Damages awarded to unsuccessful tenderer
In a decision by the Danish Complaints Board for Public Procurement of 7 June 2019, an unsuccessful tenderer was awarded expectation damages. The contracting entity failed to make it probable that the contracting entity would have cancelled the tender if the contracting entity had been aware of the fact that the winning offer was non-compliant.
As Pankas submitted the next best offer, Pankas subsequently claimed expectation damages (i.e. loss of profit). The decision by the Danish Complaints Board for Public Procurement of 7 June 2019 concerns the issue of damages.
Initially, the Complaints Board established that MoH had acted in a manner giving rise to liability towards Pankas by awarding the contract to a tenderer whose ofer should have been rejected due to non-compliance with the contract conditions.
Following this, the Complaints Board stated that MoH was responsible for making it probable that MoH would have cancelled the tender if MoH had been aware of the fact that the offer submitted by SR-Gruppen was not in compliance with the contract conditions. The Complaints Board found that MoH had not made this probable/, as MoH had only stated that MoH had no obligation to contract and that MoH was therefore not obliged to accept Pankas' offer.
Consequently, the Complaints Board allowed Pankas' claim for damages. Due to uncertainties regarding the possibilities of realising the intended profit, the Complaints Board set the damages by estimate at DKK 600,000.
Plesner’s comments
It follows from case law of the Danish Complaints Board for Public Procurement that a contracting entity is not obliged to pay damages to an unsuccessful tenderer, as long as the contracting entity makes it probable that it would have cancelled the tender if the winning offer would prove not to be in compliance with the contract conditions. The decision is an example of a situation in which the contracting entity has failed to make this probable. The decision determines that it is not sufficient for the contracting entity only to refer to the fact that it has no obligation to contract.
An example of a situation in which the contracting entity has successfully made it probable to be willing to cancel a tender, is found in the decision by the Danish Complaints Board for Public Procurement of 28 February 2019, Aarsleff Rail A/S against the Municipality of Viborg. In this case, the contracting entity proved that the tender would have been cancelled if the complainant had been awarded the contract as the complainant’s offer constituted a budgetary overrun.
Read the decision by the Danish Complaints Board for Public Procurement (in Danish)
