Public E-Procurement

24 May 2006

Debora Stella, Francesco Fulgoni

The Italian Council of State - the highest Italian administrative court - has recently issued a decision (Consiglio di Stato, sez. V, n. 5181/2005) focusing on the rules governing the public e-procurement of software and ways to limit the risks of software products becoming out of date during an e-procurement. This decision has been made in the context and in accordance with the principles stated in the Directive 2004/18/CE (the “Procurement Directive”) (implemented in Italy with the Italian Legislative Decree no. 163/2006, in force from 1 July 2006).

The decision clarifies that a public body, when putting out an invitation to tender, can legitimately specify not only its technical requirements at the time an invitation to tender is released but can also include a provision in the invitation to tender which requires bidders to take account and put forward in their tenders of any technical updates made to the goods or services being procured in the period between the invitation to tender and the date on which tenders are submitted.

The case

This case in question involved a consortium of companies bidding in a public e-procurement procedure, who were provisionally awarded a public tender for the supply of a certain number of computers (hardware, software and optional services) to an Italian public body. However, after a formal evaluation of the consortium’s offer, the provisional award was withdrawn as it was found that their offer did not contain the most up-to-date version of the software specifically mentioned in the invitation to tender documentation. In fact, the consortium’s tender referred to software which was no longer on the market. The consortium’s tender was initially admitted to the public tender since the formal requirements to participate to the tender were fully satisfied; the provisional award was subsequently withdrawn due to the absence of an essential/substantial requirement of the tender that is the mention of the price of the product/software object of the public tender. The consortium did not mention it because the software was out of the market and it did not consider that a clause of the public tender provided the supply of the up-to-date version of such software.

The software in question was a particular product called “SW Ghost tipo I” in the version “Symantec Ghost 7.5 Corporate Edition”. The invitation to tender stated that the successful tender would have to incorporate the latest version of this software onto the hardware being procured.

The specific version of the software product mentioned in the invitation to tender had become unavailable by the time the submission of tenders was due. The consortium based its tender on the out-of-date version of the software and failed to specify the specific fees for this product whilst other bidders put forward the latest version with corresponding pricing. The invitation to tender contained the technical evolution provision (i.e. the requiring bidders to put forward the latest version available at the time of tender submission).

According to the Council of State, the consortium’s offer was correctly considered incomplete and consequently unacceptable by the public body. The Council of State went on to say that the unavailability of the particular version of the software specified in the invitation to tender should not invalidate the tender exercise and, in fact, the technical evolution provision ensured that this would not be the case.

Where a technical evolution provision is included in an invitation to tender, any technical requirements should be seen as the minimum technical and performance requirements of the product being procured. Provided that these minimum technical and performance requirements are satisfied, it is perfectly legitimate for a public body to accept a tender that includes additional features as well.

The effects of the technical evolution clause

This case confirms that public bodies, when conducting e-procurements, are permitted to include provisions in tender documentation which are aimed at allowing public bodies to take advantage of any developments in the market during the tender period.

In particular, the case stresses the suitability for public bodies of including the technical evolution provisions in all public e-procurements together with the detailed requirements of the products being procured. It does not make any difference and does not create unfairness that any version mentioned in the tender document is different from the latest version of the product available at the time tenders are due.

Thus, the bidders should consider in their tenders not only the technical requirements of any product mentioned in the tender documentation, but also any further technical evolutions made to the product in the period between release of the invitation to tender and submission of tenders.

Conclusion

Whilst we understand the rationale behind the decision to uphold the principal of technical evolution provisions, the facts of the case raise other procurement law issues.

In order to protect fair competition and non-discrimination among producers, the Procurement Directive requires that, when setting out technical requirements, a public body does so in a way that affords equal access to all suppliers and does not have the effect of creating unjustified obstacles to the opening up of public procurement to competition.

The Ministerial Circular dated 12 October 2005 which implements this principle prohibits any reference in the tender documentation to any products of a particular manufacturer, a particular origin, or obtained with any specific procedure where such a specification could have the effect of advantaging or excluding any producer. In this case, we question whether the reference to a particular piece of Symantec software is consistent with this principle.