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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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Public Procurement Regulations 2015: Consequences for breach of Part 4

Tuesday 15th September 2015

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EU Public Procurement Update

The Public Contracts Regulations 2015 (PCR 2015) came into force in England on 26 February 2015. PCR 2015 is split into four parts, the first three of which largely reflect the words of the EU Public Sector Directive 2014. Part 4, however, contains provisions which were not set out in the Directive and have, for political reasons, been implemented in England only.

The Part 4 provisions reflect the Government’s desire to ensure that: (1) SME businesses have access to public contract opportunities; (2) contractors and sub-contractors receive prompt payments; and (3) administrative burdens are reduced.

Under Part 4, contracting authorities are required to advertise contract opportunities on the Government’s Contracts Finder portal even if such contracts have been advertised in the Official Journal of the European Union (OJEU). Further to entering into the contracts, contracting authorities must also publish notification of awards on Contracts Finder, including those which have already been published in the OJEU and call-off contracts which have been awarded under framework agreements.

The Part 4 obligations apply even where the contract is below the minimum OJEU financial threshold, and to contracts with a value as low as £10,000 for central government authorities and £25,000 for other non-governmental bodies. However, if the contract has not been generally advertised, the obligation to publish on Contracts Finder does not apply.  

Part 4 places restrictions on the use of pre-qualification questionnaires (PQQs) and introduces a requirement for contractors and sub-contractors to have their undisputed invoices paid within 30 days.

But what are the consequences of breaching the Part 4 requirements? 

It is clear from PCR 2015 that the Part 3 remedies only apply to contracts which fall under the provisions of Part 2 (i.e. procurements above the OJEU threshold) and therefore do not apply to the Part 4 provisions. This means that a challenger who brings a claim against a contracting authority for breach of the Part 4 requirements provisions will not have the Part 3 remedies available to it. The challenger would instead have to seek public law remedies such as breach of statutory duty or judicial review.

For example, if a contracting authority had failed to advertise an applicable contract on Contracts Finder and had advertised it elsewhere, this would constitute a breach of Part 4. The question therefore arises as to the extent of the loss suffered by a party who has missed out on that opportunity by reason of the contract not being advertised on Contracts Finder. There would be no financial loss to that party, and a loss of chance claim would have little chance of success given that the opportunity was advertised, albeit not on Contracts Finder.  In addition, and from a commercial perspective, a party would be unlikely to pursue such a claim through the courts, as the cost of the litigation would almost certainly be higher than the value of the claim.

The requirement for parties to pre-qualify for below EU threshold contracts has also been restricted by Part 4, although an assessment of ‘suitability’ is still allowed. In respect of any potential breach of this particular requirement, it remains difficult to see how a challenge could be brought; especially in circumstances where the applicant has genuinely been rejected for suitability reasons as there would be no real way to determine that a financial loss had been suffered as a result.

PCR 2015 requires that contracting authorities must ‘have regard’ to Cabinet Office guidance in respect of qualitative selection, which could be considered somewhat ambiguous in terms of how much ‘regard’ must be given to the guidance and whether it can in fact be ignored completely by the contracting authority.

This point has been dealt with in recent judgments; and it seems to be that where the authority has departed from the guidance, as long as it can provide ‘compelling justification’ as to why it has not given regard to the guidance, there would be no breach.

A claimant could seek a remedy for a breach of statutory duty or duty of care, although, it would be difficult for a claimant to quantify any loss. Although, if a claimant was successful in bringing such a claim, it could expect to be awarded substantial damages, in addition to the legal costs of pursuing such a claim. 

In conclusion, it seems that whilst there are a number of remedies available for potential claimants who consider that a contracting authority has breached a Part 4 requirement, there are also numerous financial, legal and commercial factors which would prevent a claim from being pursued. Despite this, there is always a risk that a claimant may wish to bring a claim on a “principles” basis, or indeed use a breach of Part 4 as a supplementary issue when making a claim for breach of a Part 2 provision. Despite the unlikelihood of a Part 4 claim being brought, we would always advise that, for the reasons stated above, contracting authorities should, wherever possible, adhere to the requirements of Part 4.

