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What could be more important in a contract than price? And what, therefore, could be more important in the decision to award a public contract? Often, the answer is, "nothing".
So it is not surprising that losing bidders for public sector contracts often ask for details of the price offered by the winning bidder. The latest decision from the Court of Justice of the EU will help both public authorities and bidders deal with such requests.
Public authorities are understandably sometimes reluctant to supply pricing information, being concerned to protect confidential information and not to damage the commercial interests of the successful supplier or of the authority. Indeed, I see a variety of responses, such as (A) absolute refusal to supply any information about the price, (B) providing a price range, (C) providing a formula showing how the pricing score was calculated or (D) agreeing to provide the total price that the authority is paying.
Notwithstanding these concerns, authorities must act transparently and provide a significant amount of information to unsuccessful bidders as part of the standstill requirements. This includes providing scores in relation to each award criterion and explaining the reasons for the award decision. Bidders will often say that this can only properly be done if the authority gives details of the successful bidder's price and pricing score.
This question of how authorities should reconcile standstill requirements with confidentiality and the protection of commercial interests was answered last week by the Court of Justice of the EU in the Veloss v European Parliament decision. This case appears to apply to English authorities just as much as to EU institutions.
In brief, the authority must provide the price of the successful bidder, particularly in circumstances where pricing was a significant part of the evaluation (in Veloss, 40% of the total marks).
The Court of Justice made clear that even in cases where the unsuccessful bidder knows the precise formula for calculating pricing scores and can therefore reverse-engineer the total price of the winner, the authority must also disclose the actual total price. The reason is that it enables the unsuccessful bidder to check that the authority has not made any maths errors when applying the pricing formula.
This formulation does not surprise me. It is in keeping with the (now rather dated) OGC FOI (Civil Procurement) Policy and Guidance which says that tendering information received from successful bidders including total tender price should generally be disclosed once the authority has selected the successful bidder (effectively from the start of standstill).
If there are various separate elements of the pricing evaluation (for example, separate scores for the price of mobilisation and for each of phases 1 and 2), then there seems to be a strong case for disclosing the separate prices for those elements, applying the Court of Justice's logic in Veloss.
By contrast, it will be a relief to successful bidders and authorities alike that the restrictions on disclosure set out in the OGC guidance have not been eroded: whilst authorities should disclose the total price, they are likely to withhold price breakdowns, financial models, cash flow models, costing information such as profit margins, day rates and overheads.
I personally hope that in future the greater clarity will mean that bidders and authorities waste less time and cost arguing over these matters. Total cost of the winning bidder should be routinely disclosed. Detailed breakdowns should not.
For more information, please contact me on +44 (0)1392 411221 or [email protected]
