Revocation of a public tender

It is justified for reasons of public interest provided it does not violate the principles of good administration

The revocation of a public tender is a serious act and the facts leading to such a decision must be stated to allow judicial review. It is possible to revoke a legal administrative act even if a good amount of time has passed since its issuance, provided it is justified for reasons of public interest and by the principles of good administration and good faith.

Such a decision must be reasoned and take into account that in the meantime rights and favourable situations have been created for interested persons. Annulment of the award of the tender by the tender review authority is not an excuse for an administrative authority to revoke the tender without a reason and any recommendation made by the audit office should not replace the decisive competence of the authority. Decisions of the administration are reviewed by the administrative court.

A relevant judgment was issued by the Supreme Court on June 14 in a Revisional Appeal, whereby it upheld the decision of the court of first instance. The case concerned the revocation of a tender by an administrative authority conducted by an open procedure and with the criterion of awarding the bid with the lowest price.

Seven bids were submitted for the undertaking of the project, of which five were found to be out of the specifications of the tender. The evaluation committee of the authority, after the intervention of the audit office, re-evaluated this, deciding that all bidders met the required specifications and awarded the tender.

The two affected bidders filed hierarchical recourses before the tender review authority with a positive outcome, the tender award was annulled, since the bid violated an essential condition of the tender and since the evaluation committee, after the audit office’s intervention, did not evaluate which deviations from the conditions were significant and which were not. The authority decided to revoke the tender and publish again with improved terms and divided into more than one tender for the purpose of easier evaluation.

The bidder who had been selected filed a recourse against the decision of the authority to revoke the tender, with a successful outcome. The authority then filed an appeal against, arguing that the revocation of the tender was fully reasoned and substantiated. Moreover, it argued that the complexity and volume of the tender made the evaluation not only too difficult, but also unreliable and so the revocation was inevitable.

The Supreme Court did not accept the grounds of the appeal, finding that the justification given by the authority was incomplete and not legal. Its argument that the revocation and intention to publish new tenders would make evaluation easier and more reliable was unfounded. The decision of the tender review authority did not constitute an unpredictable event and the authority’s decision did not serve the public interest. The court pointed out that it is a well-established case law that the exercise of such power is subject to restrictions set by the general principles of administrative law, case law and good faith.

The special and serious reasons for which a tender is annulled or revoked, the Supreme Court stated, must serve the public interest, which is not a concept above the law, but is defined within the framework of the constitution and laws. The decision must be justified with reference to the facts, in order to reveal the reasoning and allow its judicial review. So, the authority’s decision was deemed illegal and the Supreme Court dismissed its appeal.

George Coucounis is a lawyer practising in Larnaca and the founder of George Coucounis LLC, Advocates & Legal Consultants, [email protected]