Concrete & steel in legal perspective 

Concrete and steel, tendering and RAW

When work in the concrete and steel industry is put out to tender, in very many cases RAW specifications are put out to tender. The RAW system has a number of specific provisions for tenders, including provisions that must be observed in the event of an invalid tender. Case law shows that these specific RAW provisions regularly lead to legal proceedings, in which the outcome is often negative for the tenderer. Disputes that can be avoided if a tenderer has knowledge of these RAW provisions. In this column I discuss the specific RAW provisions in tenders on the basis of a very recent tendering decision about sewerage works. 

A ruling by the North Holland District Court on February 7, 2024 involved a European public tender for the purpose of concluding a Framework Agreement for the cleaning and inspection of sewers. The Standard RAW Provisions 2020 had been declared applicable.

Include all costs in the unit price

A very important principle in tenders based on the Standard RAW Provisions is that a tenderer is required to include in each unit price all costs necessary to achieve the result obligation. For framework agreements this is regulated in 01.01.06 paragraph 02 [1] of the Standard RAW Provisions. 

In the present matter, the contracting authority tested whether the provisional winner's bid met that obligation. This is a test that the contracting authority is obliged to perform on the basis of article 01.01.07 paragraph 01 of the Standard RAW Provisions [2]. That test revealed in this case that a considerable number of unit prices showed deviations from the budget drawn up by the contracting authority. And that could indicate that the tenderer did not comply with the obligation outlined above to include all costs in the unit price. Accordingly, the contracting authority asked the provisional winner for an explanation regarding some unit prices. The provisional winner then has seven calendar days to provide a written explanation. This mandatory verification method stems from article 01.01.07 paragraph 02 of the Standard RAW Provisions [3].

Price for flush truck not realistic

During the verification interview, it appeared that the provisional winner had used a unit price for the use of a so-called flushing truck that was not realistic. The provisional winner responded that the unit price is realistic if the flushing truck is used in combination with a sewer cleaner and a vacuum truck. With that statement, the matter was settled immediately. Because on balance, the provisional winner here stated that 1) not all the costs for the flushing truck were included in the unit price and 2) that the costs for the flushing truck were partially shifted to the sewer cleaner and the vacuum truck. The Interim Injunction Judge ruled - correctly - that this did not comply with the obligation in Article 01.01.06(02) of the Standard RAW Provisions. And on the basis of article 01.01.07 paragraph 03 of the Standard RAW Provisions, the contracting authority is in such a case obliged to reject the tender as invalid. 

The provisional winner's remark that it wishes to take for its own account any loss on the unit price for the rinsing truck was also by no means a happy one. Apart from the fact that that remark reaffirmed that not all costs were included in the unit price, on balance it has to be said that the provisional winner is thereby declaring that he is granting a discount in the unit price. And pursuant to article 01.01.06 paragraph 03 [4] of the Standard RAW Provisions a tenderer may not include a discount in a price per unit. After all, the discount must be included separately in the tail costs.

Price for traffic controllers not realistic

In addition, the Contracting Authority found that the provisional winner charged the same unit price for two traffic controllers as for the deployment of four traffic controllers. This meant that the price per unit for the specification item of four traffic controllers - when converted to one traffic controller - was so low (€ 13.75 per controller) that it was certain that this price per unit could never include all the costs. The provisional winner stated that he had made a calculation error with this specification item. This statement also immediately resulted in an invalidity of the tender. The interim relief judge ruled - correctly - that this is not an obvious error that lends itself to simple rectification. The provisional winner's argument that the contracting authority could deduce from the stated unit price of the two traffic controllers that the unit price for the four traffic controllers should simply be doubled was not accepted. After all, it could just as easily be that the unit price for the two traffic controllers contains an error. And on top of that, adjusting the unit price for the four traffic controllers also tinkers with the total bid sum, which is also not allowed. 

Also with this unit price, the provisional winner stated that it was willing to bear the loss on the unit price of the four traffic controllers. But as with the flush truck, the Court in preliminary relief proceedings ruled that this results in a discount on the unit price, which is not allowed under the RAW system.

Be warned

This ruling clearly shows that bidders in RAW tenders must adhere to the RAW system. And failure to do so will result in exclusion. So tenderers, be warned.

A critical note regarding the RAW system is in order. After all, the total sum of a tender can be completely in line with the market and reasonable, but on the basis of a single price per unit - which does not meet the requirements of the RAW system or where a calculation error has been made - it can still be declared invalid. That feels like a very heavy penalty both instinctively, prudentially and legally.

Joost Haest
Severijn Hulshof lawyers