Incumbent advantage and equal treatment: lessons from CORDIS

Every re-tendering of a live IT system starts from an imbalance. The contractor that built and operates the system knows its architecture, its code, its data and its weak points; the other candidates know what the tender specifications say. EU law does not ask the contracting authority to abolish that difference. It asks the authority to stop the difference from deciding the outcome. The judgment of the Court of First Instance of 12 March 2008 in Case T-345/03, Evropaïki Dynamiki v Commission, in which JuriSpectrum's founding partner acted for the applicant, remains the reference point for where that obligation begins and where it ends.

The CORDIS tender

CORDIS is the Commission's Community Research and Development Information Service. In 2002 the Commission launched call for tenders ENTR/02/055 to renew the services supporting it. Lot 2 covered the development and maintenance of the service, which meant that the successful tenderer would take over applications built and run by the incumbent contractor. Evropaïki Dynamiki tendered for Lot 2. By decision of 16 July 2003 the Commission rejected its tender and awarded the contract to another tenderer.

The applicant's central complaint was about information. The technical documentation describing the existing system had been in the incumbent's possession throughout. The other tenderers depended on the Commission to release it, and the Commission did so only in part and only late in the tendering period, leaving them little time to reflect it in a tender that had to price the take-over and further development of a running service.

What the Court held

The Court began with principles it has restated in every procurement case since. Equal treatment requires that all tenderers have the same chances when formulating their tenders, which implies that the tenders of all competitors are subject to the same conditions. Transparency, its corollary, requires that all information relevant to a proper understanding of the invitation to tender be made available, as soon as possible, to every undertaking taking part, so that reasonably informed tenderers can interpret it in the same way.

Applied to an incumbent, those principles cut in both directions. The Court accepted that the incumbent's familiarity with the existing system is an inherent advantage which the contracting authority cannot be required to neutralise completely. But where the incumbent holds information that the other tenderers need in order to prepare a competitive tender, and that information is available to the authority, the authority must place it at the disposal of all tenderers, and in time for it to be of use.

On the facts the Court found that the Commission had not met that standard, and it did not require the applicant to prove that it would otherwise have won. It was enough that the information withheld or released late was capable of influencing the content of the tenders and that the applicant had been placed in a less favourable position than a competitor with full access to it. The award decision was annulled and the Commission was ordered to pay the costs.

What a contracting authority must disclose

The practical rule that emerges is short. Before the tendering period opens, the authority must identify what a newcomer would need to know about the existing system in order to compete on the merits: architecture, interfaces, volumes, licences, documentation and, where tenderers are expected to maintain existing applications, the source code or an equivalent technical description. It must release that material to every tenderer at the same time, ideally with the specifications rather than on request. If information becomes available only during the procedure, the deadline must be extended so that the late release does not itself become the inequality. The same logic is now written into Article 41 of Directive 2014/24 for national procurement, which requires authorities to take appropriate measures, including the communication of relevant information to the other candidates and adequate time limits, where a tenderer has been involved in preparing the procedure.

What a bidder should ask for

• Use the question-and-answer phase to ask, in writing and item by item, for the documentation of the existing system needed to price take-over and maintenance.
• Ask expressly whether the incumbent holds information not contained in the tender file, and when the authority intends to release it.
• If material arrives late, ask in writing for an extension of the deadline and keep the refusal.
• Document internally, at the time, how the missing information affected your technical solution and your price.

Preserving the challenge

An information asymmetry raised for the first time after the award decision is a weaker case than one raised during the procedure. A tenderer that submits in silence invites the argument that it accepted the conditions of the competition. The written questions, the dates on which answers and documents were received, and any refused extension are the file on which an action will be built. Once the rejection letter arrives, the time limits are unforgiving: the action for annulment must be lodged before the General Court within two months of notification, and the request for the characteristics and relative advantages of the successful tender should be made within the fifteen days provided for by the Financial Regulation. Damages for the lost opportunity are a separate claim, with a five-year limitation period running from the rejection decision (Case C-469/11 P), and require proof that a lawful procedure would have ended differently. Annulment requires only that the competition was not equal.

The incumbent may know more. What it may not do is compete against tenderers who were denied, or given too late, what the authority could have shared.

This article is provided for general information only and does not constitute legal advice. It reflects the law and the authors' views at the date of publication. For advice on a specific situation, please contact the firm.