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Commercial

European Commission Position Paper on Public Procurement
Wednesday 27th September 2017

Negotiations with the EU over the UK’s withdrawal from the Union have entered their fourth round this week. Whilst most news and media outlets are focussing on the headline topics, there are of course a number of other important areas for discussion, such as public procurement, which tend to elude the public eye.

The European Commission (“the Commission”) recently released a position paper regarding Public Procurement for discussion at the European Council’s Article 50 Working Party, which sets out three main principles of the EU’s position (as to procurement) to be presented to the UK in the Brexit negotiations.

First, the Commission states that any on-going public procurement procedures, and any procedures in relation to on-going framework agreements (including the award of contracts) should continue to be governed by national law as it stands at the date of withdrawal (in other words, in accordance with EU law).

Second, the ‘non-discrimination principle’ (in brief, that contracting authorities must not discriminate against tenderers and contractors based upon which member state they are from) should be complied with by contracting authorities both from the UK (in respect of tenderers and contractors from the other member states) and from the EU (in respect of tenderers and contractors from the UK) in relation to on-going procurement procedures and framework agreements.

Finally, the review procedures and legal remedies available in procurement matters under national and EU laws (as at the withdrawal date) should also continue to apply to any on-going procurement procedures and framework agreements. Such remedies include the requirement for member states to ensure that contracts are declared ineffective where certain rules have not been followed, and the automatic suspension of contracts upon the submission of an application to the Courts for the review of a decision made by a contracting authority.

Whilst the first two principles provide that the procedural aspects of advertising and awarding public supply and works contracts should remain unchanged (at least for any on-going projects), the final principle seeks to ensure that disappointed contractors and tenderers retain their means of enforcement against contracting authorities that do not adhere to the rules.

The position and intentions of the UK in this respect are not yet clear. The majority of the regulation of public procurement in the UK is based in national laws that were designed to implement EU Directives and, post-Brexit, it would of course be possible for the UK to repeal those regulations. However, the UK will remain a party to the Government Procurement Agreement (GPA) as part of its membership of the World Trade Organisation, which contains many provisions that are similar to the EU regime (albeit, in some cases, in less detail).

It seems likely that the UK will eventually derogate to some extent from the position under EU law (even if only to simplify the regulations), but many of the guiding principles behind the existing EU rules (such as non-discrimination, transparency and the availability of review procedures) will remain intact, to a degree, by virtue of the GPA anyway.

At this stage, it does not appear that the EU anticipates ‘shutting out’ the UK from the benefits of the EU regime. The Commission position paper specifies that, from the withdrawal date, other member states should continue not to discriminate against UK contractors, and the Publications Office of the European Union should continue to publish notices sent by UK authorities. Before the UK considers the benefits of repealing any of the rules under the EU regime, it should certainly be considered what benefits could be lost in respect of contracts from the remaining member states.


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Pharmacies - Collaboration and Joint Ventures
Tuesday 19th September 2017

Nearly a year after the government imposed significant cuts, many community pharmacies continue to struggle with the effects of reduced funding.

Reacting negatively to the funding cuts could involve pursuing options such as implementing cost-cutting measures or, more drastically, even selling the business. However, we are finding that an increasing number of independent pharmacies are instead looking to react positively by expanding or exploring collaborative arrangements with other pharmacies.

Corporate Joint Ventures

By forming a new corporate vehicle, multiple pharmacies can work together and share costs, resources and facilities. This can be useful for performing a particular function or undertaking a fixed-length project, in order to ring-fence liability. The newly formed entity could bid for enhanced and locally commissioned service contracts whilst the primary pharmacy businesses remain largely protected. However, the downside to this approach is finding a way of ensuring that each of the pharmacies has a satisfactory level of influence in the management of the joint venture company.

Contractual Joint Ventures

Alternatively, pharmacies can collaborate by entering into a legally binding contract. Administrative functions can be streamlined by sharing premises and staff, and issues of financial liability and decision-making can be addressed in the contract. Under this type of arrangement, one of the contracting pharmacies could bid for locally commissioned services on behalf of the other parties.