If you would like more information or to discuss any public procurement issues you may have please contact either:

Richard Hough
Partner, Commercial team
Tel: 0151 600 3302
Email: richard.hough@brabners.com

 

 

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

 


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


Legislation update: Cabinet Office guidance, Mystery Shopper Service and EU consultation on public procurement remedies

Tuesday 4th August 2015

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EU Public Procurement Update - Issue 6

Cabinet Office guidance

From 26 February 2015, most new procurement exercises undertaken by public sector bodies in England and Wales (“contracting authorities”) are now governed by the Public Contracts Regulations 2015 (PCR2015), which have replaced the well-established Public Contracts Regulations 2006 (PCR2006).

Since the publication of our last bulletin, many of the remaining provisions of the PCR2015 have come into force. During this time, the UK Government, directly through the Cabinet Office and on its behalf by the Crown Commercial Service, has issued a number of guidance notes on how procurements should be undertaken under the new regime.

The Cabinet Office has issued guidance on awarding contracts, the use of pre-qualification questionnaires, changes to contracts during their term, the standstill period and the new light-touch regime.

PCR2015 requires contracting authorities to consider Cabinet Office guidance in their decision making. For example, the guidance on awarding contracts clarifies exactly how contracts must be awarded under the PCR2015, including how award criteria must be linked to the subject matter of the contract, the new definition of most economically advantageous tender, use of life-cycle costing methods and use of social and environmental considerations, including fair trade practices. The pre-qualification questionnaire (PQQ) guidance includes a standard model PQQ, which contracting authorities would be well advised to adopt and adapt as required for their new procurements.

So keep your eyes open for any new Cabinet Office guidance that gets released.

New law puts Mystery Shopper Service on a statutory basis

The Mystery Shopper Service (MSS) is part of the Cabinet Office, which is dedicated to investigating and addressing issues raised about public sector procurements. It also undertakes proactive investigations. The intention of the MSS is to improve the procurement policies and practices of contracting authorities and to ensure there are no unnecessary barriers for small businesses to work with the public sector.

On 26 March 2015, the Small Business, Enterprise and Employment Act 2015 put the MSS on a statutory footing. The Act allows the Secretary of State or the Minister for the Cabinet Office to make regulations imposing additional duties on contracting authorities in respect of their procurement and contract management functions. Given that the PCR2015 encourages contracting authorities to provide reports on their procurements, we anticipate that the MSS will have access to plenty of information to enable it to keep a closer watch on public sector procurement in the future.

EU consultation on public procurement remedies

At the end of April, the European Commission launched a consultation to investigate the effectiveness of the legal remedies for breaches of EU public procurement law that were introduced by the EU in 2007. These remedies were incorporated into domestic law in 2009 and remain unchanged following the introduction of the PCR2015.

Before 2009, the remedies for a breach of EU public procurement law were pretty limited. The 2009 changes codified the standstill period (previously only effective through the Alcatel case), brought in the automatic suspension of contract making after a challenge is lodged at the courts (the effect of which has been reviewed in our previous updates) and substantial, albeit rarely used, remedies such as the declaration of ineffectiveness.

The consultation is looking to see if these remedies are effective. Interested parties can take part in the consultation which will help to shape the future of public procurement law remedies.

For more information on these developments or to discuss any public procurement issues you may have please contact either:


Richard Hough

Partner, Commercial team
Tel: 0151 600 3302
Email: richard.hough@brabners.com

 


Michael Winder

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

 

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


Case law developments: Changes to contracts, tender requirements and the need for market flexibility, evaluation documentation and automatic suspension refused

Tuesday 4th August 2015

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EU Public Procurement Update - Issue 6

Supreme Court provides guidance on changes to contracts under the Public Contracts Regulations (PCR2015)

Edenred (UK Group) Ltd and Another v HM Treasury and Others [2015] UKSC45

Regulation 72 of PCR2015 sets out when a contract can be changed without needing to retender and conversely when changes are so substantial that a new tender exercise is required. This issue was recently considered by the Supreme Court in this case. 

HMRC had entered into a memorandum of understanding with National Savings & Investments (NS&I) for NS&I to deliver a new tax free childcare scheme. NS&I had an existing contract with Atos for other support services.  NS&I decided to use Atos for the delivery of its new scheme on the basis that the original tender documents envisaged the Atos contract could be extended in the future to provide further services for NS&I. Edenred challenged this, arguing the delivery of the childcare scheme constituted a substantial change to the existing contract, and as such, a new tender was required.

