decision.134
How to write concisely?
(i) cut the evidence/facts – include only evidence that is relevant for the legal problem which is subject of the complaint;
(ii) use quotations only when a brief reference or paraphrase is not adequate; basic rules when to use quotation are: when the exact words of the document in question are essential (especially applicable law) and when a paraphrase would be less clear and concise than the original;
(iii) do not state the obvious;
(iv) avoid multiple citations;
(v) avoid explaining and supporting well known legal principles;
(vi) avoid amplifying easy arguments;
(vii) avoid repetition;
(viii) avoid passive voice;
(ix) avoid double negatives;
(x) avoid legal jargon;
(xi) break long sentences into smaller pieces;
(xii) revise with conciseness in mind – keep your eye on the issues. Facts, quotations, arguments – the length of these units depends upon the issues in
133 J.C. Raymond, The Architecture of Argument, The Judicial Review: Journal of the Judicial Commission of New South Wales, 7, 2004, p. 46. 134 Edward Berry, Writing Reasons, A Handbook for Judges, E-M Press, 2007, p. 66.
77
the case. The crucial question in revision is what can be cut without sacrificing my argument.135
The tribunal member may not always like the outcome of a case, but he/she is still obliged to write the decision in accordance with the facts and law.
7.3.2 Paragraphs
A paragraph should present a single idea. The thoughts within the paragraph must be unified and coherent internally; they must also be joined effectively to the preceding and succeeding paragraphs. Paragraphs must enable development.136 In addition, the point of the paragraph must be stated first, in order to inform the reader of its content.
The following section of a procurement review decision illustrates one approach to the division of the text into paragraphs.
“Although a contracting authority has the discretion to determine its needs and the best method to accommodate them, the contracting authority may include restrictive requirements only to the extent that they are necessary to satisfy its legitimate needs.…. The adequacy of the contracting authority’s justification is ascertained by examining whether the contracting authority’s explanation is reasonable, that is, whether the explanation can withstand logical scrutiny...
With respect to the requirement for a single manufacturer for the computers and monitors, the contracting authority states that it has a legitimate need to standardize its information technology requirements. Specifically, the contracting authority states that standardization will lower the contracting authority’s operational costs and will provide a common environment, generally seen as a best practice…..
The complainant disputes the contracting authority’s assertion that standardizing computers and monitors to one manufacturer results in lower costs or other tangible benefits to the contracting authority….. The complainant asserts that this requirement achieves nothing more than administrative convenience for the contracting authority.
Here, the tribunal finds that the record does not contain analyses or documentation supporting the contracting authority’s justification for its standardization requirement. .. in support of this requirement, the contracting authority has provided a statement from an information technology project manager…. The project manager does not, however, identify any analyses or studies that were performed to determine that this standardization requirement was necessary to obtain the asserted benefits... Without some documentation or explanation in the record to show that the restriction on competition will achieve the alleged benefits, the tribunal is unable to find that the contracting authority’s asserted justification for this restriction is reasonable.…”137
135 Edward Berry, Writing Reasons, A Handbook for Judges, E-M Press, 2007, p. 66-68. 136 Edward Berry, Writing Reasons, A Handbook for Judges, E-M Press, 2007, p. 76. 137 GAO decision in NCS Technologies, Inc., dated November 8, 2010. The selected parts of the decision are adjusted for the needs of this handbook.
78
7.3.3 Use of headings
If a decision is only two or three pages long, it may not need any heading. In longer texts, headings are extremely helpful, particularly to readers who read tribunal decisions as quickly as possible.138
There are two types of headings. Generic headings which might appear in any kind of decision – “Introduction”, “Issues”, “Facts and Evidence”, “Law”, “Analysis”, “Conclusion”. They make it possible for a reader to identify a specific section of interest. However, they are vague as they do not provide the reader with information on a particular case. Therefore, the most useful headings are those that are specific to the decision at hand. Case specific headings may be combined with generic headings.139
For example, in a procurement case which deals with the evaluation of the bid, the headings in the decision may be as follows:
• Introduction (if you decide to have introduction section)
• Issues (if you decide to have issues section)
• Facts
• Law (if you decide to have a law section)
- Tribunal jurisdiction
- Admissibility of the complaint
• Analysis (or Reasoning)
- Criteria for bid admissibility
- Criteria for low tender
- Principle of non-discrimination of tenderers
Specific headings may be even more specific and refer to particular sections of law or to specific facts of the case
7.3.4 Steps for revisions
Once the first draft of the decision is written, it is necessary to review in order to determine that the decision meets the basic criteria for good decision writing. The following revision stages may be helpful to achieve that goal. In practice, many judges and tribunal members revise decisions at least two or three times before they have a final decision which meets the criteria.
