Existing govt contract doesn’t stop you from bidding

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Dear Corruption Watch 30,

I run my own business and am providing consultancy services to a municipality. This same municipality has put out a tender for the same services that I provide. Can my company bid for the tender together with another company who will be the principle bidder (my company will be subcontracted to the principle company to do some of the work) while I am a consultant for the municipality?

 

Cautious Consultant

 

Dear Cautious,

 

There are two legs to your question. It appears that the first question you are asking relates to the work you currently do for the municipality and specifically whether this is a bar to your tendering on this work when the contract comes up for renewal. The second question is whether you may enter into a joint-venture with another bidder in order to submit a tender.

 

In principle the fact that you are currently providing a service to the municipality can never prevent you from being one of the bidders when the contract comes up for renewal. There are however some interesting situations which may arise when there is an incumbent with regards to proprietary information (depending of course on the nature of the consultancy service you are providing). 

 

All tenders must be fair and transparent. Sometimes the incumbent obtains important information. They have an inside track as it were. They are in a better position than the new bidders but generally speaking this can never be a bar to bidding. Put differently, the incumbent cannot be penalised for the experience it has gained while performing the contract. It will depend on the facts of course and the extent to which an unfair advantage may or may not be gained as a result of the incumbent's "insider" knowledge. 

 

For example, a tender may require a bidder to submit a price per unit where that unit is calculated as an average in the case of a municipality that requires waste removal from a demarcated city area. What a realistic and competitive price would be is a guesstimate for all the tenderers except the incumbent who has accurate information. But keep in mind that it is a double-edged sword. The new bidders may submit prices lower than that of the incumbent, prices which are attractive to the municipality, precisely because these lower prices are a result of educated guessing.

 

It is a moot point who owns the information obtained by the incumbent and is probably a question which can only be answered with reference to the tender contract. In other words, is the municipality obliged to make available information in the tender renewal document obtained by the incumbent?

 

Regarding your second query, the answer will lie in the specifications of the tender document. Usually these documents state whether bids may be submitted in the form of joint ventures and what the requirements for these joint ventures are. If the reason that you are considering a joint-venture is because you think that your incumbent status might negatively affect your chances you may wish to reconsider this strategy. Tenders are often renewed with incumbents after a fair and transparent tender process has taken place. As long as all the requirements of a competitive bidding process have been met, there is no principle in law which prevents the incumbent again being the successful bidder.

 

If there is some other reason why a joint-venture makes sense for you then that of course is a different matter.