In dismissing Edenred’s appeal, the Supreme Court noted that Regulation 72 will govern any amendment of the Atos contract. The Court said that the original contract allowed for an expansion of services and that the expansion here was within a “reasonable compass”; in particular, the essential nature of the services provided by Atos was not altered, it was within the financial range originally advertised, and the economic balance in the contract had not changed. The Court also expressed the view that the contract amendment clauses in the Atos contract, as required under Regulation 72 were sufficiently clear in this case. 

This judgment provides helpful guidance on the application of Regulation 72. In particular, although public contracts should not be designed to avoid EU public procurement law obligations, the Supreme Court has endorsed the ability for contracting authorities to tender contracts which have an ability to expand their scope in the future. This is allowed so long as that expansion in scope is envisaged and advertised in the initial procurement process. The Court said to do otherwise would mean outsourced services would not be able to accommodate the events and policy changes that are part of public life.  

The fine line between carefully designed tender requirements and the need for market flexibility

Case C 278/14, SC Enterprise Focused Solutions SRL v Spitalul Judetean de Urgenta Alba Iulia

In this Romanian case, the Respondent district emergency hospital launched a call for tenders in respect of a contract for the supply of a computing system and equipment. The Respondent rejected the Applicant company’s tender on the basis that the processor offered by the Applicant did not comply with the technical specifications of the contract. The specification of the processor submitted by the Applicant in its tender was superior to the processor specified by the Respondent in the technical specification for the contract but, as the market for the computer processors was a fast evolving one, the Applicant’s specification was inferior to the current model offered by the Respondent’s preferred manufacturer. The Applicant challenged the Respondent’s rejection of its tender. The question put before the court was whether EU legal principles committed the Respondent to reject the Applicant’s tender which satisfied the requirements of the original contract notice on grounds which were not set out in the notice. 

The European Court of Justice ruled that, in the context of a public contract which was below the threshold for application of the EC directive but which had cross-border interests, fundamental EU principles of equal treatment, non-discrimination and transparency, should be interpreted as meaning that a contracting authority could not reject a tender which satisfied the requirements of the contract notice on grounds which were not set out in that notice.

This case highlights that contracting authorities should take care when specifying technical requirements in fast moving markets because if the specifications of products improve due to rapid advancement in technology, contracting authorities may find themselves bound by overly rigid requirements and lose the opportunity to avail themselves of the latest technology for their requirements.

Authorities should ensure that tender evaluation documentation exists or could face an order for early disclosure of other documentation

Geodesign Barriers Ltd v The Environment Agency [2015] EWHC 1121 (TCC)

The Environment Agency (the “EA”) issued an invitation to tender regarding the provision of temporary flood barrier services. At the time of issuing the invitation Geodesign Barriers Ltd, (the “Claimant”), was the incumbent provider of the temporary flood barriers service. Ultimately, the Claimant lost the tender process to their competitor, Inero. The Claimant issued proceedings on the basis that the EA’s evaluation process had been flawed.

The Claimant was unsatisfied with the brief information supplied by the EA as part of the post-tender debrief. The Claimant then applied to Court for disclosure of the detailed bid evaluation documents.

The Claimant requested access to a wide variety of documents relating to the evaluation of the tender. Whilst the Court held that access to many of the more sensitive requested documents was unwarranted, the Court ordered the EA to disclose documentation which related to how they had evaluated the competing bids. The Court confirmed that the EA did not have to identify the competing bidders.

The EA said it was unable to provide any documents detailing the evaluation process. The Judge described the EA’s tender evaluation material as "most unsatisfactory". The lack of readily available documentation relating to the evaluation raised significant concerns within the Court regarding the transparency of the tender process, with the Judge suggesting such lack of transparency will significantly weaken the EA’s position if its award decision is challenged further.

This case highlights the importance for contracting authorities to ensure that clear and contemporaneous documentation exists recording the decisions reached in respect of any tender process they undertake, especially when evaluating bids. Failure to maintain sufficient tender evaluation documents can place a contracting authority in a significantly weaker position than would otherwise be the case should an award decision ever be challenged.  

