Sacre bleu! Incumbents don’t always win big procurements…….

I'm delighted to say our guest writer, Toni Saraiva (more about him here), is back from a couple of months of travels with lots of interesting material about procurement across the EU and even wider.  So we'll be having regular posts from him over the forthcoming weeks - we'll start today with news from Paris...

An interesting story from France  - quite typical of things happening in the UK too - and should give some food for thought when firms think they are at a disadvantage against an incumbent company on the renewal of a contract.

What happened?

Paris City Council issued a tender for street lighting, monument lighting and traffic lights.  On 11th January the Council issued the award in favour of the ETDE group. ETDE group is a partnership of Bouygues, Satelec, Vinci  Energies and Aximum. The contract has been awarded for 10 years for the whole lot of activities.

The incumbent was a company called Citelum, a daughter company of EDF and Veolia working together.

Heavy hitters all over the place working in partnership to win a public sector contract. That in itself is interesting. Very often I speak with small businesses and encourage them to team up to be able to deal with the public sector contracts because very often they are to small on their own. Even the big companies do this and create new vehicles to carry the bid and the project.

What happened next?

EDF/Veolia were not very pleased and on 24th February they went to the Administrative courts in France to get the cancellation of the €800 million contract.

Their grounds were that Paris City Council did not inform the bidders on the obligation to move the staff working on the contract delivery over to the new contract. No mention of a TUPE style clause. How is that important to the point it should cancel the contract? Surely the City Council can decide whether or not to include a TUPE clause freely?


The second argument was based on the fact that the City Council did not break the tender into lots. This is an interesting one. The point that EDF/VEOLIA are making here is that the services to be provided can be separated, distinguished between each other and as a consequence should be divided into lots. It is either that, or they want a piece of the cake, how little or big it could be.  It could be a valid argument and the French have written in their public procurement act (code des marches publics) article 10, that to encourage competition, tenders should be divided into lots with a  few exceptions.

It sounds interesting - if EU public procurers are encouraged to divide their contracts into lots  it would be beneficial for small businesses involvement. EDF/VEOLIA are not really an SME, but I wonder if this challenge would have more legs if it was a group of SMEs putting in a claim, based on all the political influences going on around the EU?

On Friday 10th June, the courts rejected the arguments of EDF/VEOLIA saying that the “code du travail” (roughly the working law – contract of work law) has no place to rule in that case.

For the lots, the courts say that cutting into lots would have made the delivery technically difficult based on the objectives of the City Council to reduce their energy use and make it more efficient.

Just to rub the nose of EDF/VEOLIA in it, a closing remark by the City Council says that the criteria of the contract were fixed from the start and used as such and EDF/VEOLIA did not complain at the time…  you bet!

And as I have heard many times in the UK, the incumbent is not the natural winner in many cases, because of complacency in their reply to the tender. Here again one of the reproaches made to EDF/VEOLIA was that at the end of the procedure, they delivered a tender that was missing parts and incoherent, so the procurement appeal commission had no choice but to discard it…

This is probably the main point to remember.  In any procurement exercise, if you don’t reply to everything, and follow the rules - then tough.

Original article in French:

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