Norway is not a member state of the EU, but has access to the internal market in Europe through its membership in the European Economic Area (EEA) and the EEA agreement. Norway has implemented the EU procurement directives and is obliged to implement and follow the rules and regulations from EU in this field.
The procurement directives are implemented into Norwegian legislation through the Procurement Act of 1999 which is of general application and includes principles applicable to public procurement, such as, inter alia, equal treatment and transparency. The detailed provisions of the procurement procedure are set out in two regulations: The Procurement Regulation of 2006, which implements the directive 2004/18/EC and the Utility Regulation of 2006, which implements directive 2004/17/EC, and is applicable to contracting entities that pursue activities in the water, energy, transport and postal services sector.
The regulations contains different rules of procedure depending on the value of the contract and certain thresholds, whether the contract value is above the EU-thresholds, and in the case of services, whether it fells in the category “prioritised” or not. The public authorities must always comply with the main principles as equal treatment of tenderers, transparency, non-discrimination, integrity and good business practice, regardless of the threshold values.
If a provider are unlawfully rejected from the tender process, for instance if the public authority claims that the qualification criteria is not fulfilled, or a provider is of the opinion that the evaluation of the contract has not been properly conducted, there are various ways to gaining enforcement of the regulations:
- Prior to signing of the contract, the providers that have participated in the tendering procedure may complain to the public purchaser about irregularities in the tendering procedure. The legislation provide for a stand-still period after the evaluation of the tenders, and the tenderers shall be informed of this. The stand-still period implies that there shall be no signing of the contract before approximately 10 days after the other tenderers have been informed of about the award.
- During the stand-still period and before the contract is signed, the provider may choose to try to stop the process by filing an action for interim measure to suspend the procedure until the case is settled in court.
- After the signing of the contract there are no remedies available under the procurement rules that allows for a change of the award of the contract or to stop or alter the tendering procedure. The other potential providers that participated in the competition is left with the opportunity to seek damages from the public purchaser. The provider who has suffered a loss because of an irregularity in the tendering procedure may seek damages by filing a case with the District Court.
The compensation that may be obtained in a court case depends on the circumstances, and whether there has been a material breach. Compensation may be awarded for full damages, typically lost profit, in situations where it is clear that the complainant would have won the contract, had it not been for the breach or breaches. Another option, if this cannot be proved by the complainant, is to seek compensation for the costs of participating in the tendering procedure. This requires that the complainant proves that he would not have participated and used time and resources to make his bid if he had known that the purchaser would breach the procurement rules.
An alternative to legal proceedings that is less costly, is to file a complaint with the Norwegian Complaints Board for Public Procurement (Kofa), which is an advisory board. Complaints to Kofa must be filed within 6 months after signing the contract. In cases where it is alleged that there has been made an illegal direct award of contract the time limit for submission of a claim is 2 years. Complaints have a filing fee of NOK 8000. Complaints regarding illegal direct awards have a filing fee of NOK 1000. Complaints must be lodged formally, in writing, and drafted in Norwegian. The procedure for reviewing cases consists of a written exchange of pleadings, similar to the hearing of civil actions. There is, however, no oral proceedings. It should be noted that a complaint does not have the effect of suspending the procedure for the award of a public contract and Kofa does not have the power to award damages. The contracting authority may, however, decide to suspend the procedure pending the outcome of the Kofa’s decision. Kofa handles the case in an expedited procedure if interim measures are in place or the contracting authority confirms that the conclusion of the contract will be suspended. In other cases, it may take between 3 -12 months before a decision from Kofa is obtained.
Contact: Hanne S. Torkelsen, ht@lynxlaw.no or Kjell Steffner, ks@lynxlaw.no