Contesting a public procurement in the IT services sector

For some time now, I have wanted to shatter the urban legend “All public procurements are contested”. I will bring out specific numbers that prove the opposite – contesting a public procurement is not a frequent phenomenon at all.

Statistics on contestations of public procurements in 2018-2020

General statistics on public procurements can be viewed on the summaries page of the public procurement landscape of the Ministry of Finance, analytical charts on the interactive statistics page, and statistics on appeals on the statistics page of the Public Procurement Review Committee (PPAC).
However, I was more interested in the IT services sector, i.e. public procurement, the CPV code of which starts with “72”, i.e. “IT services: consultancy, software development, Internet and support services”.
As the statistics pages above did not contain such detailed information, I took the data directly from the Public Procurement Register. Here they are.

Over the past 3 years, public procurements for IT services have been contested in an average of 2.3% of cases, which means that the contracting authorities’ fear of being challenged is not really justified. Moreover, about 80% of all complaints related to IT service procurements remain unsatisfied.

Contesting a public procurement is not popular for several reasons

Firstly, a lawyer who has the relevant competence must be involved in the contestation. As can be seen from the statistics, in the majority of cases the complaint is not satisfied and the legal costs must be borne by the opponent himself.

Secondly, upon filing a challenge, the applicant must pay a state fee, which is either 640 or 1280 euros, depending on the budget of the public procurement.

Thirdly, an amendment to the law entered into force in January 2019, according to which, if a review is filed and the PPAC does not satisfy the complaint, the opponent must pay the legal expenses incurred by the third party on the contracting authority’s side in the challenge and possibly also the contracting authority’s legal aid costs.

Fourthly, procurements with a large budget are mainly contested, and considering the new provision of the law on the award of legal expenses, the percentage of contestations will decrease even more in the case of procurements with a smaller budget.

Below are the budgets for public procurements of IT services in 2020 (13 in total), where it can be seen that about half of them are larger than 1 million euros.

Therefore, for procurements with smaller budgets (less than 500k), the probability of contestation is extremely low – less than 1%.

And last but not least, IT companies usually do not have the time, resources or will to deal with the dispute process, it is done only as a last resort – when the stakes are very high or the feeling of injustice is immense.

I hope that I managed to alleviate the fears of the IT service client when preparing the procurement. Of course, the procurement must be prepared carefully and thoroughly, but there is certainly no need to fear unnecessary and malicious contestation by bidders.

By the way, there is also a very competent blog in Estonia that covers public procurement topics called the Public Procurement Blog – Staged Life, I highly recommend it!

Sources and references

• Public Procurement Register
• Public Procurement Review Committee (PPAC)
• Summaries of public procurements
• Interactive public procurement statistics 2010-2020 (as of 6.10.2020)