Variant bids are an increasingly common facet of public tenders because creative solutions are sought to deliver innovation and enhance value for money. They are a useful tool to promote (or propose) innovative approaches, but ensure you take advice to manage the opportunities and risks.
A variant bid complies with the basic requirements of a public body awarding a contract, using the most economically advantageous criteria, but is different from the fully-compliant (mandatory) bid in certain key aspects.
Bidders who opt to submit a variant bid must, if stated in the contract notice, also submit a compliant bid, and both bids will then be considered by the contracting authority (so more work for both sides).
What is meant by ‘variants’?
Regulation 10 of the Public Contracts Regulations deals with ‘variants’. It states at (1) where a contracting authority intends to award a public contract on the basis of the offer which is the most economically advantageous… it shall indicate in the contract notice whether or not it authorises economic operators to submit offers which contain variants on the requirements specified in the contract documents and a contracting authority shall not accept an offer which contains a variant without that indication.
At (2) it states where a contracting authority authorises a variant in accordance with paragraph (1) it shall state in the contract documents the minimum requirements to be met by the variants and any specific requirements for the presentation of an offer which contains variants.
At (3) it states a contracting authority shall only consider variants which meet its minimum requirements as stated in the contract documents in accordance with paragraph (2). This reinforces the fact the minimum requirements must be made clear.
What official guidance is available on variant bids?
The European Commission has published the Guide to the Community Rules on Public Procurement of Services, although this disclaims any legal value.
There is some detail (but lack of practical guidance) on “offers containing variants”, highlighting:
• Contracting authorities are obliged to state in the general or contractual documents the technical specifications of the services they are looking for. Nevertheless, it is important for economic operators and users that services may also be offered which do not correspond to those identified by the contracting authority but which satisfies its requirements.’
• “Subject to certain conditions, the services directive allows tenderers to propose variants. The first condition is variants can only be permitted when the contract is awarded on the basis of the economically most advantageous offer.”
Are there any examples of variant bid practice here in the UK?
An invitation to tender (ITT) issued by the Department for Business Innovation & Skills stated: “You are encouraged to be innovative in your thinking when preparing your bid and to provide any suggestions and solutions that may provide a more cost efficient and value for money solution. Any such proposal which alters the requirements of the specification must be in the form of a variant bid, must be clearly marked ‘variant bid’, and must be submitted at the same time as the fully compliant bid requested in this ITT.”
This approach has its merits although it is necessary elsewhere in the ITT to fully explain the tender evaluation model.
Are there any examples of practice outside UK central government?
When researching tenders issued by local authorities and related bodies we identified facets that had more detail than the example above. An ITT could include:
1. [Contracting authority] will only accept variant bids (at its sole discretion) if they meet the minimum specification detailed in the tender specification (or in the absence of defined minimum specification in the tender specification, meet and exceed all criteria of the tender specification).
2. Variant tenders will be evaluated against the published evaluation criteria.
3. Variant tenders submitted which do not meet the minimum specification detailed in the tender specification (or in the absence of a defined minimum specification in the tender specification) will be deemed non-compliant and not capable of acceptance by [the contracting authority].
4. The variant bid must be set out in writing, as a separate document to the tender and accompanied by a new ‘form of tender’ submitted and marked ‘variant bid’. For the variant bid offered the full scope of the proposal, costings, delivery and, or, implementation timetable and/or other proposals must be submitted in accordance with the terms set out in the tender documents.
A salient feature is the final sentence, which can be usefully adapted to deal with the specific circumstances of a procurement.
Have variant bids ever been tested in court?
There is the relevant case from the High Court of Justice in Northern Ireland of Natural World Products Ltd v ARC 21.
The case is founded on a variant bid not being evaluated properly. The unsuccessful bidder’s claim was supported by the judge who determined that the contract could not be awarded and the authority must return to the evaluation of the variant bid. This emphasises the importance attached to the evaluation model and the manner in which the evaluation of any variant bids received.
☛ Stephen Ashcroft is a specialist in procurement risk at Brian Farrington. You can comment or connect with him on LinkedIn and follow him on Twitter