138 J.C. Raymond, The Architecture of Argument, The Judicial Review: Journal of the Judicial Commission of New South Wales, 7, 2004, p. 47. 139 Edward Berry, Writing Reasons, A Handbook for Judges, E-M Press, 2007, p. 47.
79
(i) Stage one
Think of your audience. Is the decision convincing for the contracting authority and the complainant? Is it sufficiently clear for other tenderers or contracting authorities who may face similar problems?
(ii) Stage two
If applicable, read your introduction. Ask yourself the following questions: (1) have I identified the parties?, (2) have I identified the nature of the case?, (3) have I stated the issue or issues? If the answer to these questions is no, then more analyzing and writing will be needed.
(iii) Stage three
Read through the entire decision quickly, with the issue or issues in mind. Then ask yourself whether the sections in the decision are presented in the most effective order. Is the overall structure clear? Is the order or arguments logical and persuasive? What are the most effective headings for the issues? Is a separate section on evidence necessary? Does my structure tie the evidence directly to the issues?
(iv) Stage four
You have already stated the issues and structured the decision, now you can omit the redundant part. Have I included more facts than necessary? Have I focused too much on side issues? Have I written too much on the obvious? Have I quoted too much? Have I adopted a point-first or context-first approach to paragraphs?
(v) Stage five
Re-write the decision as necessary. Focus on the clarity of the issues, the organization of the argument and the conciseness.
(vi) Stage six
Clean up the language. Focus on the things you want to avoid in your writing. When you see an unusually long sentence, take a second look and rewrite it if needed.140
And two words at the end, spell check!
140 Adjusted based on advice stated in Edward Berry, Writing Reasons, A Handbook for Judges, E-M Press, 2007, p. 150-152.
80
Annex Sample decision of United States Government Accountability Office – No. 1
Decision Matter of: NCS Technologies, Inc. File: B-403435 Date: November 8, 2010 Thomas K. David, Esq., and Kenneth D. Brody, Esq., David, Brody & Dondershine, LLP, for the protester. Diane Foose, Esq., Department of Homeland Security, for the agency. Peter D. Verchinski, Esq., and Guy R. Pietrovito, Esq., Office of the General Counsel, GAO, participated in the preparation of the decision. DIGEST Solicitation requirements that computers and monitors be from the same manufacturer and use Intel-based microprocessors is overly restrictive where the agency fails to demonstrate a reasonable basis for the requirements. DECISION NCS Technologies, Inc., of Gainesville, Virginia, protests the terms of request for quotations (RFQ) No. HSCETE-10-Q-00314, issued by the Department of Homeland Security (DHS), Immigration and Customs Enforcement (ICE), for computer hardware. NCS challenges several solicitation provisions as unduly restrictive.
We sustain the protest.
BACKGROUND
The RFQ was issued to DHS’s First Source contract holders and several small vendors on the General Services Administration’s Federal Supply Schedule (FSS) 70,141 and provided for establishing a blanket purchase agreement with a five-year term for commercial off-the-shelf laptops, desktops, and monitors.142 These items arbeing procured to replace ICE’s existing computer equipment, at an anticipated raof approximately 6,500 devices a year. RFQ, Statement of Work (SOW), at 4; LegMemorandum at 2. The agency states that the estimated value of the blanket purchase agreement is approximately $75 million. Legal Memorandum at 2.
The RFQ informed vendors that the blanket purchase agreement would be issued on a low-priced, technically acceptable basis and requested that vendors provide prices for estimated
141 DHS’s First Source program consists of multiple, task order contracts for information technology commodities and supplies. Although the RFQ was provided to First Source contract holders, the blanket purchase agreement would only be issued to a vendor under its FSS 70 contract. RFQ at 56. 142 The agency states that it considered the computers and monitors to be commercial items “because they are not unique and/or specialized.” Legal Memorandum at 2.
