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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 liability 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 matter 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 invited tenders on May 16, 2011 from pre-qualified contractors for five packages.
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 deposited bid security of Rs2.773 million at the rate of 2 per cent.
Subsequently, the authority contended that the bid was 22.5 percent below the engineer’s estimate of Rs143.563 million and demanded an additional 8 percent security. Upon failure to furnish the additional security, the bid was rejected, the bid security was forfeited, and the company was blacklisted for six months.
The company challenged the action before the PHC, which held that demanding additional security based on the engineer’s estimate was unlawful because the estimate had not been disclosed in the Notice Inviting Tender (NIT).
The detailed judgment observed that imposing a financial burden later based on the engineer’s estimate, when it was not included in the advertisement, contradicted the principles of transparency, equality and fair process. It stated that receiving bid security based on the estimated cost in the advertisement and then subsequently applying an undisclosed standard within the same process was legally impermissible.
It reiterated that transparency, fairness and competitiveness in public contracts require the advertisement to clearly set out the essential terms.
