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ISLAMABAD:
The Federal Constitutional Court (FCC) ruled that in public procurement, only conditions explicitly stated in the tender advertisement are enforceable. Any subsequent financial obligation imposed based on an undisclosed estimate or criterion cannot be sustained.
According to a detailed written judgment approved for reporting, a three-member FCC bench dismissed the civil petition for leave to appeal after hearing the case and upheld the March 30, 2022 judgment of the DI Khan Bench of the Peshawar High Court (PHC).
The case arose after the Frontier Highway Authority on 16 May 2011 invited bids from pre-qualified contractors for five parcels.
M/s Brothers Construction and Builders (BCB) submitted a bid for DI Khan-Chashma Road Phase-I (Package-I) offering 7 percent below the estimated cost of Rs138.65 million and depositing bid security of Rs2.773 million at a rate of 2 percent.
Subsequently, the authority claimed that the bid was 22.5 percent below the engineer’s estimate of Rs143.563 million and required an additional 8 percent security. Since the additional security had not been provided, the bid was rejected, the bid security was forfeited and the company was blacklisted for six months.
The company contested the case before the PHC, which held that it was illegal to require additional security based on the engineer’s estimate because the estimate had not been disclosed in the notice of tender (NIT).
The detailed judgment noted that imposing a financial burden later based on the engineer’s discretion when it was not included in the advertisement was contrary to the principles of transparency, equality and due process. It stated that it was legally impermissible to receive bid security based on the estimated costs in the advertisement and subsequently apply an undisclosed standard within the same process.
It reiterated that transparency, fairness and competitiveness in public contracts require that the advertisement clearly sets out the essential terms.
