Legal Briefing

E-tendering

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Technology, Media and Telecoms | 01 May 2010

On 24 March 2010, the Office of Government Commerce (OGC) published guidance (‘Implementing e-tendering’ (the Guidance)) on the implementation of e-tendering as part of the public procurement process. The release of the Guidance comes at a time when, in light of the current economic climate, Alistair Darlings’ spending cut targets in the 2010 Budget and the recent general election, saving money is a priority for the government.

E-tendering is one way in which the public sector can reduce the costs of the procurement process and drive down costs of government suppliers by promoting competition among tenderers. However, the benefits of e-tendering may be limited by European legislation, which aims to promote an open and competitive supply marketplace, but contains strict rules that govern the procedures concerning the award of public contracts.

The release of the Guidance comes in the wake of the Glover Review, which recommended that:

  • the government should issue all tender documentation electronically by 2010;
  • businesses should be permitted to tender electronically for all public sector contracts by 2010; and
  • the whole tendering process should be electronic by 2012.

Further, the use of e-tendering solutions is an enabler of the European i2010 eGovernment Action Plan, which aims to ensure all public administrations across Europe have the capability of carrying out 100% of their procurement electronically (where legally permissible). Member states are committed to this target.

What is e-tendering?

At a basic level, e-tendering solutions provide a platform for suppliers to access invitations to tender (ITT) and other associated tender documents electronically, and allow them to return their completed bid documents securely. Returned tender documents are then automatically released to authorised staff in the procuring organisation, after the closing date for submission.

More complex e-tendering solutions offer the capability to assist in contract notice creation, foster collaborative work in producing ITTs and associated documents, and provide a forum for suppliers and the procuring organisation to request and clarify information. Some platforms host evaluation tools that can assist in the management and control of the tender evaluation and award process, which arguably pushes the boundaries of e-tendering towards a complete e-procurement solution.

benefits of e-tendering

The Guidance advises that procuring public organisations should see several benefits in using e-tendering, which offers advantages over the traditional procurement process, with the ultimate aim of securing value for money from goods and services purchased. Further, in the current economic climate, the advantages of e-tendering for both the public sector and potential suppliers are more pertinent than ever.

Public organisations

Advantages include reductions in:

  • tender cycle times;
  • timescales under public procurement rules;
  • time and cost of distributing tender documents; and
  • time and cost of receipt, recording, and distribution of tender responses.

Improvements will be found in:

  • speed and accuracy of prequalification and evaluation;
  • speed and ease of response to queries from all suppliers during the tendering process;
  • transparency and integrity of audit trail;
  • provision of management information; and
  • storage and archiving of tender documentation.

Suppliers

Advantages include reductions in:

  • tendering costs;
  • time on completing tender responses;
  • overheads on printing, copying, collating and postage services;
  • lead times; and
  • response times for sharing information with the procuring authority.

Such perceived benefits and savings should enable the government to achieve some of the £11bn savings in public spending across Whitehall that was announced in the 2010 Budget.

Public procurement rules

The level of savings may, however, be limited by the rules governing public sector procurement. Directive 2004/18/EC, which outlines the procedures for the award of public sector contracts, has been implemented in England and Wales by the Public Contract Regulations 2006 (the 2006 Regulations), and many public sector contracts will be governed by them.

E-tendering is subject to the same requirements under the 2006 Regulations as procurement activities carried out through traditional paper-based methods (Regulation 44 (1)). The 2006 Regulations require that, if an e-tendering solution is used, tenders submitted electronically must be stored in a way that ensures the integrity of the data is maintained and that the tender can only be accessed after the time limit for the submission of tenders has expired (Regulation 44 (3)). Submission of a tender by e-mail will not conform to the 2006 Regulations unless technical means are implemented to stop those with access to the receiving electronic mailbox from opening tenders before time limits have expired.

The 2006 Regulations also provide that, where a public sector procurer requires bidders to use an e-tendering solution, the equipment used must be non-discriminatory, generally available, and interoperable with information and communication technology products in general use (Regulation 44 (4)). Although the 2006 Regulations provide no definition as to the meaning of ‘generally available’ or information technology ‘in general use’, the Guidance advises that this could be achieved through use of passwords and/or token-protected access to a secure internet site, only requiring the supplier to need internet access from a standard computer.

Contracting authorities are required to ensure that:

  • any e-tendering system will not allow tender material to be accessed before the due date and time;
  • only authorised persons can access the material;
  • any authorised access is detected and recorded; and
  • the opening of tenders requires more than one authorised person (Regulation 44 (5)).

It is these requirements that prevent a public body from merely requesting bidders to submit tenders by e-mail, as most e-mail platforms do not provide these extra tracking and security capabilities. Therefore, when implementing an e-tendering solution, public bodies should be careful to ensure it meets the criteria laid out in the public procurement rules.

The Public Contracts (Amendments) Regulations 2009, which came into force in the England and Wales on 20 December 2009, implement the European Remedies Directive 2007/66/EC by amending the 2006 Regulations in relation to the process for notifying bidders after a procuring authority has decided which supplier should be awarded a contract. The new provisions in the 2009 Regulations, which apply to contract award procedures that commenced after 20 December 2009, state that contracting authorities must issue an award decision notice to tenderers that includes:

  • the award criteria;
  • the reasons for the decisions, including the characteristics and relative advantages of the successful tender;
  • the score obtained by the recipient and the operator to be awarded the contract; and
  • the successful operator’s name.

Public sector authorities will therefore need to consider the requirements of the 2009 Regulations and ensure that an e-tendering solution meets these provisions, so that they are not susceptible to challenges relating to unfair contract awards.

Comment

While the advantages of rolling out e-tendering across the public sector in terms of the efficiencies and savings it will enable cannot be underestimated, the public procurement rules will need to be observed, and the additional hurdles could inhibit the adoption and impact of e-tendering solutions.

To comply with the legislation, contracting authorities will have to implement specialised e-tendering platforms and not just maintain an ‘electronic mailbox’. Whether such platforms need to be bespoke or an ‘off-the-shelf’ solution will depend on the requirements of the public body involved.

The Guidance is available on the OGC’s website at http://www.ogc.gov.uk/documents/e-tendering_guidance.pdf.