Sooner or later any party involved in a tendering procedure is faced with it: a discussion about the tendering guidelines, an appendix, the summary of additional information, or the agreement ultimately reached. To what experience does the reference requirement in question relate? And does a reference to one customer suffice? What is meant by “completion” and a “day”? And what do “all-inclusive” and “agreed rates” mean? What is meant by “solution time”: does it start the moment a report is filed or the moment the report is handled? All of these are practical questions that have been raised over the years and that cannot always be avoided.
Legal proceedings are sometimes required to decide how such terms must be interpreted. Such a decision is made on the basis of the collective bargaining agreement (CBA) standard. The objective literal wording of the provisions is conclusive, rather than the parties’ subjective intentions.
This blog addresses the significance of the CBA standard in practice on the basis of a recent judgment. This judgment also demonstrates what consequences such questions may have. A number of practical tips and tools are provided at the end of this blog.
The CBA standard explained
The CBA standard owes its name to the Gerritse/HAS judgment in which the Dutch Supreme Court found, for the first time, that “in principle, the CBA’s wording, read in the light of the text as a whole, is conclusive” in interpreting the CBA. The CBA standard has been declared applicable not only to the CBA, but also to other types of contract, including tender documents.
In public procurement law two situations must be distinguished in this regard: the interpretation of tender documents during and after the tendering procedure. In light of the principle of transparency, the contracting authority is required to formulate the conditions and requirements of a tender in a “clear, precise and unambiguous manner”. The contracting authority's intentions may be taken into account only if they are clearly apparent from the tender documents. The CBA standard is and remains the guiding principle: the textual and grammatical interpretation of provisions is conclusive in the interpretation of tender documents.
The situation is different if a dispute arises regarding the performance of an agreement concluded after the tendering procedure. An agreement is a bilateral juridical act, which means that the parties’ intention should also be considered when interpreting its provisions (known in Netherlands as the Haviltex standard). Courts that are requested to interpret an agreement entered into after a tendering procedure often apply an “intermediate form” that contains aspects of both the Haviltex standard and the CBA standard. For example, in a case from 2009, the court ruled: “It must be taken into account that the Agreement was entered into as a result of a tendering procedure; the aforesaid Haviltex standard must therefore be placed in a procurement law context.”
A ruling of the Court of Appeal of 2013 was based on a similar method: “the Court of Appeal therefore applies an objectified Haviltex standard in interpreting the Agreement.”
Application of the CBA standard in practice
A recent judgment centred on a European call for tenders issued by the municipality of Utrecht for the construction of bus shelters, among other things. The tender documents included the requirement: “the seat element may not rest on the floor of the bus shelter, but must be mounted to the structure.”
JCDecaux Nederland (the claimant) and Reclame Bureau Limburg (RBL) both submitted a tender: the municipality ultimately awarded the contract to RBL, JCDecaux came second.
Once the contract had been awarded and the shelters had been constructed, it became apparent that one of the seats of RBL's bus shelter rested at least partly on the ground and was therefore not entirely wall-mounted. JCDecaux objected and argued that RBL’s bus shelter did not meet the requirement set out in the tender documents. In the municipality’s opinion that type of shelter was compliant, however, because the seat element was mounted to the structure and therefore rested on the floor as little as possible. The court was therefore required to interpret the requirement set out in the tender documents and ultimately had to decide whether the winning tender should have been declared invalid.
In this case, the court applied an objective standard in interpreting the requirement in question in the tender documents. It found that RBL’s bus shelter did not meet the requirement in the tender documents and should therefore have been declared invalid during the tendering procedure. The municipality had therefore acted wrongfully towards JCDecaux: it should have declared RBL’s tender invalid and awarded the contract to JCDecaux. The municipality was ordered to reimburse the loss incurred and to be incurred by JCDecaux: “If no wrongful act had been committed, the municipality would have entered into the concession agreement with JCDecaux, as set out in paragraph 4.18, and JCDecaux would have generated turnover which it is now losing out on.”
Tips and tools
Disputes increasingly relate to the dotting of the i's and crossing of the t's in the interpretation of tender documents. The interpretation of a core competence or a requirement can easily make the difference between the contract being awarded to one tenderer or another.
Our advice to contracting authorities is therefore: be clear and unequivocal when drawing up tender documentation, particularly when formulating the requirements and conditions. Specify exactly what you want and why you want it. Precisely because in principle courts do not take the parties’ intentions into account in the event of a dispute, those intentions must be clearly and unequivocally explained in the tender documents. It is of course also essential to include a sound forfeiture of rights clause in the contract.
We advise tenderers to carefully examine the requirements and conditions included in the tender documents and whether they can comply with them. Furthermore, in the event of doubt or lack of clarity, it is important to present questions to the contracting authority. That way any questions and ambiguities can be clarified in good time. As the judgment addressed in this blog demonstrates, failure to clarify obscure wording may have major consequences. Moreover, we recommend bearing competitors in mind when studying the tender documents. Are they able to meet the requirements? Also in the case of a strict interpretation? That way a tenderer can influence the possible inclusion of competitors in the procedure.
More information on sustainable procurement by a contracting authority or other party and on tendering for a contract can be found at www.innovatiepartnerschap.info.
