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Public Procurement Law Update

Updates covering the latest public procurement issues on legislation, policy and cases in this fast moving area of law.

Latest Issue

In the latest edition of our Public Procurement Law Update, we cover the conclusions of the European Commission following its review of the Remedies Directives, and the most recent guidance issued by the Crown Commercial Service. We also report on a number of recent cases.

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“Early” is the word for public procurement cases

Thursday 24th August 2017

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The Technology and Construction Court (TCC) has produced a guidance note on procedures for public procurement cases. The note aims to streamline management of such cases, acknowledging that short limitation and mandatory standstill periods can lead to legal proceedings being “issued hastily”.                                                                                                                                               
Key points from the note include:

Pre-Action and Alternative Dispute Resolution (ADR)

  • With the mandatory standstill period being only 10 days long, potential claimants must act quickly to obtain automatic suspension of the contract award. A pre-action process is recommended to the extent that it is practical and does not take up too much time. This aims to enable parties to settle issues without the need to start proceedings, as well as exchange information and consider ADR.
  • The recommended pre-action process is as follows:
  • The potential claimant should send a letter before claim to the contracting authority. This should identify the procurement process being challenged; the grounds for the claim (both factual and legal); any information sought from the authority; the remedy required; any request for an extended standstill period; and an appropriate time limit for a response.
  • The authority should respond with an acknowledgement of receipt of the letter before claim, give its solicitors’ details, and indicate whether the standstill has been extended.
  • The parties should continue to resolve the dispute without the need to commence proceedings. Communication should be co-operative and reasonable, and ADR processes are encouraged throughout proceedings.

Institution of Proceedings

  • The Claim Form must be served on the defendant within 7 days after the date of issue, and the Particulars of Claim must be served no later than this.
  • If the Particulars of Claim contain confidential information, both a confidential and non-confidential (i.e. redacted) version of the pleading should be lodged with the Court. The former should be clearly marked as confidential on paper and envelope. An order should be sought by letter (and copied to any relevant parties) that access to the Court file be restricted.

Specific and Early Disclosure

  • Early disclosure may be justified to enable the claimant to plead its case properly, and “contracting authorities are encouraged to provide their key decision making materials at a very early stage of proceedings or during any pre-action correspondence”, in order to avoid additional early proceedings to secure disclosure.
  • In practice, this means authorities will have to provide relevant information fairly soon after the pre-action letter. The question of disclosure will be considered at the first Case Management Conference (CMC), which itself may be early if appropriate.

Confidentiality

  • The note stresses the importance of general confidentiality, while seeking to avoid “unnecessary cost or complexity”. It advises confidential papers to be clearly marked or stamped as such, suggesting coloured paper to be used for immediate identification.
  • Confidentiality rings are becoming increasingly common. However, due to increased cost and complexity, a two-tier ring must be justified early on. A “two-tier” ring may be considered, with employee representatives having access to some but not all of the material disclosed in the ring – only what they need to know.

Interested Parties

  • The successful bidder may be affected by the relief sought in a procurement claim, which typically involves setting aside the award decision in their favour. The Court can consider an interested party, besides the claimant and authority, to become a full party to the proceedings. This may involve providing relevant documentation – once again, the note stresses this must happen “as soon as practicable”.

This guidance note can assist claimants, authorities, and other interested parties by laying out a procedure. The note is, however, incredibly ambitious – asking a lot from these parties, and as soon as possible. The fast-paced nature of procurement proceedings requires this, but it presents a mammoth task to all parties. Getting in touch with external legal advisors early on is therefore necessary for a successful procurement claim or defence.  

For any queries regarding preparation of your tender documents, the evaluation process, or public procurement law in general, please visit our procurement page or contact Richard Hough.


Court of Justice for the European Union (“CJEU”) considers clarification of tenders

Tuesday 11th July 2017

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Clarification of tender submissions can be a minefield for contracting authorities. In addition, the growing trend for tender submissions being submitted electronically through a portal, can lead to additional problems such as tender documents not uploading correctly or incorrect documents being uploaded. Even where the tender submission is complete, answers may assume knowledge on the part of the reader that the contracting authority may not have, e.g. because the answer is very technical.

Contracting authority’s desire to be able to receive complete tender submissions and understand them can put it at risk of breaching its overarching general duties of transparency and equal treatment of bidders. So how far can a contracting authority go in order to clarify a tender before it is in breach of their duties?

