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ISLAMABAD:
The Federal Constitutional Court (FCC) ruled that in public procurement, only the conditions explicitly stated in the tender notice are applicable. Any subsequent financial liability imposed based on an undisclosed estimate or criterion cannot be borne.
According to a detailed written judgment approved for report, a three-member bench of the FCC dismissed the civil application for leave to appeal after hearing the matter and upheld the March 30, 2022 judgment of the DI Khan bench of the Peshawar High Court (PHC).
The case arose after the Frontier Highway Authority issued a request for tenders on May 16, 2011 from pre-qualified contractors for five lots.
M/s Brothers Construction and Builders (BCB) has submitted a bid for DI Khan-Chashma Road Phase-I (Package-I), offering 7 per cent less than the estimated cost of Rs 138.65 million and posted a bid security of Rs 2.773 million at the rate of 2 per cent.
Subsequently, the authority maintained that the bid was 22.5 percent lower than the engineer’s estimate of Rs 143.563 million and demanded an additional security of 8 percent. Failing to provide the additional security, the bid was rejected, the bid security was lost and the company was blacklisted for six months.
The company contested the action before the PHC, which ruled that requiring additional security based on the engineer’s estimate was unlawful because the estimate had not been disclosed in the Notice of Invitation to Tender (NIT).
The detailed judgment observed that subsequently imposing a financial charge based on the engineer’s estimate, when it was not included in the advertisement, contradicted the principles of transparency, equality and fair procedure. He said it is legally against the law to receive a bid guarantee based on the estimated cost in the advertisement and then apply an undisclosed standard in the same process.
She recalled that the transparency, fairness and competitiveness of public markets require that advertising clearly states the essential terms.
