Awarding public health contracts on price basis is unwise, Court of Appeal says

The Court of Appeal has described the awarding of contracts related to public health to the lowest bidder as a practice of “questionable wisdom” as it overturned a decision by the Public Contracts Revision Board over the handling of a tender for children's hearing aids.

Lawyer Michael Tanti Dougall, on behalf of medical supplier OK Ltd, had filed an appeal against the award of a tender for the supply of bone conductive hearing devices for children and adults suffering from hearing loss or single-sided deafness in March this year. Three bids had been made, including that submitted by OK Ltd and the winning bid by German company Med-El Elektromedizinische Geraete GmbH. OK Ltd argued that the winning offer was not technically compliant because the devices offered by the company did not cater for persons under the age of five, whereas OK Ltd's did.

The Board had replied, contending that it had compared the bids with the technical specifications of the tender and not to other bids. It confirmed that the plaintiff's bid did satisfy all the requirements, but explained that “the awarded device was the second cheapest and fully compliant.”

The Board had argued that while the word “children” justifiably covered all persons below 18 years of age, according to medical classification and the UN Convention on the Rights of the Child, children below the age of five were classified as “infants.”

Chief Justice Silvio Camilleri, together with judge Tonio Mallia and judge Joseph Azzopardi, presiding the Court of Appeal said it could not accept the distinction made by the board. The court held that it was immediately understandable that the call was for a product that could be used for children and adults “and persons between the ages of three and five are certainly children.” It had not been explained to the bidders that the word “children” was not to be taken in its general sense, the court held. Had the ministry wanted the medico-legal definition to be used, it should have clearly been specified as “children (not infants) and adults.” The bidders should not suffer for this lack of clarity, the court said.

The board had abdicated its duties by not examining whether the bid was technically compliant, the court said, pointing out that the board was made up of technical experts precisely for this reason. Its functions included addressing non-compliant offers and could not simply say that the offer was “adjudicated in a just and proper manner” without examining the complaint from the technical aspect.

After presuming compliance, the board had gone for the lowest priced bid because the sole criteria for the award of the tender was the price. “The wisdom of this, when public health is involved, may be questionable, but those were the terms of the call.”

But the board was obliged to examine whether the preferred offer was technically compliant or not and not simply rest on what an evaluation committee had said, the court held.

It rescinded the decision by the Public Contracts Revision Board in its entirety and sent the case back to that board in order to evaluate whether the offer was technically compliant or not.