The Public Contracts Regulations 2015 (the Regulations), which derive from European Directive 2014/24 provide the framework within which a contracting authority may provide goods, works or services. Regulation 76(2) sets out a contracting authority’s equal treatment and transparency.

Regulation 67(8) states that in the case of doubt, contracting authorities shall verify the “accuracy of the information and proof provided by tenderers”. Regulation 69 places a separate requirement on contracting authorities to get bidders to explain their costings if their bids are considered to be abnormally low in price.

The issue of clarification has of course been previously considered by the courts; the leading case being from 2014 . In these earlier cases, the CJEU confirmed that the principle of equal treatment does not prevent a contracting authority from seeking a genuine clarification or correction of obvious errors, provided that:

  • The request must not be made until all tenders have been reviewed by the contracting authority.
  • A request for clarification should be sent to an all bidders in the same situation.
  • A request for clarification must relate to all sections of the tender which require clarification.
  • The request should not lead to the submission of missing documents or information which should have been included in the original tender, i.e. a request for clarification cannot lead to the submission of what would be in effect a new tender.
  • Contracting authorities should treat bidders equally and fairly so that a request for clarification does not (or does not appear) to have unduly favoured or disadvantaged the bidder who receives the clarification.

A recent Polish case  was referred to the CJEU for clarification regarding the late submission of samples by bidders, where incorrect samples had previously been provided. This afforded the CJEU a chance to consider further this aspect of public procurement law.

In this case, the referring court asked the CJEU if the principle of equal treatment allowed contracting authorities to invite bidders to correct or submit further information or documents in order to complete a tender submission after the deadline had passed.

The CJEU confirmed the principle of equal treatment means that all bidders must have equality of opportunity when they are formulating tender submissions. This implies that the tenders of all bidders should be subject to the same conditions. It also confirmed that the nature of the restricted procedure under the Regulations (as was the case here) precludes any negotiations after the submission of the tenders. Therefore after submission of a tender, the tender can no longer be amended at the request of the contracting authority’s or the bidder. To allow a late submission of a key part of the tender submission in order to provide clarification would in effect be a confidential negotiation with one bidder, a breach of the duty of equal treatment.

The CJEU noted that, given the settled case law, the principle of equal treatment means that a contracting authority cannot invite or permit late submission of documents or information that were required to be a provided as part of the tender within the time limit set for the public procurement procedure.  The principle of equal treatment however does not prevent a contracting authority from inviting a bidder to clarify a tender, or to correct an obvious clerical error, subject to the conditions established to ensure the equal treatment, as set out in the bullet points above. It was up to the Polish courts to determine where the facts of the case pointed, i.e. correction of an obvious error, and therefore permitted, or the submission of further information which is not.

The recent case demonstrates that the law is becoming fairly settled on this point. While there is flexibility (within limits) to clarify minor errors or confusing aspects of tenders, contracting authorities cannot seek late submission/late revised submission of information that was required as part of the tender submission or the introduction of new information. This is because the submission is such information would breach the principles of equal treatment of bidders and would in reality constitute a new tender.

For any queries regarding requests for clarification of tenders or public procurement in general, please contact Richard Hough on 0151 600 3302 or at richard.hough@brabners.com
 


Are damages an adequate remedy for the loss of a contract?

Friday 7th July 2017

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Public Procurement Law Update - July 2017

The recent case of Alstom Transport UK Ltd v London Underground Ltd and another [2017] EWHC 1521 (TCC) arose out of a procurement for the provision of AC traction motors for London Underground Limited’s (LUL) fleet of Central Line trains. Bombardier won the tender and Alstom, who came in second place, challenged the result, triggering an automatic suspension on LUL’s ability to enter into the contract with Bombardier. 

Alstom sought an order that: (i) LUL’s decision to award the contract to Bombardier be set aside: (ii) that LUL were in breach of the Utilities Contracts Regulations; and (iii) a declaration that the contract should be awarded to Alstom. Alstom claimed that damages alone would not be an adequate remedy because of the damage the loss of the contract would have on its business, not only due to the loss of value of the contract but also the loss in its expertise and therefore its ability to win future contracts. Alstom argued that the procurement had already been delayed and therefore the effect on LUL of delaying the contract until after the full claim had been heard would be insignificant.

