Case law has held that there is a distinction between the natural advantage that an incumbent will have in any re-procurement exercise and an ‘unfair’ advantage (see T-345/03 Europaiki Dynamki v Commission). However, case law has also recognised that differential treatment may be justified where the bidders are not in a comparable position for the purpose of the tendering exercise, albeit such differential treatment should not be “arbitrary or excessive” (see Case T-211/17) Amplexor Luxembourg Sarl v European Commission).
Indeed, in the Amplexor case referred to above, it was suggested that in procurements involving incumbent bidders, an authority may need to allow bidders other than the incumbent a transition phase with extra payment if they need to invest resources to adapt to the particular requirements of the contract, to the extent that such additional remuneration is not arbitrary or excessive. The case concerned a contract to publish procurement notices in the Official Journal. The incumbent was identified as one of the three successful tenderers, however it would only receive a 0.3% payment on top of contract price, while the other two suppliers would get 3%. The 3% figure was intended to finance the implementation costs of the two other suppliers during the transition phase and was designed to restore equal treatment of bidders. It was held that ultimately, there was no obligation on the Commission to neutralise all incumbency advantages, as potentially this could be contrary to the interests of authority in terms of cost and effort. However, it was recognised that a balance needs to be struck between the various interests involved. Therefore, an incumbency advantage must only be neutralised to the extent: (i) it is technically easy to effect; (ii) it is economically acceptable; and (iii) it does not infringe rights of the incumbent or other bidders.
These principles were considered by the Court in the case of AbbVie Limited v NHS England [2019] EWHC 61 (TCC), where the authority had utilised a ‘dummy price mechanism’ to address the fact that certain bidders were able to supply drugs capable of treating the whole market, whereas others did not. Again the Court recognised that the fact those bidders were treated differently did not breach the equal treatment principle, as they were in different situations.
Applying the case law to evaluation of mobilisation costs, in our view there is no obligation on the authority to take further steps to ‘neutralise’ any perceived incumbency advantage, where this is likely to lead to an outcome which does not make economic sense for the authority. However, where this is not the case, the case law seems to suggest that the authority may be required to consider measures to level the playing field. However, those measures should not be “arbitrary or excessive” and would therefore need a considered approach and the approach is likely to be unique to the particular contract in question including the value of the contract, any economic factors (e.g. maximum budgets) and ensuring that this does not place the incumbent in a position of significant disadvantage.