A participant in a tender may find itself in a situation where such participant's winning was unlawfully denied by the tender committee. The outcome of this may involve considerable financial loss and may sometimes also involve damage to reputation. May such a participant demand compensation for this unlawful denial of winning?
The Courts recognized the right of a participant, whose winning in a tender was unlawfully denied, to compensation for the damage incurred due to the loss of the transaction. To prove such a claim one is required to prove that the offer was legitimate and that the participant was eligible to be selected as the winner of the tender. In addition, it is important to prove causation between the flaws in the tender process, the denial of the win and the damage incurred. Where both causation and unlawful denial are proven, the Court will deem the participant as the winner of the tender and the participant will be entitled to compensation for all the profits it would have received had the contract was not unlawfully denied from it.
Often it is hard to prove precisely and with certainty the extent of the damage and the proper compensation, but it is sufficient to submit data that can be reasonably furnished. For example: the scope of the anticipated work, the expected revenues from the project or financial reports regarding the expected profit margins. In such a case the Court may exercise discretion and make complete the missing data with a Court estimation in order to determine the damage invovled.
In some cases the Court will deny a participant compensation if the participant failed to duly and timely attack the tender decision. The Courts have more than once decided that a claim for compensation must follow an administrative claim by which the participant tries to enforce its right to win the tender. The main reason for this is to minimize the cases in which the public authority may find itself paying twice for the same contract. Thus, it is essential to attack the tender process prior to filing of a claim for compensation.
A claim for tender related compensation has the characteristics of both administrative and civil procedures. Thus, it should be taken into account, in addition to considerations common to any civil claim, also administrative law considerations such as a demand for bona fide behavior of the claimant and lack of mootness. As such, it is advisable to consult with an attorney who specializes in tenders as soon as one is aware of grounds for entitlement to compensation as a result of flaws in a tender process and also to duly and timely attack the tender procedures prior to filing a monetary claim.