In a welcome and much anticipated interpretation of Cyprus law, the Cyprus Administrative Court has clarified that in proceedings before the Tender Review Authority (the TRA) where the remedies sought include the grant of an order for rendering ineffective a signed contract between the contracting authority and a successful tenderer, such successful tenderer has the right to participate and be heard in the course of the TRA proceedings.
The facts
In the consolidated cases 274/2022 and 275/2022 between NCR (Cyprus) Ltd v Tender Review Authority, the Administrative Court was called to decide a novel point of law as to the rights of a successful tenderer to participate and be heard in the course of the TRA proceedings.
NCR (Cyprus) Ltd (NCR) was awarded a tender by the Department of Information Technology Services (the DITS) pursuant to a negotiated procedure without prior publication. The particular process was followed due to the fact that the tender involved the provision of specific products (due to the fact that such products were also provided before) and the fact that NCR was the exclusive representative of the specific brand of products in the Cyprus market. On these grounds, DITS formed the view that no other company could have reasonably tendered and that it was appropriate to engage with NCR through a negotiated procedure without prior publication. Given that this decision was not challenged within the timeframe allowed by the law, DITS and NCR signed a contract on 22 October 2021 and the relevant notifications to the Public Procurement System were effected.
Subsequently, IBM Italia S.p.A (IBM) and NewCytech Business Solutions Limited (NewCytech) challenged this decision before the TRA and requested that the TRA declares the contract ineffective on the ground that the justification given by DITS for resorting to a negotiated procedure without prior publication was insufficient. NCR sought to intervene in those proceedings, however the TRA rejected the request, citing its typical practice not to allow successful tenders to be parties before the TRA proceedings. On the merits of the challenge and without NCR being allowed to participate in the proceedings, the TRA disagreed with the DITS and agreed with IBM/NewCytech, determining that the reasons put forward by DITS for following a negotiated procedure without prior publication did not adequately justify the use of this exceptional process. Accordingly, it made an order and declared the contract between DITS and NCR as prospectively ineffective, in accordance with Article 27(a) of the Law on Procedures for Appeals in the Field of Public Procurement Contracts of 2010 (L.104(I)/2010).
NCR challenged the decision of the TRA before the Cyprus Administrative Court for a number of reasons, including the ground of being denied to participate and be heard before the TRA.
The legal issue
The issue related to the right to be heard before the TRA was decided by the Cyprus Supreme Court in the Review Appeal 20/2006, G.P. Iron & Wood Makers Ltd v Government of Cyprus. In the said case, the Cyprus Supreme Court held that successful bidders do not have locus standi before the TRA proceedings before such successful bidders simply have a legal expectation to be awarded a contract and their rights, prior to the determination of the matter by the TRA, do not yet crystallise. Therefore, the proper parties before the TRA proceedings are only the bidders who challenge the award (as applicants) and the contracting authority who is defending its decision to award the contract to the successful bidder (as respondent). The successful bidder does not have locus standi in the said proceedings.
The TRA devoutly and consistently followed this practice ever since 2008 and it did so not only in cases where the contract between the successful bidder and the contracting authority was not yet signed but, also, in cases where the contracting authority had already signed the contract with the successful bidder. Hence, the issue before the Cyprus Administrative Court was, in essence, whether the ratio decidendi of the G.P. Iron & Wood Makers Ltd would extend in cases where the contracting authority had already signed the contract with the successful bidder or whether this set of facts should be distinguished and a different process should be followed, by allowing the successful bidder who has now converted into a contracting party to participate and be heard in the TRA proceedings.
The decision
The Cyprus Administrative Court agreed with NCR and held that the rule in G.P. Iron & Wood Makers Ltd would not apply in circumstances where the contracting authority had already signed the contract with the successful bidder. The Cyprus Administrative Court explained that when a party contracts with an authority, it is no longer in the same position as an economic operator to whom a tender has been awarded but with whom a contract has not yet been concluded. There are solid grounds to distinguish between an awarded party that has signed a contract from one that has not.
Citing section 43 of the Law on General Principles of Administrative Law (L.158(I)/99), the Cyprus Administrative Court concluded that the right to be heard is granted where a decision adversely affects a person and, in the circumstances, a successful tenderer who has signed a contract had already vested contractual rights, which could not have been modified without such person been given the right to be heard. The Cyprus Administrative Court ultimately agreed that NCR should have been granted the right to participate and express its views on the matter prior to the decision being made and that the decision of the TRA not to grant her a right to participate and be heard was wrong and should be cancelled.
Importance of the decision
The decision of the Cyprus Administrative Court is a welcome interpretation of the law on the rights of parties to participate before the TRA proceedings. It does not affect the solid practice of the TRA not to allow successful tenderers (pre-contract stage) to participate before the TRA but it does change a 15 year practice that extended this non participation rule also in cases where the successful tenderer had already signed a contract (post-contract stage). In the latter instance, it is now clear that the successful tenderer (and contracting party) has a right to participate and be heard before the TRA, especially in instances where the remedies sought by the TRA include an order for rendering ineffective the signed contract.
The decision bolsters the importance of the right to be heard in administrative proceedings, which is at the heart of European legal principles. It clarifies and underscores the fundamental importance of affording the right to a prior hearing in administrative proceedings, especially in the domain of procurement law. It establishes a precedent that ensures fair and informed decisions by emphasising that affected parties should have the opportunity to express their views before administrative bodies when their rights or interests are affected, contributing to a more equitable and just administrative process.
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