Whilst this method can avoid some of the governance issues of a corporate joint venture, it may increase risk for the pharmacy contractor, as liabilities under the contract will be borne by each of the relevant contracting pharmacies.

These collaboration methods allow pharmacies to cover a wider geographical scope and potentially achieve economies of scale. In a market with limited funds and tight margins, this is an attractive proposition for commissioners, who may prefer to contract with just one provider to cover a range of services.

Mergers

The final option is for two or more pharmacies to merge, combining all trading activities, assets, liabilities and capital into one organisation and sharing a joint customer base. Statutory protection exists for pharmacies that choose this route, where it does not create a gap in service provision.

The cost reductions involved can make this an attractive option; fewer staff may be required and there will be more scope to increase efficiency through automation, streamlined supply chains and “hub and spoke” dispensing. However, this comes at the sacrifice of the autonomy, control and flexibility previously enjoyed by the individual parties, and governance of the merged entity can be complex and contentious.

Each form of collaboration has advantages and disadvantages, and circumstances will dictate which is the most appropriate. It is important to take advice from solicitors and accountants and reach a decision which is bespoke to the pharmacy in question.

Members of our pharmacy team will be attending the Pharmacy Show at the NEC Birmingham on 8th – 9th October 2017. We will be exhibiting at stand PG31.  Richard Hough, a pharmacist and lawyer, who is head of our pharmacy team, and David Seddon, a specialist pharmacy transactional lawyer, will be on hand to answer any questions you may have about our specialist legal service for pharmacists and pharmacy business owners. To arrange a meeting with either Richard or David, please get in touch using the details below. Alternatively, we would be delighted if you visited us at our stand anytime.

You can find out more about the event by clicking here.


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Defective Work and Buying a Dental Practice – How Your Solicitor Can Reduce the Risks
Wednesday 13th September 2017

The process of buying a dental practice can be stressful. However, it doesn’t have to be. Ensuring that you have the right legal team on board can change that stress into a feeling of being well informed, and empowered. Our dental team prides itself on timely communication of appropriate, easy to understand information. Our clients in turn have a firm understanding of both the different stages of the transaction, and perhaps more importantly a real knowledge of the business that they are acquiring.

This can be particularly important when it comes to acquiring a practice but discovering that there has been defective treatment carried out by your predecessor, which may have been an ongoing issue for some years.

A specialist dental lawyer knows the questions that need to be asked when a practice is being purchased. The information provided during this process should uncover any potential regulatory or management issues at the practice. However, when it comes to the standards of care received by the patients this can be harder to unearth until after the practice has changed hands. Despite this difficulty, it doesn’t mean that there is a lot that can be done to minimise the risks.

Denplan Care patients (or patients on similar capitation schemes) can be the biggest problem when it comes to defective treatment. These schemes work on the basis that the dentist receives a set monthly amount in return for maintaining patients at a certain standard of dental health. Problems can arise where patients have either been incorrectly banded under the scheme, or the standard of dental health promised has not been achieved or maintained by the outgoing dentist. The biggest worry is that you will spend many hours after acquiring the practice remedying issues with patients only to receive the standard monthly amount. 

Denplan recommends that, when Denplan Care patients are transferred, a sum is kept aside equating to 10% of annual Denplan turnover. The idea behind this is that the retained sum can be claimed by a buyer if any additional work is required. A purchase contract can make provision for this retention and then clearly set out the circumstances in which a claim on those funds can be made.

For purely private patients, arrangements can be made either for the seller to carry out appropriate repair work, or for you to step in and remedy the defective treatment and for the seller to reimburse you for the cost of the work. 

Where defective work has been carried out by a previous practice owner on the NHS, then remedial work will be carried out under the NHS guarantee scheme and, for the most part, any repair work would be eligible for you to claim UDAs.

You should therefore not be out of pocket if you are required to carry out remedial work.

Even if funds are set aside for potential claims, it is important to remember that there may be some limitations on the amount you can claim. Sale agreements often include minimum values before a claim can be made in order to avoid disputes over small sums. Contracts often also have a maximum limit of either the full purchase price of the practice or the price paid for goodwill and equipment at the practice. Sale contracts will also set out the timescales for making claims under any defective work warranty. It is important that you are aware of these, as a claim will not be allowed if it is brought too late. 

