When can the negotiated procedure be used?

Background

In May 2020, the Municipality of Albertslund ("MA") launched a call for tenders for a number of framework agreements concerning artisan services, including plumbing and heating, carpentry, electricity, ventilation, and sewer work as a negotiated procedure.

It was stated in the tender conditions that the purpose of the negotiations was to allow the tenderers to optimise their offers, to ensure compliant offers and to further specify the specification of requirements.   

In February 2021, MA decided to award the five framework agreements. Subsequently, three undertakings, Albertslund Tømrer og Snedker A/S, VVS & Varmeteknik A/S and HRH EL A/S, individually filed complaints with the Danish Complaints Board for Public Procurement (the "Complaints Board"), claiming that MA had used the negotiated procedure contrary to the rules of the Danish Public Procurement Act, as the conditions for using this procedure were not fulfilled.  

During the complaints proceedings, MA stated that the procurement had been completed as a negotiated procedure in accordance with section 61(1)(i)(a) of the Danish Public Procurement Act (the need to adapt solutions already available) and 61(1)(i)(d) (not possible to define the technical specifications with sufficient precision by reference to a standard, a European Technical Assessment, a common technical specification or a technical reference).

The Danish Complaints Board for Public Procurement's decision

The Complaints Board's decision was made by an extended complaints board consisting of four members. The majority found that it was contrary to the Danish Public Procurement Act that MA used the negotiated procedure when calling for tenders for the framework agreements on artisan services. 

The majority stated that the negotiated procedure is an exception to the ordinary procedures. Therefore, the conditions for using the negotiated procedure should be interpreted restrictively. 

The contracting authority has the burden of proof in regard to whether the conditions for using the negotiated procedure are fulfilled. As for the burden of proof, the majority established that an increased burden of proof applies when the procurement concerns a framework agreement and not the performance of a specific task, for instance a specific IT or building project. The majority further stated that even though the contracting authority is not obligated to state the reason for using the negotiated procedure in the tender documents, it may be ascribed evidentiary significance if the contracting authority does not announce it until the complaints proceedings. 

The majority then stated with respect to the interpretation of section 61(1)(i)(a) and (d) that - in light of the underlying provisions of the directives - they should be interpreted to the effect that a negotiated procedure cannot be used "unless a procedure without negotiation most likely cannot lead to a satisfactory result", and that a negotiated procedure cannot be used either "in connection with calls for tenders for standard services or goods that may be supplied by many different operators in the market". 

Specifically in relation to MA, the majority found that MA had not discharged the burden for proof for the conditions for using the negotiated procedure being fulfilled. MA had not stated which specific services legitimated that the procurement was completed as a negotiated procedure. Therefore, MA had not proved any real need for adapting already available solutions. In addition, the services were described as "common" work in the tender documents. Nor had MA proved that the purpose of the tender was to cover special requirements which necessitated adaptions of already available solutions.

The fact that the tenderers had an opportunity to optimise tenders and that it was ensured in connection with the negotiations that the tenderers submitted compliant offers could not lead to any other assessment. According to the majority, another result would imply a very wide interpretation of the provision.
 

Plesner's comments

The decision demonstrates that the negotiated procedure still constitutes an exception to the ordinary procedures, and that the conditions for using the procedure should, therefore, be interpreted restrictively. 

With this decision, the Complaints Board has further specified that the conditions for using a negotiated procedure are subject to a stricter interpretation in regard to framework agreements. As mentioned, the contracting authority is not obligated to state in the tender documents, the reasons as to why the negotiated procedure is used, but it may be a good idea to ensure written documentation for the contracting authority's reflections on this before launching of the call for tenders. 

 Read the Complaints Board for Public Procurement's decision (in Danish)