WATER DISINFECTANTS – PUBLIC UTILITY COMPANY “BELGRADE WATER SUPPLY AND SEWERAGE” (2017)
The case of public procurement of water disinfectant for the public utility company “Belgrade Waterworks and Sewerage” is another example where the contracting authority restricted the competition by the way it determined the subject of public procurement and the technical specification of the required good. Also, this case is another in a series of examples of inconsistent and unclear practice of the Republic Commission.
Namely, after eight requests for additional clarifications of the tender documentation and five amendments to the tender documentation, the contracting authority finally defined the subject of public procurement as an aqueous solution of chlorine dioxide obtained by mixing component A and component B. The contracting authority determined the minimum concentration of chlorine dioxide to be obtained by mixing these components, while accurately determining the amounts of components A and B to be offered. Components A and B can be powdered or liquid, so depending on that, the quantities were determined in kilograms, i.e. liters.
In one of the four requests for protection of rights which disputed the content of the tender documentation (another request was filed against the decision on awarding the contract, after which the procedure was suspended), it was pointed out that it was neither logical nor justified for the contracting authority to require the desired goods in a manner defined by the tender documentation, i.e. through the procurement of pre-determined quantities of components that clearly indicate particular manufacturers. In this request it was also stated that it is completely irrelevant whether chlorine dioxide is obtained by mixing powdered or liquid components, because the principle is completely the same. Also, the amount of components of the liquid or powder substance is not relevant at all, nor can the contracting authority request a specific amount of components: the only relevant thing is that by mixing them in an adequate ratio, which is usually not identical, you get a certain amount of active substance – chlorine dioxide.
In this regard, the Applicant pointed out that the contracting authority should define exclusively the required amount of chlorine dioxide, i.e. the active substance of a certain concentration that should be obtained by mixing powder or liquid components. Therefore, only this parameter should be an integral part of the tender documentation, both in terms of the subject of this public procurement, and in terms of the price to be offered.
Namely, some bidders offer powder and others liquid components, which the purchaser should mix before use in order to obtain a chlorine dioxide solution. Some sellers also offer a chlorine dioxide solution as a finished product. The common denominator for all these products is the amount of the active substance (chlorine dioxide) that the contracting authority eventually receives for use in their system. Therefore, if the contracting authority receives bids for these three different forms of products that have the same purpose, the only comparable thing is the amount of active substance. That is why it makes sense to compare such offers on the basis of the price for the amount of active substance obtained in the end.
Also, by determining fixed quantities of powder and liquid components, but only the minimum concentration of chlorine dioxide, the contracting authority practically favored bidders who can offer cheaper components whose mixing results in a product that has a weaker real effect (lower amount of active substance) than other offered products that are more expensive but have a stronger effect (higher amount of active substance). In such a situation, there is a risk that the procured quantities of components purchased at a lower price get consumed faster by the customer, i.e. get used for disinfection of lower amount of drinking water. Therefore, it remains unclear whether the contracting authority in that case would really buy a cheaper product; also, one could ask how purposeful is such a procurement precisely because of the described final financial effect.
Deciding on the submitted request for protection of rights, the Republic Commission did not accept the applicant’s allegations indicating the need to determine the price on the basis of the quantity of active substance. Among other things, the Commission stated that the contracting authority justified its needs and objectives underlying specific requests: the contracting authority clearly stated that they could not determine the exact amount of active substance that would be needed, indicating the fact that the solution itself may vary depending on the way the components are mixed, and that determining the amount of active substance of chlorine dioxide solution would make it difficult to implement this public procurement.
The Republic Commission took a similar position when deciding on the request for protection of rights in another procedure of public procurement of chlorine dioxide, ordered by the public enterprise “Kikinda” from Kikinda, also from 2017. The Commission accepted the position of the contracting authority who stated that competition would be additionally limited by prescribing the amount of active substance.
On the other hand, in some other decisions (decision no. 4-00-524 / 2017 from July 05, 2017 and decision no. 4-00-1756 / 2016 from February 03, 2017), also related to public procurements with the same subject, the Republic Commission took a completely different position and concluded that the contracting authority is obliged to determine in the tender documentation the amount of active substance to be obtained by mixing powder or liquid components. In its explanation, the Commission stated that the amount of active substance is the essence of procurement, and that the price in the tender documentation should be expressed per unit of measure of the active substance (chlorine dioxide), so that the offers would be comparable by applying the criterion “lowest offered price”.
The public procurement procedure in question ended with the Decision on the suspension of the procedure from October 29, 2018, which stated that the public procurement was initiated in 2016, that several submitted requests for protection of rights prolonged its implementation, and that having in mind the importance of the required goods for the contracting authority, and in order not to interfere with the water disinfection process, the user switched to the use of hydrogen peroxide, the procurement of which was realized through a contract concluded on September 5, 2018. It was also stated that having in mind all the above, the purchaser would not carry out the procurement of chlorine dioxide in the following 2019 either.
Therefore, this procurement was not completed, i.e. it did not end with the award of the contract. Regardless of the fact that this outcome prevented the potential negative effects indicated in this study (restriction of competition and the inexpediency of procurement), we believe it is important to point out these possible negative effects for the sake of all future procurements with the same or similar procurement subject. It is also important to insist on the uniform practice of the Republic Commission, for the sake of legal certainty. Consequently, the contracting authorities will no longer be able to justify their illicit conduct by saying that the Commission had previously taken various decisions, which is why they did not know how to act.