If claims are made against a seller for defective work, a sale agreement may also set out a process for either: i) the seller to carry out remedial treatment themselves; ii) the seller to examine the patients to ascertain whether the work is really required; or iii) the seller to have an independent third party examine the patients to verify the claim. The seller and the buyer would negotiate on these points and agree to any suitable options in the circumstances.

Although a solicitor can do a lot to protect a buyer financially, there are some risks that are more difficult to safeguard against. The poor dental health of your patient base may mean that during the first year of practice ownership you spend all of your time remedying problems left by your predecessor, rather than concentrating on new business and growth. You should consider whether you will have enough staff should extensive remedial work become necessary. Where the practice is staffed by associates, are they the right people to help you fix the problems of the past, given that they may have been aware of, or worse, part of the problem in a failure to maintain clinical standards? Patients may also simply dislike the practice, or it could have a poor reputation in the community which can take years to bounce back from.

An experienced dental lawyer can do a lot to protect you financially from the risks associated with purchasing a practice and discovering a catalogue of defective treatment. However, owning and running a business is an inherently complicated and risky world. The practical implications of taking over a patient base which has been poorly treated shouldn’t be downplayed. Proper and careful consideration of any business you are looking to acquire, with the help of expert advice, will always put you in the best possible position to deal with any challenges you uncover as a new business owner.


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Considering the least risk of injustice in automatic suspensions in public procurement cases
Wednesday 13th September 2017

The recent case of Sysmex (UK) Limited (“Sysmex”) v Imperial College Healthcare Trust NHS Trust (“Trust”) [2017] EWHC 1824 (TCC) has again shown  the Courts applying and developing the American Cyanamid rules in order to determine whether or not an automatic suspension should be lifted.  The case arose as a result of a procurement by the Trust for a contract for pathology services.  Abbott Laboratories Limited (“Abbott”) won the tender.  Sysmex (who came second in the process) challenged the result of the procurement, triggering the automatic suspension on the Trust’s ability to enter into the contract.

The Trust applied to lift the suspension. Sysmex argued that the suspension should remain because damages would not be an adequate remedy for them, due to the size and prestige of the contract and the related reputational damage being unquantifiable in monetary terms.

In considering the application, the Court considered the usual principles as set out in American Cyanamid.  The Court considered that it only had to be satisfied that there was a serious issue to be tried, and that no trial of the issues would be necessary; Mr Justice Coulson iterated that other than in exceptional circumstances where one party had a “knock-out point”, such action is inappropriate as a matter of principle.  The Court also added that, if damages were an adequate remedy then this would normally (but not in all instances) be sufficient to lift the suspension.  In addition, the Court added that, when considering the practical application of these principles, considerable assistance can be taken from the judgment in Nottingham Building Society v Eurodynamics Systems, particularly that ‘the overriding consideration is which course is likely to involve the least risk of injustice if it turns out to be “wrong”’.

The Court deemed Sysmex’s arguments in relation to the prestige of the contract and their reputational damage as speculative and lacking supporting evidence, and that damages would be an adequate remedy and that it would be just to confine them to that remedy.

Regarding the Trust however, the Court determined that damages would not be adequate. Whilst the Trust may be able to quantify its loss of profits during the period of the injunction, the Court determined that, due to the nature of the contract, in considering the balance of convenience, it was apparent that damages would not be a suitable remedy.

The Court determined that there was overwhelming evidence to lift the suspension on the contract.  Due to the nature of the services, the Court found that “where there is credible evidence that patient care will suffer if the suspension is not lifted, it will usually be the case that the least risk of injustice will favour the lifting of the suspension”.  The Court balanced this point against those raised by Sysmex’s arguments that the procurement had been significantly delayed and that it is in the public interest to ensure that a procurement is ran correctly.  However, it deemed that the delays in the process were understandable given the size and complexity of the contract awarded and that, whilst the public interest is important in relation to the procurement process, patient care was of more importance in this case.