81
quantities of 8 different items: a high performance desktop computer, a standard performance desktop computer, a standard laptop computer, a lightweight laptop computer, a ruggedized laptop computer, a tablet computer, a 20-inch computer monitor, and a 24-inch computer monitor. RFP at 58-59. Among the requirements identified for the computers and monitors was that, with the exception of the ruggedized laptop, all of the computers and monitors must be from the same manufacturer.143 The RFQ also required that the all of the computers use an Intel-based microprocessor. See RFQ, appendix B, client device specification. Vendors were also informed that they must submit with their quotations
a 3rd party review less than 2 years old such as that provided by ‘Square Trade, PC Magazine, Byte, etc.’ demonstrating that proposed manufacturer suite of equipment have been rated average or above in reliability as shown in the report provided. Internal reviews or white papers are not acceptable.
RFQ amend. 5, at 3.
Prior to issuing the RFQ, the agency conducted market research and determined that two firms [DELETED] could satisfy all of the stated technical requirements. See Agency Report (AR), Tab 6, Declaration of Information Technology Project Manager, at 1. The agency also determined that, based on its review of vendors’ FSS contracts, two FSS vendors, [DELETED], could fulfill all the technical requirements.144
DISCUSSION
NCS objects to the requirement that all the computers and monitors (apart from the ruggedized laptops) be from the same manufacturer and that the computers use an Intel-based microprocessor. NCS contends that these requirements do not reflect legitimate agency needs and are unduly restrictive. NCS also objects to the requirement that vendors provide third party reviews establishing the reliability of the vendors’ quoted products.145
Although a contracting agency has the discretion to determine its needs and the best method to accommodate them, the agency may include restrictive requirements only to the extent they are necessary to satisfy its legitimate needs. See FAR § 11.002(a)(ii); CHE Consulting, Inc., B-297534.4, May 17, 2006, 2006 CPD ¶ 84 at 2. We review challenges to allegedly restrictive requirements to determine whether the restrictions are reasonably necessary to meet the agency’s needs. The adequacy of the agency’s justification is ascertained through examining whether the agency’s explanation is reasonable, that is, whether the explanation can withstand logical scrutiny. Chadwick-Helmuth Co., Inc., B-279621.2, Aug. 17, 1998, 98-2 CPD ¶ 44 at 3.
With respect to the requirement for a single manufacturer for the computers and monitors, the agency states that it has a legitimate need to standardize its information technology requirements. Legal Memorandum at 5. Specifically, the agency states that standardization will lower the agency’s operational costs and will provide a common environment, generally seen as a best practice. Id. In addition to lower costs, the agency lists a number of other benefits, including: streamlining maintenance and parts support for the computers,
143 The agency amended the RFQ to provide that the ruggedized laptop could be “from a different manufacture-brand.” RFQ amend. 1, at 1. 144 NCS disputes this assessment, asserting that it cannot fulfill all the requirements. 145 NCS also initially protested a requirement that the vendors’ quoted products have a “strong market presence” and the RFQ’s failure to state whether the agency would evaluate the price of vendors’ quoted optional equipment. The agency responded that it would amend the solicitation to state that FSS 70 vendors were deemed to posses a strong market presence, and to include Federal Acquisition Regulation (FAR) clause 52.217-3, Evaluation Exclusive of Options.
82
simplifying field support, reducing deployment time and costs, providing a single point of contact for repair and support services, and obtaining predictable warranty response times. See Id. at 6; see also Contracting Officer’s Statement at 3-4.
NCS disputes the agency’s assertion that standardizing computers and monitors to one manufacturer results in lower costs or other tangible benefits to the agency. NCS points out, for example, that the solicited monitors are standard LCD monitors, which are built by numerous manufacturers to industry standards and which are interoperable with all computer brands. NCS asserts that this requirement achieves nothing more than administrative convenience for the agency. Protester’s Comments at 2.
Here, we find that the record does not contain analyses or documentation supporting the agency’s justification for its standardization requirement. That is, in support of this requirement, the agency has provided a statement from an information technology project manager, who generally asserts that standardizing the computers and monitors to a single manufacturer reduces costs and provides other benefits, such that a single manufacturer for all the computers and monitors is a legitimate need of the agency.146 See AR, Tab 6, Decl. of Information Technology Project Manager, at 1-2. The project manager does not, however, identify any analyses or studies that were performed to determine that this standardization requirement was necessary to obtain the asserted benefits; nor does the project manager provide any explanation or analyses that would show the extent to which these claimed benefits would be achieved by this restriction.147 In sum, the agency has provided nothing more than unsupported conclusions for its claim that the single manufacturer restriction is necessary. Without some documentation or explanation in the record to show that the restriction on competition will achieve the alleged benefits, we are unable to find that the agency’s asserted justification for this restriction is reasonable.148 See e-LYNXX Corp., B-292761, Dec. 3, 2003, 2003 CPD ¶ 219 at 8 (it is a fundamental principle of government accountability that an agency be able to produce a sufficient record to allow for a meaningful review where its procurement actions are challenged); Navajo Nation Oil & Gas Co., B-261329, Sept. 14, 1995, 95-2 CPD ¶ 133 at 6-7 (agency’s justification for restriction is not adequate where the justification consists of unsubstantiated factual assertions and conclusory statements).
