Procurement: What – How? | Transparency vs. commercial interests in public procurement
Transparency is a fundamental principle of procurement law. But what if the contracting authority, in the course of a procurement procedure, makes use of documents originating from third parties that are subject to intellectual property rights (IP rights)? For instance, a scoring methodology where the third party insists that, for reasons of rights and commercial interests, the underlying formulas must not be disclosed?
This requires the contracting authority to strike a balance of interests:
- On the one hand: the interest of the contracting authority and tenderers in a transparent and lawful procurement procedure. The principle of transparency requires that the evaluation system can be verified. Where a mathematical method is applied to determine scores, it must be clear how those scores are established. The formulas, values and parameters underlying the methodology must be disclosed.
- On the other hand: the interest of the third party whose system the contracting authority is using. The interest in being able to commercially exploit the system with other parties, and in recouping investments made in its development. For these reasons, the third party will not wish the underlying system to be made public.
In my view, the contracting authority must act first and foremost in accordance with the principle of transparency. The procurement must be designed in line with the fundamental principles. This is in the interest of tenderers, but ultimately also of the contracting authority itself. The contracting authority must be able to verify the outcomes of the procedure independently, and moreover must be in a position to defend those outcomes in court proceedings. It should not be dependent on a third party for this.
This means that the commercial interest of the third party in maintaining confidentiality of the scoring methodology must give way to the interest in a lawful and transparent procurement procedure. That said, a certain degree of confidentiality can still be maintained, for example by conducting a restricted procedure in which the methodology is disclosed only to a limited number of parties. Tenderers may also be required to sign a non-disclosure agreement, but solely in respect of the methodology underpinning the award criteria. Such confidentiality must apply only for the intended purpose.
In this way, transparency can be ensured while, to some extent, the commercial interests of the third party can also be preserved.
Blog Series 'Procurement: What – How?'
This blog is part of the series ‘Procurement: What – How?’, in which Joris Bax, attorney at Brackmann, shares his insights and reflections on current topics in procurement and construction law.
Procurement: What – How? | Confidentiality declarations in procurement: the assessment criteria
Article 2.23, paragraph 1, sub e of the Dutch Public Procurement Act provides the possibility to declare a procurement procedure confidential. In practice, this provision is rarely applied, resulting in limited case law. Recently, the District Court of The Hague issued a ruling concerning this article, clarifying the criteria against which a confidentiality declaration must be assessed.