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ISLAMABAD:
The Federal Constitutional Court (FCC) ruled that in public procurement only the conditions expressly established in the tender notice are enforceable. Any subsequent financial liability imposed on the basis of an undisclosed estimate or criterion cannot be sustained.
According to a detailed written judgment approved for report, a three-member bench of the FCC dismissed the civil petition for leave to appeal after hearing the matter and confirmed the March 30, 2022 judgment of the DI Khan Bench of the Peshawar High Court (PHC).
The case arose after the Border Roads Authority invited tenders on May 16, 2011, from pre-qualified contractors for five packages.
M/s Brothers Construction and Builders (BCB) submitted bid for DI Khan-Chashma Road Phase-I (Package-I), bidding 7 per cent below the estimated cost of Rs 138.65 crore and deposited bid security of Rs 2.773 crore at the rate of 2 per cent.
The authority later maintained that the bid was 22.5 per cent lower than the engineer’s estimate of Rs 143,563 crore and demanded an additional 8 per cent security. By failing to provide the additional security, the offer was rejected, the offer security was forfeited and the company was blacklisted for six months.
The company challenged the action before the PHC, which found it illegal to demand additional guarantees based on the engineer’s budget because the budget had not been disclosed in the Notice of Invitation to Tender (NIT).
The detailed ruling observed that imposing a financial burden later based on the engineer’s budget, when this was not included in the advertisement, contradicted the principles of transparency, equality and fair process. He stated that receiving a bid guarantee based on the estimated cost in the advertisement and then applying an undisclosed standard within the same process was legally impermissible.
He reiterated that transparency, fairness and competitiveness in public contracts require that the announcement clearly establishes the essential terms.
