SmartTender Lawyers

During the summer, the number of appeals on bank guarantees increased significantly. On March 19, 2021, the Order of the Ministry of Economic Development and Trade of Ukraine No. 2628 dated 12/14/2020 (hereinafter referred to as the Order) came into force. Thus, it became the second normative document regulating the content and form of issuing a bank guarantee in public procurement. Previously, customers were guided only by the Resolution of the NBU Board of December 15, 2004 No. 639 (hereinafter referred to as the Resolution). We suggest that you familiarize yourself with the most common cases related to this subject of an appeal.

Lack of Data in the Bank Guarantee

Decision No. 1347-р/пк-пз dated 06/10/2021

In procurement UA-2021-03-05-009099-c, the customer rejected the supplier due to the lack of a bank guarantee that meets the requirements of the tender documents. The participant appealed against this decision, noting that his proposal contains the necessary documents, by paragraph 2 of the Instructions for preparing a tender proposal regarding the tender security.

In response to the complaint, the customer explained that he had rejected the supplier because his bank guarantee does not contain all the necessary information (postal address for correspondence, e-mail address of the guarantor where the documents are received, SWIFT address of the guarantor), and does not correspond to the form, established by the Order.

The AMCU Collegium checked the complainant's guarantee and found that it does not contain the listed data, which means that the proposal was rightfully rejected. The complaint was denied.

Taking this into account, we advise each participant personally or with the help of lawyers to check the guarantee issued by the banks for the fact that it meets all the requirements. The bank may make mistakes in the text, and it will cost you your participation in the tender. Remember that the absence of even a small amount of information will be the basis for your rejection.

Updating Legislation During the Tender

Decision No. 12651-р/пк-пз dated 06/04/2021

This decision is interesting because the tender documentation was published before 03/19/21 and contained only references to the Resolution.

The supplier disputed another participant of procurement UA-2021-02-03-000022-c. He noted the following point: according to clause 26 of the Resolution, the details of the bank guarantee must comply with the requirements established by the regulatory legal act of the central executive authority implementing the public procurement policy. Since the participant's bank guarantee was issued on 03/23/2021, it must correspond to the Order form but does not contain the SWIFT address of the guarantor bank and the date of the decision of the customer who approved the tender documentation.

Interestingly, the tender documents did not contain any requirements related to the Order. But the AMCU Collegium agreed that the guarantee was issued after the date of entry into force of the Order, and therefore must comply with the form established by it. This was enough to satisfy the complaint and oblige the customer to reject the participant's proposal.

Thus, even if the documentation contains references only to the Resolution, we still recommend providing a bank guarantee that will meet the requirements and form of the Order.

We draw your attention to this point and warn you for the future to follow the adoption of regulatory legal acts related to the field of public procurement.

Disqualification due to Lack of Category

Decision No. 12474-р/пк-пз dated 06/03/2021

In the procurement UA-2021-04-21-006257-a, the customer rejected the supplier's offer, explaining that in the text of his bank guarantee there is no category of the principal, beneficiary, guarantor, which means it does not meet the requirements of the Order. In response, the supplier filed a complaint, noting that the Order did not contain explanations regarding the indication of this category.

The AMCU Collegium agreed with the complainant that the Order does not specify which category should be indicated. In this regard, the complaint was satisfied, since the customer did not prove and did not documentary confirm that the participant's bank guarantee did not contain categories.

In this case, the customer's mistake was that he did not indicate what category he meant in understanding the tender documents. Banks may use different wording in the text of guarantees, and this is not regulated by the Order. Therefore, we advise you not to appeal to other participants if you see that they do not have a category specified. And remember that you cannot be disqualified for this reason if the documentation does not contain a category definition.

Lack of Data on the Agreement with the Bank

Decision No. 12539-р/пк-пз dated 06/03/2021

In procurement UA-2021-03-17-016135-c, the supplier disputed another participant, noting that his bank guarantee does not contain data on the agreement, according to which the bank (or other institution) issued a guarantee, and therefore does not meet the requirements of the Order and the customer's conditions in the tender documents.

In the decision, the AMCU Collegium referred to the text of the tender documentation: "Appendix 6 of the tender documentation determines the form of the guarantee, in particular, the need to indicate information about the agreement according to which the bank guarantee (if available) was issued" and focused on the text in brackets – "if available". Based on this, the supplier should provide such information only if such an agreement already exists. This document did not appear anywhere in the supplier's proposal, therefore, the complaint was refused because the complainant did not prove and did not document the existence of an agreement, according to which a bank guarantee was issued.

Therefore, remember that the lack of information about the agreement in the text of the bank guarantee is not an error. If you provide a contract as part of a tender offer, we recommend that you indicate the appropriate paragraph in the text of the guarantee.

Where to Find Out More About Preparing a Bank Guarantee?

On September 22, a webinar will be held at SmartTender.biz with the site specialists: legal adviser Yan Tomashuk and account manager Viktoriia Tsovbun. In particular, you will learn what to look for when ordering and downloading tender guarantees to avoid mistakes and not give reasons for the appeal.

Find out the details and register for the event here.

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