Time for new rules of evidence in public procurement cases – unreasonable demands on complaining suppliers

All contracting authorities are required to comply with the procurement rules when buying services and goods. The total value of public procurement contracts is approximately SEK 600 billion annually. The scope of public procurement spans everything from pencils to complex technical solutions. Accordingly, there is a great deal of variation in the requirements of different procurement documentation. The contracting authorities are therefore facing a varying task when checking that a tender meets all the requirements specified in the tender documentation.

When procuring medical devices, the contracting authorities often need products with advanced product features. In these situations, the contracting authority usually sets out extensive technical requirements that the products provided must meet. It is, of course, essential that the products procured actually meet these requirements. Failure to comply with the requirements could bring devastating consequences at a later date when the products are used on patients.

We have noticed that the contracting authority is often content with a confirmation from the bidder that its products meet the requirements in the procurement tender documentation. This confirmation is often made in the tender by simply ticking a box that says “yes, the product complies with the requirements” or by providing a description of the product.

A recurring situation is that a bidder who has not been awarded the contract initiates proceedings to have the procurement process reviewed on the basis that the winning bidder’s product does not meet the requirements set out in the procurement documentation. In these situations, the court must decide whether or not the winning bidder’s product does meet those requirements.

This situation occurred in the following case. A county council procured a specific medical device. The winning bidder had confirmed in its tender that its product met a specific technical requirement and had also provided a description of how the requirement was met. Another bidder initiated court proceedings and claimed that the winning bidder’s product in fact did not meet that specific requirement.

In support of its claim, the claimant presented various product studies that explained why the winning bidder’s product did not meet the requirement. Furthermore, a detailed explanation was submitted as to why the winning bidder’s confirmation was not valid.

The Administrative Court dismissed the claimant’s application based on the fact that the winning bidder had “stated that it complied with current mandatory requirements” and that the winning bidder had “satisfactorily explained how the requirement was fulfilled”.

After the agreement between the county council and the winning bidder was signed, the winning bidder issued a safety notice. According to the notice, the products that had been called into question in the court proceedings did not meet the requirements set out in the procurement documentation. The question thus arises as to how the Administrative Court could have come to the conclusion it did. In the above example, and in similar situations, the court must decide whether a product meets a certain requirement. In this regard, the issue regarding burden of proof is of significance.

The first issue that the court must consider is which party should bear what is known as the burden of proof, i.e. which party should provide the evidence supporting a particular claim. Neither the procurement legislation nor the administrative procedural legislation contains any provisions on how the burden of proof should be allocated in this situation. So what have the courts stated? Initially it should be noted that there is no precedent from the Supreme Administrative Court. However, the Administrative Court of Appeal has touched on the issue in some cases.

One quotation that has been repeated in judgments from both the Administrative Courts and Administrative Courts of Appeal is from the Administrative Court of Appeal in Gothenburg in Case No. 6092-13 where it stated: “Should a court order rectification, a complaining supplier must clearly have proved that the contracting authority has misjudged a bid or considered irrelevant matters. As regards claims which by nature are such that it is not possible to assess their reliability without any technical or other particular expertise, it is the supplier’s responsibility to prove its claims by means of expert evidence or otherwise.”

This implies that the burden of proof lies entirely on the complaining supplier. In practice, this means that a contracting authority’s obligation to check a tender is considerably restricted and may be limited to confirming that a box has been ticked. A supplier who questions whether the ticking accurately reflects reality must produce substantial evidence to support this.

Furthermore, the above quotation does not offer any guidance as to what evidence the complaining supplier must submit. Our experience is also that it is difficult for the complaining supplier to obtain substantial evidence, especially since it is the product owner who has possession of the relevant product information.

Our opinion is that this allocation of the burden of proof makes unreasonable demands on complaining suppliers. Furthermore, we believe that the consequence of this could be that contracting authorities may procure defective products. There is also a risk that any judicial review will be close to illusory.

Equally, we understand that contracting authorities’ procurements are regularly reviewed and that it would be administratively unmanageable for the authorities to produce full proof that the products procured meet specified requirements as soon as proceedings have been initiated.

We therefore propose that the burden of proof should be allocated equally between the complaining supplier and the contracting authority. Should the complaining supplier show that there are grounds for its claim, the burden of proof should be transferred to the contracting authority, which must then demonstrate that it acted properly in accepting the product.

Such “transferable” burden of proof also has support in legal precedent. The Administrative Court of Appeal in Jönköping stated in Case No. 1667-14 that the evidence adduced by the complaining supplier suggested that “there was at least reason to question whether the [winning bidder’s] product met the current mandatory requirement”. In that situation, the court considered that the contracting authority had to provide support of its decision to accept the product. We are convinced that a transferable burden of proof would benefit the quality of the procurement contracts awarded and that at the same time the administrative burden on contracting authorities during the reviews would be kept at a reasonable level.