The central issue in dispute was whether Bombardier should have been rejected from the tender process for failing to meet pre-determined minimum thresholds at the end of stage 3 of the procurement. The ITT stated that any failure to meet the minimum thresholds would be treated as non-compliance. However, the ITT also reserved to LUL the right to reject a response, re-open stages of the process, request re-submissions of parts of a response and to request further information in relation to a submission. The recommendation document endorsed by LUL’s Evaluation Board recognised that Bombardier had not met the minimum thresholds for passing stage 3 but recommended that “in order to maintain tender competition, all three bidders are considered to have met the requirements for stage 3 and have proceeded to the stage 4 Evaluation”. The Court stated that if there were “even a whiff of corruption” any court would regard that as a feature tending to support the maintenance of the automatic stay. However, the Court found no such evidence in this case.

The Court followed the principles set out American Cyanamid and found firstly, that it only needed to be satisfied that there was a serious issue to be tried but that it should not undertake a trial of the issues; and secondly, that if damages were an adequate remedy, that would normally (but not always) be sufficient to defeat an application for an interim injunction. 

In response to Alstom’s claim that damages would not be an adequate remedy, the Court referred to Alstom's published accounts in relation to its existing facilities and investment and its place as a market leader in the United Kingdom and globally. It referred to its order book income of £65 million on annual sales of £600 million and it seemed sceptical of claims that the loss of the LUL contract would cause it to lose its expertise and competitive edge.

The Court concluded that damages would be an adequate remedy for Alstom and that a claim for loss of profits could be formulated by reference to Alstom’s profits on contracts historically, its projected profit on the tendered contract and the costs it had occurred in tendering for the contract.

In response to the claim that further delay caused by the injunction would be insignificant, the Court found that the evidence put forward by LUL which pointed to the current traction systems needing to be replaced sooner rather than later supported lifting the automatic suspension so that the contract with Bombardier could be concluded.

Whilst questions have certainly been raised regarding LUL’s conduct of the procurement, the key issue for this application was not the strength of Alstom’s case but the importance to public procurement law claims of the principles previously set out in America Cyanamid and the courts’ willingness to apply them when determining the issue of whether damages would be an adequate remedy for the alleged breach of the Utilities Contracts Regulations.

For any queries regarding preparation of your tender documents, the evaluation process, or public procurement law in general, please visit our procurement page or contact public procurement lawyer Victoria Trigwell.

 


Public Procurement: Potential Developments for Subsidiaries of Contracting Authorities

Tuesday 23rd May 2017

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On 27 April 2017 the Advocate General issued an opinion in respect of the Lithuanian case of LitSpecMet UAB v Vilniaus lokomotyvu remonto depas UAB and another regarding the status under public procurement law of subsidiaries to Contracting Authorities.

Many Contracting Authorities, such as councils and registered providers of social housing, set up subsidiary companies for specific purposes. Some of these subsidiary companies are used as special purpose vehicles for the provision of specific functions for the Contracting Authority or its wider group, for example a development company arm or a repair company for the Contracting Authority’s housing stock.

Often such companies are able to use the in-house or Teckal exemption provided under public procurement law in order to provide the relevant services to the Contracting Authority without having to competitively tender for them. For our articles on when the Teckal exemption can apply, see here.  Other subsidiary companies trade on the wider market as an income generating vehicle which helps the Contracting Authority either offset costs or have greater income to provide its core services. In either case, it is necessary to consider whether the Public Contracts Regulations 2015 (the “Regulations”) apply to such subsidiaries when they in turn need to purchase goods, works or services by determining whether the subsidiary is a Contracting Authority in its own right.

Under the Regulations, and the European Directives from which the Regulations come, the definition of a Contracting Authority includes a list of specific bodies, including “bodies governed by public law”. This is in turn defined as anybody:

  • Established for the specific purpose of meeting needs in the general interest, not having an industrial or commercial character; and
     
  • Having legal personality; and
     
  • Any of: (a) financed, for the most part, by the state, regional or local authorities, or other bodies governed by public law, or (b) subject to management supervision by those bodies, or (c) having a board, more than half of whose members are appointed by the state, regional or local authorities, or by other bodies governed by public law.

A subsidiary must meet all of the main criteria to be a Contracting Authority in its own right. Currently eligibility to use the Teckal exemption does not automatically confer status as a body governed by public law.