NCS also challenges the requirement that all of the computers use Intel-based microprocessors. See RFQ, appendix B, client device specification. NCS contends that other microprocessors, such as Advanced Micro Devices (AMD) microprocessors, are of equal functionality and are “interoperable” with the same information technology systems for which the Intel processors are specified. Protest at 5.
ICE responds that the DHS has “not approved” the use of AMD equivalent microprocessors, and that AMD products are “not on the First Source Approved Hardware List.” ICE states that it does “not have authority to change [information technology] systems/components that
146 The agency also provides the declaration of another agency project manager who states generally that before establishing requirements “for a purchase of this nature” the project manager considers the needs and requirements of the user and that this was done here. See AR, Tab 11, Decl. of Project Manager, at 1. This statement also does not provide an explanation or analysis supporting the agency claimed need for a single manufacturer for all the computers and monitors. 147 The information technology project manager does state that, after his office created the draft specifications, market research was done for the purpose of determining whether there were manufacturers that could satisfy the agency’s draft requirements. He does not state, however, that this market research was done to determine the agency’s legitimate needs. AR, Tab 6, Decl. of Information Technology Project Manager, at 1. 148 The agency also argues that because ICE is a law enforcement agency this requirement concerns national security and is vital to the performance of the agency’s mission. Given the absence of analysis as to what is actually required to meet the agency’s needs, we have no basis to accept the agency’s statement that the one manufacturer requirement is necessary for national security or law enforcement reasons.
83
have been approved by DHS.”149 Supp. AR at 5. The agency also contends that “AMD chipsets introduce increased security risks to ICE,” and that DHS/ICE security departments have found the risk unacceptable. Id.
As with the requirement for a single manufacturer, the agency has provided no analyses or studies, either from ICE or DHS, supporting its claimed need for Intel-based microprocessors. In this regard, the agency also does not explain the significance of a processor being included on the “First Source Approved Hardware List,” or how a vendor can have its microprocessor or other hardware device included on this list.150 Given our recommendation to consider whether the requirement for a single manufacture reflects the agency’s legitimate needs, we think the agency should also review its requirement for an Intel-based microprocessor.
Finally, NCS challenges the requirement that vendors provide third party reviews of their quoted computers and monitors to establish reliability of the equipment. NCS contends that this requirement is ambiguous, given that the requirement for “average or above in reliability” lacks specificity, and the phrase’s meaning may vary from one 3rd party reviewer to the next. Protester’s Supplemental Comments at 4. The agency responds that this requirement is not unduly restrictive, inasmuch as the agency does not specify particular third party reviewers that must be provided. The agency also contends that there is nothing ambiguous about stating that equipment must obtain an average or above rating in reliability. Supp. AR at 6.
While we do not view this issue as a separate basis for sustaining this protest, the agency may wish to reconsider this requirement. As the protester points out, the phrase “average or above in reliability” is unclear to the meaning of both “average or above” and “reliability,” as the meaning of these words vary depending upon the reviewer. In this regard, there is no objective standard specified to identify what the agency considers to be average reliability.
RECOMMENDATION
We recommend that the agency review its requirements for a single manufacturer and Intel-based microprocessors to determine whether these requirements reflect the agency’s legitimate needs. To the extent that this analysis results in a change in the agency’s determination of its needs, the agency should amend the RFQ and allow vendors, such as NCS, to submit quotations. We further recommend that the agency reimburse the protester the costs of filing pursuing its protest, including reasonable attorneys’ fees. The protester’s certified claim for costs, detailing the time expended and the costs incurred on this issue, must be submitted to the agency within 60 days of receiving this decision. 4 C.F.R. § 21.8(f)(1).
The protest is sustained.
