A losing bidder for a contract to provide surveys for the retrofitting of hundreds of thousands of properties throughout Ireland has failed to get a High Court order requiring the winning bidder to disclose its lower and confidential pricing structure.
The contract, which was awarded by the Sustainable Energy Authority of Ireland (SEAI), is set to last up to five years and is estimated to be worth €75 million. The services include building energy ratings (BERs), surveys and inspections.
The contract is currently held by Kerrigan Sheanon Newman Unlimited Company (KSN) which has been supplying the services to the SEAI since 2012.
A new public procurement process was held recently in which the SEAI awarded the contract to the Abtran firm last June.
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KSN then brought High Court proceedings against the SEAI, with Abtran as notice party, challenging the award.
It claimed the Abtran tender was too low, pointing out that it was 30 per cent lower than the price currently being paid to KSN for the service.
The SEAI disputes KSN’s claims.
In the run up to the hearing of the case, KSN sought discovery of documents and materials from the SEAI in relation to the Abtran tender.
In a judgment, Mr Justice Michael Twomey refused the discovery sought. He said KSN did not provide compelling arguments to justify the “very significant encroachment on the confidentiality of a winning tenderer’s bid”.
The court therefore had “little hesitation” in refusing the application for the disclosure of Abtran’s pricing information.
He also refused a request that a director of KSN be entitled to access to the confidential information as part of a “confidentiality ring” of lawyers who are normally the only people allowed to have such access in these cases.
The judge said in cases such as these, one has to balance, on the one hand, the interests of a losing tenderer in seeking to discover evidence that will support his/her claim that a particular procurement process was unlawful.
On the other hand, there is the much broader and very serious undermining effect it would have on competition and public procurement generally, if losing tenderers could have access to the highly sensitive pricing information of their competitors by just putting in a legal challenge such as this.
The court believed there would have to be “a very compelling set of circumstances for the losing tenderer” for the balance to fall in favour of the one-off challenge to a procurement process and against the public interest in protecting the integrity of procurement as a whole, he said.
That public interest was particularly so in relation to the need to encourage participants to be completely open with a State body regarding their most sensitive and confidential information, in order to achieve the most competitive tender, he said.
Earlier, the judge said one of the central issues was the interpretation of the “statement of requirements”, as laid down by the procurement process.
KSN claimed the reason Abtran’s price was apparently abnormally low was because Abtran quotes for BER, inspection and survey services during one site visit rather than separately, and this was not permitted by the statement of requirements. The interpretation of the statement of requirements will be a matter for the judge hearing the full case, Mr Justice Twomey said.
The question of whether disclosure of pricing structure would be damaging to Abtran was “vividly illustrated” by the approach KSN itself took when it tendered for the 2011 contract and won, he said. In refusing to disclose that information then, KSN director Michael Slevin said it would be damaging to KSN if it was disclosed, the judge said.
“It seems clear to this court that there is a high bar to cross when it comes to disclosing the pricing structure of a winning tenderer who has competitively won a tender, particularly where the losing tenderer alleges that it was underbid by a tender price that was too low/too competitive,” he said.
The court concluded that the case law makes clear that a court should only disclose this information where it is absolutely necessary to achieve a just resolution of the proceedings.
If KSN was successful in getting this information, it is likely that Abtran and KSN would have to tender again, but this time KSN would have the “inside track” regarding how Abtran structures its pricing, he said.
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