Automatic suspension – refused due to nature of claimant and balance of convenience

Bristol Missing Link Ltd v Bristol City Council [2015] EWHC 876 (TCC)

In 2014 Bristol City Council (the “Council”) sought tenders for a contract for the provision of violence and abuse support services. The contract in question was eventually awarded to Refuge rather than to the incumbent provider (and fellow tenderer) Bristol Missing Link Ltd (“the Claimant”). The decision to award this contract to Refuge was heavily criticised by the Claimant. The Claimant repeatedly requested to be provided with evaluation documentation relating to the award decision and ultimately brought proceedings to challenge the decision.

When a challenge is made, the law imposes an automatic suspension of the procurement process which prevented the Council from entering into the proposed contract with Refuge until the challenge was addressed.

The Council applied to Court to lift the automatic suspension early, which was refused by the Court. In its decision the Court noted that the Council had not sufficiently disclosed evidence to clearly rebut the arguments being made by the Claimant and therefore there was a serious issue to be tried.

The Court pointed out that the Claimant was a non-profit organisation, which had bid on a non-profit basis, and if the automatic stay was lifted the only remedy that would be left available to the Claimant would be a payment of damages. It was clear to the Court that damages would not be an adequate remedy given the nature of the business in question and would not suitably compensate the “catastrophic” effect losing the contract would have on the Claimant.

In reaching its decision, the Court had considered the balance of convenience and found that, on balance, the disadvantages suffered by the Council in maintaining the suspension until the proper trial were negligible and, most importantly, that it would not affect service users of the contract.

This case again highlights the importance of the balance of convenience in considering whether the automatic suspension should remain in place or whether it is better to lift the stay and permit the contract to be awarded. As the Court determined the ultimate service users would not be affected by maintaining the stay, the significant harm the loss of the contract would have on the Claimant became a critical factor in refusing to lift the automatic stay.

For more information on these decisions or to discuss any public procurement issues you may have please contact either:


Richard Hough

Partner, Commercial team
Tel: 0151 600 3302
Email: richard.hough@brabners.com

 


Michael Winder

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

 

Richard Hough and Michael Winder are Members of the Procurement Lawyers' Association


Public Contracts Regulations 2015 – New Public Procurement Rules came into force on 26 February 2015

Monday 20th April 2015

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EU Public Procurement Update - Issue 5  

As from 26 February 2015, most new procurement exercises undertaken by public sector bodies in England and Wales (“contracting authorities”) are now largely governed by the Public Contracts Regulations 2015 (“PCR 2015”). The PCR 2015 has almost wholly replaced the Public Contracts Regulations 2006 (“PCR2006”), the previous domestic law.

As reported in earlier editions of this newsletter, the European Union adopted three new directives last year in an attempt to modernise and simplify public procurement law.  The directives cover the procurement of public sector, concession and utilities sector contracts. EU member states are required to implement all three of the directives into their national law by April 2016.  The UK Government has realised the benefits to the economy of simplified procurement legislation and has pressed ahead with early adoption of the public sector directive into national law. The remaining two directives will be implemented into national law in due course.

Key changes introduced by the PCR 2015 include:

  • Greater flexibility for contracting authorities in running procurement procedures;

  • Introduction of shorter timescales;

  • New procedures - “innovation partnership” and “competitive procedure with negotiation”;

  • A requirement that contracting authorities offer unrestricted and full direct access free of charge to the procurement documents from the date that the OJEU notice is filed;

  • Provisions to encourage small and medium enterprise (“SME”) participation, such as breaking larger contracts into smaller lots;

  • Award criteria is limited to most economically advantageous tenderer (“MEAT”);

  • Changes to the definition of MEAT;

  • Clarification on grounds for exclusion, including consideration of a supplier’s poor prior performance;

  • Abolition of the Part A and Part B services distinction;

  • Introduction of a lighter touch regime for health and social services; and

  • Codification of case law, including the law relating to modification of contracts during their term.

The UK Government has gone above and beyond the requirements of the EU’s public sector directive by including provisions in the PCR 2015, which implement Lord Young’s reforms on supporting growth, transparency and maximising opportunities for SMEs.  This means that, while below threshold contracts are largely exempt from public procurement requirements, contracts with a value over £25,000 may be subject to the following requirements:

  • Publication on the Government’s Contracts Finder portal;

  • A requirement on contracting authorities to pay undisputed invoices within 30 days;

  • Minimal use of selection criteria to encourage greater SME participation;

  • The banning of the use of a pre-qualification stage for sub-OJEU threshold procurements; and

  • Adherence to Cabinet Office guidance.