Lynn H. Gibson Acting General Counsel
149 The agency contends that NCS will not suffer any competitive prejudice from this requirement, because NCS offers computers on its FSS contract with Intel–based microprocessors. NCS responds that this requirement will prevent it from offering the bulk of its products. 150 As noted above, although the agency solicited First Source contract holders, issuance of the blanket purchase agreement was limited to vendors with a FSS 70 contract.
84
Sample decision of United States Government Accountability Office – No. 2
Decision Matter of: C.L. Price & Associates, Inc. File: B-403435 Date: January 7, 2011 Carl L. Price, Jr. for the protester. David L. Bell, Esq., Department of the Navy, for the agency. Noah B. Bleicher, Esq., Paul. N. Wengert, Esq., and Sharon L. Larkin, Esq., Office of the General Counsel, GAO, participated in the preparation of the decision. DIGEST 1. Protest that agency failed to consider whether the awardees’ prices were unrealistically or unreasonably low is denied where solicitation provided for the award of a fixed-price contract and realism analysis was not required, and the agency reasonably determined, using appropriate price analysis techniques, that prices were fair and reasonable. 2. Protest challenging the agency’s evaluation of the protester’s corporate experience is denied where the agency reasonably determined that the protester lacked desired infrastructure experience. DECISION
C.L. Price & Associates, Inc., of Newport, North Carolina, protests the award of multiple contracts issued by the Department of the Navy, Naval Facilities Engineering Command, under request for proposals (RFP) No. N40085-09-R-5308 for general construction services to be performed at the Marine Corps Base Camp Lejeune, Marine Corps Air Station Cherry Point, and outlying bases in North Carolina. C.L. Price challenges the agency’s evaluation of price and corporate experience.
We deny the protest.
BACKGROUND
On May 15, 2009, the Navy issued the RFP in order to select vendors for Multiple Award Construction Contracts (MACC) to provide a variety of general construction services including, for example, new construction, building renovation, and installation of a variety of infrastructure systems. The RFP anticipated that the successful vendors each would receive an indefinite-delivery, indefinite-quantity contract for a 1-year base period with four 1-year option periods. RFP at 3-5, 8. The total estimated construction cost for all of the awards under this RFP was not to exceed $450,000,000. Contracting Officer’s Statement, Oct. 7, 2010, at 1.
85
The RFP announced that awards would be made to the offerors whose proposals provided the best value to the government, based on technical and price factors, with the technical factors being “approximately equal” to the price factor. Id. The solicitation identified three equally-weighted technical factors (corporate experience, past performance, and safety) and stated that price would be evaluated on the basis of a cumulative price for all line items in the solicitation for a “seed project.” Id. at 52. The seed project was to replace windows in one of the buildings at the Marine Corps Base in Camp Lejuene. Id. The RFP provided that, at the time of the initial awards, one vendor would also receive a fixed-priced task order for the seed project. The RFP reserved the initial task order for the offeror whose proposal represented the best value to the government for the seed project. Thereafter, additional fixed-price task orders for construction projects would be competed among the MACC holders, typically on a lowest-priced/technically-acceptable basis. Id. at 8.
In response to the RFP, the agency received 67 proposals, including the protester’s. The agency evaluated the proposals and assigned adjectival ratings of excellent, good, satisfactory, marginal, and poor for each technical factor. Twelve offerors’ proposals, which received ratings of good or better overall, and ratings of good or better for each individual technical factor, were included in the competitive range. The protester’s proposal was not included in the competitive range because it received a rating of satisfactory under the corporate experience factor. Contracting Officer’s Statement, Oct. 7, 2010, at 2.
C.L. Price filed a timely protest with our office on August 3, 2010, challenging the exclusion of its proposal from the competitive range. In response, the agency took corrective action by reevaluating proposals and adding three proposals, including the protester’s, to the competitive range. In implementing this corrective action, the agency raised C.L. Price’s proposal rating from satisfactory to good under the corporate experience factor. As a result of the agency’s corrective action, our Office dismissed the protest on August 11.
Thereafter, the agency held discussions with the 15 offerors whose proposals were in the competitive range, and sought and evaluated final proposal revisions. The final evaluation ratings reflect that 3 proposals received overall excellent ratings and 12 proposals (including C.L. Price’s proposal) received overall good ratings. Final proposal prices for the seed project ranged from $137,000 to $560,000; the independent government estimate (IGE) was $271,094 and the median proposal price was $241,975. The protester’s proposed price of $248,000 was the ninth-lowest in price, and was 11 percent, or $28,000, higher than the next lowest-priced proposal. Agency Report (AR), Tab 4, Business Clearance Memorandum, at 8, 16, 20.
