Precise reading of tender documents rewarded!

The Municipality of Gooise Meren (“Municipality”) has initiated a European public tender procedure in the market for security services at reception sites for Ukrainian refugees. The Municipality intends to award the contract to an (anonymous) intervening party. HD Security Services B.V. (“HD”) is currently performing security services at this site and came second in the new tender procedure. HD believes that the intervening party's tender violates the tender documents and is abnormally low. The Central Netherlands District Court dismissed the claims.

Conflict with tender documents

The Municipality's tender documents require tenderers to offer all-in hourly rates, which must include all costs required to meet the Schedule of Requirements, among others. The Schedule of Requirements states that the contractor must apply the Collective Labour Agreement for Private Security (“CLA”). It follows from Article 20 of the CLA that the intervening party must take over 11 employees from HD (as the letting party) and enter into an employment contract with them.

The intervening party submitted a tender with an hourly rate of EUR 34.98. According to HD, this rate is contrary to the tender documents. HD considers this rate to be too low because of the increasing wage costs related to the employees to be taken over, the dry cleaning costs under the CLA and the travel allowance to be paid. The intervening party says it can apply this rate because it will not deploy these workers on the present assignment from the Municipality, but on another assignment where a higher margin is applied. Moreover, the employees it plans to deploy on the assignment are in a lower salary scale. According to the interim relief judge, HD did not sufficiently substantiate that the workers should be deployed on this specific assignment and did not sufficiently challenge the explanations of the intervening party about the other costs. The Municipality therefore did not have to reject the tender.

Abnormally low tender

In addition, HD finds the hourly rate of intervening party abnormally low. An abnormally low tender exists if the price is (well) below the market price or other bids. According to the Sopra Steria judgment, a contracting authority must go through two steps to assess whether this is the case. What is important here is that the contracting authority has broad authority to determine when there is an abnormally low tender.

First, the contracting authority must make a preliminary assessment as to whether the price offered appears abnormally low. If there are no indications to that effect, it may proceed with the contract award. However, if such indications do exist, the contracting authority must carry out a more detailed examination of the price level. In that context, the tenderer must be given the opportunity to demonstrate that its price is not abnormally low. This detailed assessment must also be conducted if a losing bidder requests the contracting authority to provide reasons for not qualifying the selected tender as abnormally low.

The Municipality presented HD's objections on the level of the hourly rate to the intervening party, after which the intervening party again raised the aforementioned defences. Following a request by HD, the Municipality conducted a second and third investigation. This did not lead to a change in its view on the intervening party's tender. The interim relief judge therefore dismissed HD's claims.

Practical takeaways

Two practical takeaways can be distilled from this judgment:

1. No conflict with tender documents: the winning tenderer can apply a lower all-in hourly rate by a careful reading of the tender documents. The tender documents did not state that the workers to be taken over actually had to be assigned to the contract in question. The tender price in this case could be lowered by an accurate reading of the documents.
2. Abnormally low price: the losing bidder has to prove with clear and strong evidence that a tender is abnormally low. The contracting authority may then be required to conduct further investigations into the tender.