The question considered by the Advocate General arose from a challenge to a tendering process by VLRD, a company wholly owned by the Lithuanian State railway company (which is itself a Contracting Authority, and hereafter known as “LG”). VLDR provides goods and services to LG and the Advocate General was asked to determine whether VLRD was a Contracting Authority. VLRD had argued that it was not a body governed by public law as it was not established for the ‘purpose of meeting needs in the general interest, not having an industrial or commercial character’.

The Advocate General recommended that the definitions of Contracting Authority and body governed by public law must be interpreted as meaning that:

  • A company that is connected to a Contracting Authority in terms of substance and function such that the Teckal exemption applies, is subject to the Regulations when it is concluding works, supply and service contracts with third parties for the purpose of performing the task entrusted to it by the parent Contracting Authority; and
     
  • In any event, a company should be considered a body governed by public law where it has legal personality, is controlled by a Contracting Authority and the essential part of its activity is to supply the parent Contracting Authority goods or services, free of any pressure from competitors and not in free market conditions, which enables the parent Contracting Authority to provide its own services to the public.

The Advocate General’s opinion has invited the court to develop the concept of what is a Contracting Authority by reviewing whether VLDR may be considered to be a Contracting Authority because it is in an indirect way meeting needs in the general interest by providing goods and services to LG.

At present, the Advocate General has only given an opinion and this is not binding law. It will however, be interesting to see how the case progresses and whether subsidiaries of Contracting Authorities will need to take closer account of public procurement law in the future. For any queries regarding the Advocate General’s opinion, or public procurement in general, please visit our procurement page or contact Michael Winder on the details provided below. 

 

Michael Winder
Associate
T: 0151 600 3085
Email Michael
 


Case Law Developments

Friday 21st April 2017

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Public Procurement Law Update - April 2017

In our look at case law developments, we review the cases receiving attention since our last update in December.

Issues covered by the cases include: whether claimants who are not economic operators and did not bid for a procurement can be regarded as having sufficient interest to be able to make a claim for judicial review; consideration of whether the transfer of public services to another public body constitutes a public contract; whether a definitively excluded bidder could challenge an award decision; and an update of the Energy Solutions v Nuclear Decommissioning Authority case.

Can third party organisations bring a challenge relating to a development when they are not economic operators?

In the recent case of Wylde v Waverley Borough Council 2017 EWHC 466, the claimants sought judicial review of a decision by the Council to vary a development agreement.  The circumstances were on the face of it, apparently similar to those in the decision of R (on the application of Gottlieb) v Winchester City Council 2015 EWCH 231 (Admin) and yet the outcome was entirely different.

Read more about this case here

Does the transfer of public services to another public body constitute a public contract?

In the case of Remondis GmbH & amp Co KG Region Nord v Region of Hannover and others (Case C-51/15), the court considered whether the transfer by the Region of Hannover of waste treatment tasks, which were its responsibility, to another public body, which was a special purpose association (SPA) that had been created by local authorities for the purposes of waste management constituted a public contract, and if it was, whether it could fall outside the scope of public procurement law either by application of the ‘in-house’ (Teckal) exception or the ‘cooperation’ (Hamburg Waste) exception.

Read more about this case here.

Energy Solutions EU Limited v the Nuclear Decommissioning Authority (NDA)

The NDA has recently settled the claim brought by Energy Solutions. With the NDA facing nearly £100 million in costs and a new procurement exercise, the case continues to be a cautionary example of how not to evaluate a public procurement process.

Read more about this case here.

CJEU denies a ‘definitively excluded’ bidder the right to challenge an unfavourable award decision

In the recent case of Bietergemeinschaft Technische Gebäudebetreuung GesmbH und Caverion Österreich GmbH v Universität für Bodenkultur Wien and others (Case C355/15), the CJEU denied a ‘definitively excluded’ bidder the right to challenge an unfavourable award decision. The consortium had appealed the decision to exclude it from the tender process and had separately appealed the decision awarding the contract. The appeal against the exclusion was heard first and was unsuccessful and, subsequent to this, the appeal against the decision awarding the contract was heard. The CJEU held that as the consortium had been definitely excluded from the tender process by being unsuccessful at the first appeal, it no longer had the right to appeal against the contract award decision as it was no longer a concerned tenderer.

Read more about this case here.