The agency determined that the seven lowest-priced proposals in the competitive range provided the best value to the government.151 The agency awarded MACCs to the offerors who submitted these proposals, and it awarded the seed project task order to the offeror among those seven who submitted the lowest-priced proposal, after determining that the lowest-priced proposal represented the best value to the government. Id. at 25-26.
On September 15, C.L. Price was notified that its proposal was not selected for award. After requesting and receiving a debriefing, C.L. Price filed this protest.
151 Two of these proposals received overall excellent ratings, and five received overall good ratings. AR, Tab 5, Business Clearance Memorandum, at 16, 25.
86
DISCUSSION
The protester contends that the agency accepted unreasonably low prices and that the technical evaluation was flawed.
With respect to the price evaluation, the protester contends that the agency “fail[ed] to fulfill the responsibility to assure realistic and reasonable pricing.” Protest at 2. It argues that the awardees’ prices are “artificially low” and “predatory.” Id. The protester complains that the awardees’ offers “to do the job at little or no profit . . . is a conscious attempt to exclude competitors from the seed project and entire [MACC] program,” Comments at 1-2, and that awarding C.L. Price a contract would “guarantee balance” and “provide increased value to the Government.” Protest at 3. The protester asserts that the fact that the government estimate was higher than the awardees’ prices is further evidence that the government “ignored the issues of reasonableness and realism.” Comments at 2.
As noted above, the awards in this procurement were based on the evaluation of a fixed-price seed project. Although an agency is required to determine that offered prices are fair and reasonable before awarding a fixed-price contract, Federal Acquisition Regulation (FAR) § 15.402(a), the purpose of a price reasonableness evaluation in a fixed-price environment is to determine whether prices are too high, as opposed to too low, because it is the contractor and not the government that bears the risk that an offeror’s low price will not be adequate to meet the costs of performance. Sterling Servs., Inc., B-291625, B-291626, Jan. 14, 2003, 2003 CPD ¶ 26 at 3. Arguments that an agency did not perform an appropriate analysis to determine whether prices are too low, such that there may be a risk of poor performance, concern price realism. SDV Solutions, Inc., B-402309, Feb. 1, 2010, 2010 CPD ¶ 48 at 4. However, a price realism evaluation is not required where, as here, the solicitation provides for the award of a fixed-price contract and does not include a requirement for price realism.152 Id. Thus, the protester’s assertion that the agency failed to perform a realism analysis or consider whether the awardees’ prices are too low does not provide a basis to sustain the protest.
With regard to an agency’s obligation to ensure fair and reasonable pricing in awarding fixed-price contracts, the FAR permits the use of various price analysis techniques and procedures, including the comparison of proposed prices received in response to the solicitation to each other or to an independent government estimate. FAR § 15.404-1(b)(2); Comprehensive Health Servs., Inc., B-310553, Dec. 27, 2007, 2008 CPD ¶ 9 at 8. In fact, agencies may rely upon adequate price competition alone to assess price reasonableness. See FAR § 15.404-1(b)(2)(i); Patriot Taxiway Indus., Inc., B-403690, Dec. 6, 2010, 2010 CPD ¶ __ at 7.
Here, the agency compared offerors’ proposed prices to the IGE, to the other prices received, and to the median proposal price of the offerors in the competitive range. AR, Tab 4, Business Clearance Memorandum, at 8. The agency did not, however, view the IGE as the best basis of comparison of fair and reasonable pricing, given that offerors were encouraged to provide their lowest possible prices on the seed project in order to receive a MACC and be eligible for further task orders.153 Id. at 9. The agency instead determined that the “significant extent of competition” was a better comparison tool to establish fair and reasonable pricing.
152 The RFP here incorporated a standard provision stating that if a cost realism analysis is performed the source selection authority could consider cost realism in evaluating performance or schedule risk. RFP at 12 (incorporating FAR § 52.215-1(f)(9)). However, a cost realism analysis was not performed, and was not required to be performed here, since the RFP requested fixed-price proposals. 153 The agency, however, did view the IGE as an indicator of whether prices were unrealistically high. AR, Tab 4, Business Clearance Memorandum, at 9.