The Cabinet Office has been quick to issue guidance on a number of topics. Contracting authorities are now under a statutory obligation to adhere to this guidance, which to date includes a model menu of selection criteria questions for use in single stage tenders and PQQs (where PQQs are allowed). Also model clauses have been provided for use in respect of the 30 day payment terms.

What this means for you:

  • Contracting authorities should consider amending their constitutional documents to reflect the new law;

  • All procurement procedures and precedent documents should be updated to reflect the new rules and terminology; and

  • Private sector suppliers should be aware of the provisions, particularly those that encourage SME participation, so they can be aware of their rights.

We have undertaken training across our offices since implementation of the PCR 2015 and can offer bespoke training if required.  Please feel free to get in touch on the contact details below if you would like more information on the new legislation or would like training for your organisation.


Michael Winder
Solicitor, Commercial team
Tel: 0151 600 3085
Email: michael.winder@brabners.com 

 


Richard Hough
Senior Associate, Commercial team
Tel: 0151 600 3302
Email: richard.hough@brabners.com


Case Law - Latest Developments: Variation of Development Agreement, Right to Damages and Automatic Suspension

Monday 20th April 2015

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EU Public Procurement Update - Issue 5

Variation of development agreement was an unlawful direct award and should have been re-procured

Gottlieb, R (On the Application Of) v Winchester City Council [2015] EWHC 231

Under case law relating to PCR 2006, if a contract is materially changed, a new contract is effectively created and, accordingly, a new procurement procedure is required. In 2004 Winchester City Council (the Council) entered into a development agreement for a redevelopment of an area of Winchester. The development was to be mixed use and included some civic amenities. Delays meant that in 2014 the development had not yet started. The developer approached the Council and asked to vary the development agreement to make it more financially viable, the changes including removal of the civic amenities and allowing the developer to keep more of the work in-house. The Council agreed, however one councillor applied for a judicial review.

The Court agreed that the changes to the development agreement were material in nature because the terms were now significantly more commercially attractive for the developer. Because there was a better profit margin, other developers might have bid for it. Therefore, the Court decided the Council acted unlawfully in accepting the changes without holding a new procurement exercise.

Right to damages for unsuccessful bidder confirmed

Energy Solutions EU Ltd v Nuclear Decommissioning Authority [2015] EWHC 73

The claimant, an unsuccessful bidder, commenced proceedings stating it had suffered loss because the Nuclear Decommissioning Authority (NDA) had not complied with the PCR2006. The claimant issued its claim after the mandatory 10 day standstill period but within the 30 day limitation period for claims.

The Court was asked whether the claimant was entitled to recover damages as of right, given it didn’t start proceedings within the standstill period. If it had, it might have stopped the contract being awarded. The Court decided it was a question of fact in each case whether a claimant’s loss was attributable to its failure to issue proceedings within the standstill period. It was stressed however that the PCR2006 does provide for claims to be issued after the standstill period has expired.

The Court, however, rejected the defendant’s proposal that the Court should have discretion to refuse to award damages, or to limit damages awarded where the claimant failed to issue proceedings within the standstill period or where the breach of the PCR2006 was not serious enough to warrant full damages. The Court stated full damages should be recoverable as of right where any breach by a contracting authority can be shown to have caused any loss.

Automatic suspension – additional factors to be aware of

Group M UK Ltd v Cabinet Office [2014] EWHC 3659

Group M was unsuccessful in a re-tender of a contract and issued proceedings against the Cabinet Office within the 10 day standstill period. This triggered the automatic suspension, preventing the Cabinet Office entering into the contract with Carat, the successful bidder.

The Cabinet Office applied to set aside the suspension. Carat also attended the trial as an interested third party. In addition, Carat submitted its costs in relation to the application despite not being listed as a party to the litigation. Considering the application, the Court held that there was no sufficiently serious issue to be tried and that damages would provide an adequate remedy. The Court therefore lifted the automatic suspension.

Crucially, the Court decided that Carat, as an interested third party, should be entitled to have its costs of £40,000 paid for by Group M. This case highlights the significant costs barrier that claimants face when seeking redress for an unsuccessful bid and in attempting to maintain the automatic suspension. Not only will the claimant in all likelihood have to provide a cross-undertaking to provide damages to the contracting authority in the event that the claimant’s claim fails, it may also be required to pay the successful bidder’s costs.