If you would like to discuss any matters arising from this newsletter or if you have any queries relating to public procurement law, please either view our procurement page here or contact us directly.
 


Procurement Policy Notice: New CCS Guidance

Friday 21st April 2017

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Public Procurement Law Update - April 2017

New Crown Commercial Service guidance has been published regarding the transparency of suppliers and government to the public (February 2017) (PPN 01/17). The new PPN updates and replaces PPN 13/15 and applies to all central government departments, their executive agencies and non-departmental public bodies (‘in-scope organisations’).

In-scope organisations are required to explain transparency requirements to suppliers as early as possible in the procurement process and include in tender documentation, the types of information to be disclosed on contract award and thereafter. The presumption is in favour of disclosing all information except where exemptions apply and such exemptions follow the principles set out in the Freedom of Information Act. For example, the contract value should be published but the supplier rates or means of calculating the contract price could be withheld on the grounds of being commercially confidential.

The principles require in-scope organisations to pro-actively release information about contracts through the life of the contract on a regular basis and ensure publication of that information in an accessible format.


Legislation and Policy Update

Friday 21st April 2017

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Public Procurement Law Update - April 2017

The European Commission has reviewed the performance of the Remedies Directives. The Remedies Directives were brought into effect in 2009 and introduced substantial remedies for breaches of public procurement law. The Commission has concluded that:

  • The Remedies Directives have generally met their objectives of increasing the guarantees of transparency and non-discrimination, allowing effective and rapid action to be taken when there is an alleged breach of the Procurement Directives and providing economic operators with the assurance that all tenderers will be treated equally. It recognised that the Remedies Directives are effective as a deterrent to non-compliant behaviour; and
     
  • The objectives of the Remedies Directives are still relevant. The replies to the public consultation indicated that the most relevant provisions are the standstill period, the suspension of the contract award procedure where review proceedings are initiated and the automatic debrief to tenderers.

The European Commission has therefore concluded that the Remedies Directives will be maintained in their current form without modification.

However, the European Commission did identify certain weaknesses, which it will act upon, which are as follows:

  • Information on the use of remedies on a national basis has not been collected in a coherent manner across the EU and therefore the Commission will collect information on key indicators, which will be published under the Single Market Scoreboard to enable comparison of the efficiency of the remedies systems across Member States;
     
  • First instance administrative review bodies are more effective than the courts both in terms of the duration of procedures and also in standards of review. The Commission will encourage sharing of best practices from such administrative review bodies across Member States; and
     
  • Certain provisions are not entirely clear. In particular, the Commission will provide guidance on how the Remedies Directives and the 2014 Procurement Directives relate, as well as on the criteria to be applied to lift the automatic suspension of the conclusion of a contract following legal challenge.
In response to this review, there has been a first meeting of the EU network of first instance review bodies earlier this month to discuss ways to work more efficiently. 

 


New Guidance on Social, Ethical and Environmental Considerations in Public Procurement

Tuesday 13th December 2016

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Public Procurement Law Update

Newly published Crown Commercial Service (CSS) guidance encourages contracting authorities to incorporate social, ethical and environmental considerations into various stages of their procurement processes, as permitted by provisions already in place in the Public Contracts Regulations 2015 (PCR2015).

1.   Social Tenderers

The new guidance highlights that tender competitions can be reserved for certain suppliers who assist the social inclusion of disabled or disadvantaged persons. To qualify for participation in such procurements, the supplier’s workforce has to be made up of a minimum of 30% disadvantaged or disabled workers. The figure was previously higher (at 50%), so a larger pool of suppliers will now be eligible to participate.

 2.   Automatic Exclusions

The guidance clarifies that tenderers must be excluded from the procurement if they have been convicted of terrorist, child labour and/or human trafficking offences. Contracting authorities can use their discretion to exclude those tenderers which the contracting authority can demonstrate have violated social, labour or environmental conventions.

3.   Specification and Labels

The PCR2015 provides for specifications, which lay down the characteristics required of the works, services or supplies being procured. Where contracting authorities intend to purchase works, supplies or services with specific characteristics, they can also require a specific label as proof of compatibility with those characteristics. The new guidance clarifies that labels may include environmental requirements, provided the label is available in all Member States and does not unfairly discriminate against a tenderer from a particular jurisdiction.