87
Id. The record shows that the awardees’ proposed prices for the seed project ranged from $137,000 to $220,000, all of which were below the IGE and the median proposed price. Id. at 8. Based on the adequacy of price competition, these prices were found to be fair and reasonable. Id. at 9, 12. In addition, the agency found the protester’s proposed price of $248,000 to be fair and reasonable, even though it was 11 percent higher than the highest-priced proposal selected for award and 2.5 percent higher than the median price.154 4 Id. at 8, 12. Based on this record and the fact that there was adequate price competition, we find nothing improper in the agency’s determination that the awardees’ and the protesters’ proposed prices were fair and reasonable.
C.L. Price also complains that its proposal should have received a rating of excellent, rather than good, under the corporate experience factor. Comments at 3. The protester contends that the good rating was “unjustified,” “unrealistically low,” and “reflects an unreasonable interpretation of the Rating Scheme” set forth in the RFP.155 Id.; Protest at 3-5.
The evaluation of technical proposals is generally a matter within the agency’s discretion. METAG Insaat Ticaret A.S., B-401844, Dec. 4, 2009, 2010 CPD ¶ 86 at 4. Our Office will review a challenge to an agency’s evaluation only to determine whether the agency acted reasonably and in accord with the solicitation’s evaluation factors and applicable procurement statutes and regulations. Manassas Travel, Inc., B-294867.3, May 3, 2005, 2005 CPD ¶ 113 at 2-3. A protester’s mere disagreement with the agency’s evaluation does not establish that the evaluation was unreasonable. Id. at 3.
With regard to the corporate experience factor, the RFP required offerors to demonstrate experience in “new construction, demolition, repair, and interior/exterior alteration/renovation of buildings, systems and infrastructure” valued between $100,000 and $5,000,000. RFP at 49. According to the solicitation, more weight would be given in the evaluation to proposals that demonstrated (1) experience performing as the prime contactor, (2) experience working simultaneously on several relevant projects, and/or (3) experience performing a diversified range of general construction projects. Id.
As noted above, C.L. Price’s proposal was rated good under the corporate experience factor and good overall. The proposal did not receive an excellent rating under the corporate experience factor, however, due to the protester’s lack of infrastructure work experience. AR, Tab 4, Business Clearance Memorandum, at 14. As the agency explains, C.L. Price demonstrated relevant experience with new construction, renovation, and related site work, but lacked experience with “municipal-type infrastructure” of the type required by the RFP. Contracting Officer’s Statement, Oct. 13, 2010, at 1. The agency gave the proposal credit for relevant corporate experience and assessed the proposal strengths because C.L. Price had acted as a prime contractor and performed projects concurrently; however, the agency determined that the company’s lack of experience with municipal-type infrastructure prevented the proposal from receiving an excellent rating under the corporate experience factor. Id.; AR, Tab 4, Business Clearance Memorandum, at 14; AR, Tab 3, Technical Evaluation Board Report, at 16. Although the protester disagrees with the agency’s analysis
154 During discussions, the protester was advised that its “price is below the median price received from the offerors in the competitive range.” Protest, exh. 4, Discussion Letter, at 1. In response, C.L. Price revised its initial proposed price of $246,100 upwards to $248,000. To the extent that the protester asserts that discussions were misleading, see Protest at 3, the record does not support this contention. The discussion letter did not request or encourage the protester to raise its price, and merely mentioned the protester’s price standing relative to the median price of the proposals received. 155 The protester generally asserts that it has more experience than the awardees and that its proposal was not given the “same level of consideration” in the evaluation. Comments at 3; Protest at 4. However, we find no evidence of unequal treatment in the record, and the protester has not presented persuasive evidence to call into question the ratings assigned to the awardees’ proposals.
88
and continues to argue that it has extensive and excellent experience, it has not shown that the agency’s evaluation conclusions, which were based on the criteria stated in the RFP, were unreasonable.156
The protest is denied.
Lynn H. Gibson Acting General Counsel
156 C.L. Price also protests the evaluation of its past performance, contending that the agency only considered responses from four of five past performance references it identified in its proposal. Comments at 4. However, the RFP placed the burden on the offeror to ensure that references responded to the agency’s performance questionnaires, and here only four of the protester’s references responded. Under these circumstances, we find that the agency’s past performance evaluation was unobjectionable. See American Floor Consultants, Inc., B 294530.7, June 15, 2006, 2006 CPD ¶ 97 at 3-5.
89