For more information on any of the procurement issues raised above or to discuss any issues you may have please contact either:


Michael Winder
Solicitor, Commercial team
Tel: 0151 600 3085
Email: michael.winder@brabners.com 

 


Richard Hough
Senior Associate, Commercial team
Tel: 0151 600 3302
Email: richard.hough@brabners.com


Legislation - New Public Procurement Regulations

Tuesday 20th January 2015

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EU Public Procurement Update - Issue 4

The three new EU public procurement directives (public sector, utilities and concession contracts) were adopted at European level in April 2014. We provided a detailed review of the Public Sector Directive in Issue 3 last year which can be found here. Member states have been given two years in which to transpose the directives into national law.

The Cabinet Office is keen on early transposition of the directives into UK law and is targeting the first half of 2015 for the introduction of new regulations, which are currently in draft form. On 19 September 2014, the Cabinet Office issued a draft copy of the Public Contracts Regulations 2015 (the Regulations) for consultation. The consultation lasted a month, during which interested parties were invited to provide their opinions on the draft provisions. The Cabinet Office is currently considering the responses before it issues the final version of the Regulations, which will then be adopted into law.

By and large, the Regulations copy the wording of the EU public sector directive as closely as possible, only deviating where necessary for clarification purposes. All of the changes introduced by the directive, which were considered in Issue 3, are present in the Regulations. The rules regarding remedies, which have been amended on a piecemeal basis since the introduction of the 2006 Regulations, are now consolidated in the Regulations. 

Part 4 of the Regulations includes Lord Young’s recommendations for opening up sub-OJEU threshold procurement to small to medium enterprises. In summary, the following new rules will apply to contracting authorities undertaking below threshold procurements:

  • The rules will apply to procurements over £10,000 (central government bodies) or £25,000 (other contracting authorities)
  • If the opportunity is generally advertised, it must also be advertised on the Contracts Finder portal (but not necessarily through OJEU)
  • The use of PQQs and pre-qualification stages will be banned.
  • Contracting authorities will be obliged to pay undisputed invoices within 30 days and require similar obligations to flow down the supply chain.

For more informarion on the Regulations or to discuss any issues you may have please contact either:


Michael Winder
Solicitor, Commercial team
Tel: 0151 600 3085
Email Michael

 

Richard Hough
Senior Associate, Commercial team
Tel: 0151 600 3302
Email Richard


Case Law - Latest Developments including: Automatic Suspension and “Reasonably Well-Informed and Normally Diligent Tenderer”

Tuesday 20th January 2015

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EU Public Procurement Update - Issue 4

Here we look at the latest case law issues that the Courts have be passing judgment on.

Supreme Court Confirms “Reasonably Well-Informed and Normally Diligent Tenderer” Standard

Healthcare at Home Ltd v The Common Services Agency [2014] UKSC 49

This case confirms in domestic law the European principle of the “reasonably well-informed and normally diligent” (RWIND) tenderer. The Common Services Agency (CSA) invited tenders for a cancer drug dispensing and delivery service and related support. When Healthcare at Home (HAH) was unsuccessful in its tender, it brought a challenge against the CSA, alleging, amongst other things, that a lack of clarity on some award criteria breached the principles of transparency and equal treatment because HAH had interpreted the criteria differently to other tenderers. When examining the matter, the Court said that it must be satisfied that the criteria were sufficiently clear to allow a RWIND tenderer to interpret the criteria in the same way. While the Court can take into consideration evidence that might affect this hypothetical RWIND tenderer, it is for the Court to determine the clarity of tender documents and award criteria based on this objective standard, not on how a particular tenderer subjectively interpreted the documents and criteria.

The Court’s Role Confirmed by the High Court

Willmott Dixon Partnership Ltd v London Borough of Hammersmith and Fulham [2014] EWHC 3191 (TCC)

In this case, the Court confirmed that its function in reviewing a contract award under public procurement law was limited. The Court’s role is to review the original decision of the contracting authority to determine whether there had been a manifest error and/or whether the tender process was unfair. There is no requirement for the Court to carry out a full review of the tender process or substitute scores where inaccuracies have been discovered. The Court also confirmed that the existence of a manifest error in the scoring mechanism did not necessarily mean the tender process was flawed.  The Court must instead decide if the manifest error(s) would have led to a different result in respect of the contract award.