4.   Award Criteria

The award criteria set out in the PCR2015 are a series of principles upon which detailed criteria may be built. The guidance reminds contracting authorities that contracts can be awarded on criteria other than cost price and quality. For example, whole life cost can be assessed, including production and end of life disposal, in the price award criteria. A contracting authority can also evaluate the best price-quantity ratio of tenders, which can include considerations such as the social, economic and environmental aspects (and impact) of the tender proposals, so long as such criteria relates to the subject matter of the tender.

While the ability to test such issues is welcome, it should be noted that contracting authorities must still evaluate such aspects in an objective, non-discriminatory and quantifiable way. The nature of some of these requirements can lead to difficulties in comparing tenders and devising an evaluation that does not lead to subjective marking and an inevitable challenge.

An easier way to include such requirements, which the guidance also highlights, is to include them as contractual obligations rather than pre-contract criteria. So long as they relate to the subject matter of the contract and do not make the procurement discriminatory; the inclusion of such requirements with the contract ensures the contracting authority’s needs are met whilst avoiding the difficult test of fairly and rigorously evaluating such matters.

Conclusion

It is in the interest of some contracting authorities to protect and encourage local business growth through the use of the procurement process. Of course, protecting or favouring one tenderer because of its local links fundamentally undermines the purpose of procurement law, which is about opening up competition. Although the new CCS guidance does not explicitly allow local tenderers to take precedence, it does allow contracting authorities to indirectly control certain characteristics of the successful tenderer. For example, if a contracting authority was to specify in its award criteria that the environmental efficiency of the manufacture and delivery of a product was of particular importance, then local tenderers would implicitly be placed at an advantage over their international counterparts due to the inevitable carbon output associated with long-distance transportation.

However, it is important to note the difficulty of ensuring tangible social, economic and environmental considerations are fairly, objectively and transparently assessed in the procurement process. Where a local benefit is required by a contracting authority (e.g. providing apprenticeships), it may be easier to simply ensure that such a requirement is included as a condition of the contract when preparing the invitation to tender. So long as such measures relate to the subject matter of the tender, they are likely to comply with the law. 

You can read more about our public procurement services by visiting our public procurement page.
 
If you have any queries regarding the new guidance, or public procurement law in general, please do not hesitate to contact Richard.
 
Partner, Commercial team
Tel: 0151 600 3302 / 0161 836 8800
 


Richard Hough is a  member of the Procurement Lawyers' Association

 


Case Law Developments

Tuesday 13th December 2016

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Public Procurement Law Update

  • Development agreement guidance

 Faraday v West Berkshire Council [2016] EWHC 2166 (Admin)

This case provides useful guidance as to when development agreements may fall outside the parameters of the PCR 2015. Faraday opposed the award of a development agreement to the successful bidder and applied for judicial review on the basis that the Council had failed to comply with the PCR 2015. Faraday’s challenge was dismissed.

This case emphasises the importance of adherence by contracting authorities to the PCR 2015 when entering into and drafting public contracts. Failure to comply could open the door to costly legal challenges and potential liability. The case also demonstrates that by careful design, development agreements may not be deemed public works contracts and therefore fall outside the scope of the PCR 2015.

Read more about this case here.

  • The importance of a robust and fair evaluation process

Energysolutions EU Limited v the Nuclear Decommissioning Authority [2016] EWHC 1988 

This case is a textbook example of how not to undertake a selection process. The contracting authority in this instance shredded notes, discouraged recorded discussion regarding the evaluation, and encouraged the inconsistent application of scoring across the range of bids received. The decision emphasises the importance of maintaining high standards throughout the evaluation stage and the need for a contracting authority to adhere to its own rules, as set out in its own procurement documents, in order to avoid a legal challenge.

Read more about this case here.

  • European Dynamics unsuccessful again

European Dynamics Luxembourg SA (European Dynamics), Evropaiki Dynamiki Proigmena Systimata Tilepikoinonion Pliroforikis kai Tilematikis AE v European Institute of Innovation and Technology (EIIT) T-481/14

The European Court of Justice (ECJ) was faced with a challenge by serial claimants European Dynamics regarding the procurement by EIIT of software development and services.

The ECJ dismissed the various applications by European Dynamics. The ECJ’s decision reiterates the point emphasised in Energysolutions (see above) that the implementation of fair, well-balanced and well-evidenced evaluation processes are imperative for contracting authorities in avoiding litigation. A stringent and documented selection process can go a long way towards proving adherence to the principles of procurement law.

