A well-prepared procurement procedure does not exclude a highly complex procurement dispute in VAKO and in court.
The dispute over the procurement of Estonian Railway Company „Modernization of the Traffic Management System of the West-Harju Railway Lines“ was one of the most complicated, longest and in-depth procurement disputes ever taken place in Estonia. It can be said that the facts of the dispute were ascertained not less methodically than in the John Kennedy assassination story, as every conceivable and impossible aspect of the successful bid, including compliance, cost, qualification and non-elimination, was disputed.
In this case, we successfully represented Mipro Oy, a winning tenderer from the Republic of Finland, whose tender was below the estimated value of the contract by as much as 11 million Euros. Thanks to the efficient cooperation with the client and attorney-at-law, Mipro finally got the contract and thus achieved the desired result.
If the estimated value of the tender is 28 million Euros and the participants bid at approximately the same level and scale of cost, the dispute will certainly arise if the successful bidder’s bid is “only” EUR 16.5 million. Of course, one of the main arguments of the litigant regarding this difference in price is that the successful bid is abnormally low.
Abnormally low tender
In the present case, this main argument was not affirmed in the dispute proceedings. The contracting authority had carried out a thorough inspection before deciding to award the tender and was convinced that the successful tender was not unreasonably low. Mipro proved that it had done a great job when preparing the offer and carefully calculated the offered price. As the tendered solution and its application did not yet exist, the complainant’s claims were not satisfied and all the expert opinions claiming non-compliance of the bid and the price with the terms of the procurement were overridden.
Recognition of foreign education
In addition to the eligibility of tenders, qualification was disputed. At first, just to be safe and after obtaining the qualification documents already in full. The biggest problem in this case was the higher education of the Finnish engineer, which was acquired before the education reform there in the 1990s. According to the complainant, the engineer-trained specialist did not have a proper higher education. The Estonian courts agreed with the opinion of the contracting authority and the successful tenderer that the ENIC / Naric unit certificate is not the only document certifying higher education and that the recognized definition of higher education in Finland should be taken into account.
Conflict of interest
It is a very rare occasion that a dispute with a ‚pending contract‘ is accepted to the proceedings of the Supreme Court. In the present case, however, the issue of conflict of interest raised in the matter was of interest to the Supreme Court. In particular, the applicant alleged that the person who had briefly consulted the contracting authority about 2 years ago was associated with Mipro and had designed the tender materials to be beneficial for Mipro. Indeed, the Supreme Court decision stated that any distortion of competition should be avoided and that all tenderers should be treated equally. In the course of the new hearing in the district court, Estonian Railway Company and Mipro asserted sufficiently, that the consultant did not actually prepare the procurement materials and that all tenderers were guaranteed equal opportunities.
Extraordinarily long duration of interim relief
The implicit assumption that even in case of a longest dispute the tender contract will be finalized within 6-8 months has been refuted by this precedent dispute. The dispute lasted for a total of 10 months, and although the appeals were ultimately unsuccessful, the interim relief of prohibition to conclude the contract remained in effect until the final judgment of the District Court on 28.06.2018.
The secret to success
The secret to a successful procurement dispute lies in a carefully conducted procurement procedure. In a situation where the contracting authority has conducted a thorough procurement procedure and the successful tenderer has carefully prepared the tender, the prospects of success in the dispute are very good. Secondly, and as in case of any dispute, a close and thorough cooperation between the lawyer and the client is of utmost importance – in current case it was excellent.