Automatic Suspension

Until recently, it seemed that Regulation 47G of the Public Contracts Regulations 2006, in which a contract award is automatically suspended by a challenge to an award decision, could easily be overturned and lifted by an application by the contracting authority to the Court. The first winds of change were seen in the Covanta case (which we covered in Case Law Issue 2).  Recently there has been a flurry of cases on this issue with three suspensions upheld, yet others lifted. We have selected four important cases below which highlight recent judicial trends and reasoning.

Automatic Suspension 1: Damages Not Adequate, Automatic Suspension Upheld
NATS (Services) Ltd v Gatwick Airport Ltd & DFS Deutsche Flugsicherung Gmbh [2014] EWHC 3133 (TCC)

In this case, NATS, the incumbent provider of air traffic control services at Gatwick, succeeded in having the automatic suspension upheld. The Court also confirmed that the traditional ‘American Cyanamid’ test was appropriate. This test considers: (1) whether there is a serious issue to be tried; (2) whether damages are an adequate remedy to the claimant; and (3) where the balance of convenience of lifting or upholding the suspension lies, taking into account the public interest. In NATS, the loss of chance meant damages were not an adequate remedy for the challenger. Given the slow procurement process and that NATS was still providing the services adequately, the Court decided that the balance of convenience lay with upholding the suspension. It should be noted that, as a consequence of upholding the suspension, the Court ordered an expedited trial to be held within a tight timetable of 6 months.

Automatic Suspension 2: Automatic Suspension Upheld if in the Public Interest
Edenred (UK Group) Limited v HM Treasury and others [2014] EWHC 3555 (QB)

Edenred challenged the UK Government’s decision to entrust the new Tax Free Childcare scheme to another public body, rather than the private sector as originally intended, arguing that the contract fell within the scope of the Regulations. By application of the ‘American Cyanamid’ test, the parties agreed there was a serious issue to be tried. The Court considered that damages were inadequate as a remedy – it was difficult to establish whether Edenred would have won a procurement process, and whether this added or detracted from the value of Edenred’s claim. The Court decided in favour of maintaining the suspension as the public interest in ensuring adherence to public procurement law, which is intended to ensure competition and fair use of public resources.  Any delays in commencing the contract could be mitigated by government administration. It is also noted that Edenred had already secured an expedited trial beginning only 2 months after launch of proceedings, so any delay in awarding the contract would be short.

Automatic Suspension 3: Damages Adequate, Automatic Suspension Lifted
NP Aerospace Limited v Ministry of Defence

Applying the American Cyanamid test, the Court lifted the automatic suspension in relation to a challenge by NP regarding the procurement of an armoured vehicle refurbishment contract under the Defence and Security Public Contracts Regulations 2011. The Court decided in this instance that damages would be an adequate remedy and, when assessing the balance of convenience, that there was a strong public and defence interest in allowing the challenged contract to be concluded.

Automatic Suspension 4: High Court Lifts Suspension and Re-confirms the Correct Test
Group M UK Ltd v Cabinet Office [2014] EWHC 3659 (TCC)

In this case, the Court granted an application by the Cabinet Office to lift the automatic suspension of its award of a single supplier framework agreement for media services, following an appeal by Group M. The Court reconfirmed that the American Cyanamid test was the appropriate test to use when considering whether or not to lift the automatic suspension. The Court did not consider that there was a serious issue to be tried, in any event damages would be an adequate remedy and the balance of convenience was in favour of allowing the Cabinet Office to award the framework agreement. It should also be noted that, due to its unsuccessful attempt to resist the application, Group M was ordered to pay the Cabinet Office’s costs.

For more informarion on any of the procurement issues raised above or to discuss any issues you may have please contact either:


Michael Winder
Solicitor, Commercial team
Tel: 0151 600 3085
Email Michael

 

Richard Hough
Senior Associate, Commercial team
Tel: 0151 600 3302
Email Richard


EU Public Procurement Update - Issue 3 - May 2014


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EU Public Procurement Update - Issue 2 February 2014


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EU Public Procurement Update - Issue 1 - November 2013


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