Negotiated procedure without a competitive bidding process: Why the Senate is suspending a controversial road procurement project

1. Regarding the Case

VSIA “Latvijas Valsts ceļi,” as the contracting authority, entered into a contract with a specific company for the modernization and maintenance of weighing equipment for loaded vehicles without a prior open tender. The contracting authority used the so-called negotiated procedure—an exception that allows a contract to be concluded without a call for bids if, for technical reasons, the service can be provided by only one specific supplier.

Another company considered this choice to be unjustified and filed a lawsuit, requesting that the contract be declared invalid. At the same time, it sought interim relief—prohibiting the contracting authority from performing the contract while the case was being heard on its merits.

The Administrative District Court granted this request and suspended the performance of the contract. The contracting authority filed an interlocutory appeal with the Senate, arguing that the work had already been largely completed and that its actions had been justified.

2. The Court’s Findings

The Senate concurred with the lower court’s opinion and dismissed the ancillary complaint, upholding the prohibition on performing the contract.

The negotiated procedure is an exception, not the rule. The Senate emphasized that an open tender is the primary instrument for ensuring fair competition in public procurement, and the negotiated procedure without prior publication may be used only in rare cases expressly provided for by law.

The burden of proof lies with the contracting authority. If the contracting authority wishes to invoke the “technical reasons” exception, it must prove two things simultaneously: that technical reasons do indeed exist and that, for this reason, it is absolutely necessary to award the contract specifically to a particular supplier.

Furthermore, the contracting authority must also prove that this situation of having a single supplier did not arise through its own fault.

A manufacturer’s “authorization” does not in itself prove a technical monopoly.

The fact that a specific company is referred to as the “sole authorized representative” does not necessarily mean that no other solutions actually exist. The actual technical possibilities must be assessed, rather than contractual agreements between the manufacturer and the distributor.

The contracting authority should have assessed the situation more broadly.

The Senate noted that the contracting authority must do everything reasonably possible to avoid the application of the exception—including researching the market at the European Union level, rather than relying solely on information provided by a single supplier or manufacturer.

Prior action can be significant. If the contracting authority could have prevented future dependence on a single supplier earlier, when purchasing the system,

but failed to do so, the situation of exclusivity may be considered to have been created by the contracting authority itself—and this may preclude invoking the “technical reasons” exception.

Interim relief is a justified measure even if the work has already been largely completed. The Senate held that, although suspending the performance of a contract may be inconvenient or even result in losses, ensuring the lawful conduct of public procurement is such a significant public interest that it outweighs these inconveniences. Responsibility for the consequences of any potential violations in the procurement process rests with the contracting authority itself.

3. Practical Implications

This decision serves as an important reminder to all contracting authorities and companies participating in public procurement:

The negotiated procedure without a call for competition must not be used as a “convenience measure.” If a contracting authority wishes to apply this exception, it must be prepared to demonstrate both the technical necessity and that it did not itself create the situation in which competition no longer exists.

“Sole authorized representative” status is not an automatic basis for an exception. Companies providing specialized services must be aware that a certificate issued by the manufacturer does not, in and of itself, guarantee the right to a contract without competition.

Competitors have a real opportunity to challenge such decisions and obtain interim relief even when contract performance has already begun or is nearing completion—the fact that work has already been performed does not automatically preclude a request for interim relief.

Long-term planning in procurement is important. Contracting authorities must include provisions in the initial procurement process that prevent dependence on a single supplier in the future.

If your company is facing a similar situation—a questionable procurement procedure, unfair competition, or the need to protect your interests in a public procurement dispute—please contact our office. We will help you assess the situation and choose the most effective course of action.