Challenges for Participants in Procurement-Tender Procedures
October 16, 2024Author: Roeland Zwanikken
Article 47 of the Comptabiliteitsverordening(1) (legislation that has to do with the accounting and budgeting procedures of Government), stipulates that if government invests in projects or goods and services, it must follow a procurement procedure, unless the amount involved is less than ANG 50.000, = (goods and services) or less than ANG 150.000, =(2) (projects).
Please note: not only government, but also private entities and/or government-owned companies can organize tender procedures.
If you participate in a tender procedure, you have to invest a lot of time and money to comply with the tender conditions and submit a detailed proposal, without the assurance that the assignment or work will be granted or allotted to you. Therefore, you have an interest that you will be treated in a fair manner. In general, participants in a procurement procedure desire and expect that the principles of transparency and equality will be applied and that objective standards will determine the final result.
Of course, it is very frustrating if the assignment is not granted to you, especially if you have the impression that preferential treatment was given to one of the other participants and/or that subjective reasons played an important role in the decision of the contracting party.
Does the law protect you against unfair treatment, and if so to what extent?
Based on the law, while negotiating, parties must act in accordance with the requirements of reasonability and fairness(3). In addition, based on art. 3:14 CC, a right to which government is entitled pursuant to private law, may not be exercised contrary to the written or unwritten rules of public law.
Based on the above, while negotiating, government must, in principle, act in a transparent and integrous manner and apply general principles of proper corporate governance. This means that, in principle, the principles of equality and transparency must be applied, as well as rules of good corporate governance. In addition, unfair competition and/or the granting of certain privileges to one participant in the tender procedure (but not to another) must be avoided.
To assess whether the principles of equality and transparency have been applied, one will first look at the procurement conditions. The contracting party must explain (i) how it will assess the submitted bids and (ii) which criteria it will apply to choose the winning bid and award the assignment.
If government acts in conflict with its own tender conditions, disadvantaged participants in the procurement may have a claim against government and/or can take legal action (in an effort) to prevent government from entering into an agreement with the party it chose and/or executing an existing agreement. Alternatively, the disadvantaged party can claim damages.
Private Entities
As stated, based on art. 3:14 CC, government is always obliged to apply the principles of equality and transparency. If a private entity organizes a tender procedure, these principles may also apply, but not in all cases. It depends on whether participants in the bidding procedure can reasonably expect that the contracting party will apply the principles of equality and transparency and, for that reason, it will not disappoint the participants in that expectation (on which they relied). Whether the expectation is raised depends on the procurement conditions and the other circumstances of the case, which includes the capacity of the parties involved(4).
From a formal point of view, the following is noteworthy.
In a European court case, known as Grossman(5), the court established that a pro-active attitude from a participant can be expected. This is to avoid unnecessary delays due to possible omissions and defects in the procedure (that can be rectified easily). Based on the ruling in this case, it can be expected from a participant, that if he has objections against the manner the procedure is executed, he must notify the contracting party of his objections as soon as (reasonably) possible. If he fails to notify the contracting party of defects in the procedure and/or about his objection in a timely manner, he forfeits his right to complain at a later point of time.
The above is known as the so-called Grossmann defense and this rule is applied in Sint Maarten (and Curacao) court cases. The rule tries to avoid that a disappointed (read: non-winning) participant in a tender procedure will complain about procedural defects and omissions after he knows that the assignment will not be granted to him.
If you have questions about your rights in a procurement procedure, the attorneys of BZSE Attorneys of law|Tax lawyers, are happy to guide and advise you.
Sint Maarten, March 21, 2023
Roeland Zwanikken
Partner of BZSE Attorneys at Law|Tax Lawyers
(1) AB 2010, GT no. 23.
(2) Approximately US $84 K.
(3) Art. 6.2 CC.
(4) HR 4 april 2003, LJN AF2830, NJ 2004/35, m.nt. M.A.M.C. Berg (RZG/ComforMed)).
(5) HvJ EG 12 februari 2004,ECLI:EU:C:2004:93.
More articles →
Please note: not only government, but also private entities and/or government-owned companies can organize tender procedures.
If you participate in a tender procedure, you have to invest a lot of time and money to comply with the tender conditions and submit a detailed proposal, without the assurance that the assignment or work will be granted or allotted to you. Therefore, you have an interest that you will be treated in a fair manner. In general, participants in a procurement procedure desire and expect that the principles of transparency and equality will be applied and that objective standards will determine the final result.
Of course, it is very frustrating if the assignment is not granted to you, especially if you have the impression that preferential treatment was given to one of the other participants and/or that subjective reasons played an important role in the decision of the contracting party.
Does the law protect you against unfair treatment, and if so to what extent?
Based on the law, while negotiating, parties must act in accordance with the requirements of reasonability and fairness(3). In addition, based on art. 3:14 CC, a right to which government is entitled pursuant to private law, may not be exercised contrary to the written or unwritten rules of public law.
Based on the above, while negotiating, government must, in principle, act in a transparent and integrous manner and apply general principles of proper corporate governance. This means that, in principle, the principles of equality and transparency must be applied, as well as rules of good corporate governance. In addition, unfair competition and/or the granting of certain privileges to one participant in the tender procedure (but not to another) must be avoided.
To assess whether the principles of equality and transparency have been applied, one will first look at the procurement conditions. The contracting party must explain (i) how it will assess the submitted bids and (ii) which criteria it will apply to choose the winning bid and award the assignment.
If government acts in conflict with its own tender conditions, disadvantaged participants in the procurement may have a claim against government and/or can take legal action (in an effort) to prevent government from entering into an agreement with the party it chose and/or executing an existing agreement. Alternatively, the disadvantaged party can claim damages.
Private Entities
As stated, based on art. 3:14 CC, government is always obliged to apply the principles of equality and transparency. If a private entity organizes a tender procedure, these principles may also apply, but not in all cases. It depends on whether participants in the bidding procedure can reasonably expect that the contracting party will apply the principles of equality and transparency and, for that reason, it will not disappoint the participants in that expectation (on which they relied). Whether the expectation is raised depends on the procurement conditions and the other circumstances of the case, which includes the capacity of the parties involved(4).
From a formal point of view, the following is noteworthy.
In a European court case, known as Grossman(5), the court established that a pro-active attitude from a participant can be expected. This is to avoid unnecessary delays due to possible omissions and defects in the procedure (that can be rectified easily). Based on the ruling in this case, it can be expected from a participant, that if he has objections against the manner the procedure is executed, he must notify the contracting party of his objections as soon as (reasonably) possible. If he fails to notify the contracting party of defects in the procedure and/or about his objection in a timely manner, he forfeits his right to complain at a later point of time.
The above is known as the so-called Grossmann defense and this rule is applied in Sint Maarten (and Curacao) court cases. The rule tries to avoid that a disappointed (read: non-winning) participant in a tender procedure will complain about procedural defects and omissions after he knows that the assignment will not be granted to him.
If you have questions about your rights in a procurement procedure, the attorneys of BZSE Attorneys of law|Tax lawyers, are happy to guide and advise you.
Sint Maarten, March 21, 2023
Roeland Zwanikken
Partner of BZSE Attorneys at Law|Tax Lawyers
(1) AB 2010, GT no. 23.
(2) Approximately US $84 K.
(3) Art. 6.2 CC.
(4) HR 4 april 2003, LJN AF2830, NJ 2004/35, m.nt. M.A.M.C. Berg (RZG/ComforMed)).
(5) HvJ EG 12 februari 2004,ECLI:EU:C:2004:93.
More articles →
