European Dynamics will be awarded compensation by the Office for Harmonisation in the Internal Market (OHIM) after OHIM applied more weight to certain scoring sub-criteria than it had advertised it would.
This was a procurement by a European Union body and consequently subject to European procurement rules reflecting the treaty (Article 89(1) of Council Regulation 1605/2002). Nonetheless the principles are likely to be broadly aligned with UK procurements.
European Dynamics was ranked third in a competition for a framework agreement. However, it sought an annulment of the decision when it discovered that it had been ranked second in relation to points scored for the five award criterion relating to quality and also for its financial bid.
The Court emphasised that a ‘contracting authority cannot apply a weighting of sub-criteria which it had not previously brought to the tenderers’ attention’ and as the OHIM had given a more significant weight to two of the sub-criteria, it had breached the principles of equal treatment and transparency. The sub-criteria weighting and ‘lack of precision in the tender specifications’ were held to be ‘manifest errors of assessment’.
The OHIM's award decision had failed 'to provide sufficient reasons for the purposes of Article 296 TFEU' and so as 'a result of the errors of substance and form committed by OHIM, the award decision must be annulled in full.' Despite the contracting authority's broad discretion in awarding the contract, European Dynamics will now be compensated for the loss of opportunity which constituted an 'actual and certain harm.' The loss will be assessed by the Court if the parties cannot agree it and will be reduced to reflect the uncertainty about whether European Dynamics would have fared better had the assessment been correctly undertaken.
This case underlines the need to ensure that the application of criteria and sub-criteria must be described clearly and fully in the process documentation and that approach followed.
Patrick Parkin and Hannah Craig are members of Burges Salmon's procurement team.