Imprecise Terms of Reference – a problem for the Contracting Authority!

A very interesting ruling was announced by the Regional Court in Gdansk on 10 July 2015 (file reference number I C 2/15).

Ambiguous definition of the method of calculating the price in the Terms of Reference.

The Contracting Authority placed a notice of a public procurement procedure for the provision of certain services. In the contents of the Terms of Reference, it defined the method of calculating the price for the service. However, the method was so imprecise and unclear that each of the three bidders calculated the price in a different manner.

The Contracting Authority rejected the offers of two bidders due to the incorrect calculation of the service price, and selected the offer submitted by the third bidder.

The Chairman of the Public Procurement Office decided that this situation was unlawful and brought an action for annulment of the concluded contract.

Contractors cannot suffer negative consequences of errors in the Terms of Reference.

The Court upheld the decision of the Chairman of the Public Procurement Office, and indicated that the contents and provisions of the Terms of Reference should be clear and precise, and should not raise any interpretation doubts.

Most importantly, the Court prescribed that in the case of any doubts or unclear provisions in the Terms of Reference “they should be decided in favour of contractors who may not suffer negative effects of their incompliance with unclear and wrongly formulated provisions of the Terms of Reference”.

In the justification of its ruling, the Court stated that a bid may not be rejected due to improper calculation of the price if the same was attributable solely to the Contracting Authority and the manner of preparation of the Terms of Reference allowing for errors in the price calculation.

The Court expressly upheld the opinion demonstrated by the Chairman of the Public Procurement Office by stating that given the fact that all the offers had been prepared on the basis of the Terms of Reference, and each of them was in compliance with one of the price calculation interpretation options – there were no grounds for rejecting two of the three offers.

Interpretation doubts should be ruled in favour of contractors.

This ruling is a clear statement that imprecise and ambiguous Terms of Reference constitute a flagrant violation of laws, and result in consequences which may not be accepted from the point of view of public procurement.

By issuing the ruling, the Court has further supported the opinion that Contractors should be treated as a less privileged party in relationship with the Contracting Authority in the public procurement process, and therefore any doubts arising from Terms of Reference should be ruled in their favour.