  • Settlement agreements can constitute a regulated modification of contract

Finn Frogne A/S v Rigspolitet ved Center for Beredskabskommunikation C‑549/14

The contracting authority in this case had awarded a contract to a company, the fulfilment of which was subsequently under threat. Negotiations led to a settlement agreement, which implemented material variations to the original contract, (including reductions in the value of the services to be provided and the conversion of a lease of property to an outright sale) in order to settle the dispute.

It was held by the court that, in line with PCR 2015, material amendments to public contracts shall not be made without a new tendering procedure, even where the amendment is designed to settle a dispute. This restriction may not, however, apply in cases where the original contract contains detailed provisions permitting the adjustment of certain conditions after the award of the contract.

Settlement agreements which materially vary the conditions of a public contract will therefore be subject to the same modification tests are detailed under Reg. 72 of the PCR 2015 unless robust and compliant change mechanisms exist in the contract.

  • Exclusion of ‘Abnormally Low Tenders’ (ALT): A heavy burden on contracting authorities to justify their decisions

FP McCann Ltd v Department for Regional Development [2016] NICh12

A tender for a public contract was rejected as an ALT following multiple clarification requests to the tenderer by the contracting authority. The contracting authority found that the tender was significantly lower than the internal benchmark and the tenders of other competitors for the contract, in part because of failings by the tenderer to incorporate bitumen market rates and the cost of required plant (amongst other elements) into their bid.

The court held that the contracting authority may have been correct to reject the bid as an ALT. However, it was found that the contracting authority should have sought further clarification regarding its fears in relation to certain aspects the bid, and had therefore not followed the required process sufficiently to reject the bid for being an ALT. The unsuccessful consortium bidder was awarded damages.

The case reinforces the burden on contracting authorities to engage in a genuine and thorough process of discussion with bidders before disregarding them as an ALT. The importance of this point is highlighted by the fact that damages were awarded to the tenderer despite the probability that their bid would likely have been rejected as an ALT even if they had been subjected to a more thorough evaluation. 

Need advice or wish to talk to us?
 
If you have any queries about the current public procurement regime in force in the UK, please do not hesitate to contact us.
 
Partner, Commercial team
Tel: 0151 600 3302 / 0161 836 8800
 

 
Associate, Commercial team
Tel: 0151 600 3085
 
 
Associate, Commercial team
Tel: 0151 600 3249
 
 

Richard Hough, Michael Winder and Victoria Trigwell are members of the Procurement Lawyers' Association

New mandatory Pre-Qualification Questionnaire (PQQ) published

Wednesday 5th October 2016

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Public Procurement Law Update

In its latest Procurement Policy Note (PPN 08/16), The Crown Commercial Service (CCS) has issued a new Standard Selection Questionnaire (SQ), which replaces the previous mandatory Pre-Qualification Questionnaire (PQQ) with immediate effect.

A supplier selection process is sometimes adopted under certain public procurement procedures. It allows the gathering of information in relation to and assessment of a prospective bidder’s credentials, before considering the merits of their tender for a public contract. The information gathered includes bidders' historical records, financial credentials, details regarding past corruption, and whether they meet other certain mandatory criteria.

The SQ closely resembles the outgoing model PQQ, but introduces some new features. It has been created to seamlessly work in conjunction with the European Single Procurement Documents (ESPD). The ESPD allows suppliers to state, using self-assessment, that no mandatory or discretionary exclusion grounds apply and that they meet the minimum standards for the required selection conditions. The ESPD is designed to reduce the administrative burden on suppliers, because the same exclusion grounds will be used in ESPDs across the EU, allowing them to re-use forms previously submitted for another procurement, provided the information is still accurate.

All contracting authorities undertaking procurements above the minimum OJEU thresholds must stop using the PQQ for new procurements, and instead begin to use the new SQ and adhere to the requirements as set out in the PPN 08/16, which provides CCS guidance on the selection process.

You can read more about our public procurement services by visiting our public procurement page.

For further information regarding the new standard selection questionnaire, or public procurement law in general, please do not hesitate to contact Michael.


Michael Winder

Associate, Commercial team
Tel: 0151 600 3085
Email: michael.winder@brabners.com

 

Michael Winder is a  member of the Procurement Lawyers' Association


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