Unusually, another point raised by Sysmex, was that the suspension could be lifted in relation to certain parts of the contract.  While the Court deemed that this would not be workable in this instance, it did allude to the fact that this route could be explored in future disputes.

The key issue for the Court in this matter, despite the claims from Abbott, was the importance of the American Cyanamid principles and the willingness of the Court to apply them practically to avoid an injustice, particularly in cases such as this which revolved around patient care.

For further information, please visit our procurement page or contact a member of our procurement team.


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Brexit: Calls to Simplify Public Procurement Law to Promote Local Growth
Friday 25th August 2017

The Local Government Association (LGA), which represents English and Welsh councils, has called upon the UK Government to simplify the public procurement rules for local authorities after the UK has left the European Union in order to promote local economic growth.

Procurement Regulations
Currently, councils are required to comply with EU-wide public procurement legislation, which stipulates strict advertising and award requirements whenever they purchase goods, works and services and also restricts changes to live contracts. The LGA says these rules have caused difficulties such as:

1. The EU-wide approach can conflict with a council’s desire to support its local economy;
2. Procurements that are subject to the OJEU regime can take between 3 and 18 months, typically twice as long as those undertaken in the private sector; and
3. Despite these safeguards against localism and member state protectionism, very few contracts are actually awarded to companies based in other member states: only 20% of English councils even received an expression of interest from companies in other EU countries, and across Europe only 1.6% of public contracts are eventually awarded to companies in other EU states.

A New British System?
The LGA, which remained neutral during the referendum campaign, has called for a simpler procurement process and adoption of a “lighter touch” approach after Brexit.
Such simplified system could then allow councils the flexibility to use procurement to boost their local economies, e.g. by:
1. Granting councils greater freedom to use local suppliers;
2. Allowing councils to impose additional social requirements on companies which are awarded contracts, such as specifying a local minimum wage or employing or training a number of local people; and
3. Permitting councils to procure using shorter timescales thus lowering administration (and associated costs) to councils and businesses. This may assist small and medium sized local firms to bid for contracts in the first instance.
Though councils would no longer be required to advertise contracts on an EU-wide basis, the LGA argues that local councils should retain the ability to do so, if they so wish.
Cllr Kevin Bentley, Chair of the LGA’s Brexit Group, explained that though any new regulations for public procurement must continue to “demonstrate best value for money and ensure effective and fair competition”, introducing “more local flexibility” post-Brexit could provide “more community benefits and growth opportunities for SMEs”.
Set against this are the expectations of the private sector for a framework for fairness and transparency in public procurement, and remedies where this is not the case. In an international context, trading with the EU or on World Trade Organisation terms would most likely require a system not too dissimilar to the current legal framework.

Changing Post-Brexit Landscape
The adoption of new procurement rules is just one of a number of regulatory changes that could occur after Brexit, albeit, as we have considered previously there is limited room for UK Government to manoeuvre. We consider Brexit is an opportunity to provide a more flexible public procurement regime, not only in terms of the LGA’s request but also in other areas, such as ease of seeking recourse for flawed procurements. It is important that clients keep abreast of any changes in public procurement law and seek appropriate legal advice, whether they are a contracting authority running a procurement procedure, or a private sector supplier bidding for a public contract.

For further information please visit our procurement page or contact Michael Winder.


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Selling a Dental Practice - Preparing Your Legal Due Diligence
Monday 21st August 2017

When it comes to selling dental practices, one of the key requirements of our clients is to ensure that the practice sale completes expeditiously. Delays are often not in the best interests of either buyer or seller.
The dental team at Brabners constantly look for ways to speed up the process. A well prepared seller and buyer, who understand the process, always goes a long way in ensuring that the practice changes hands sooner, rather than later. Our website contains a guide to buying and selling a dental practice, which can be downloaded free of charge and should be of interest to any dentist looking to buy or sell a dental practice. As specialist dental lawyers, we also provide specific guidance to sellers on the documentation that is likely to be requested during the sale process, much of which can be collated even before a sale is agreed. 

If you are considering selling a dental practice, it is likely that the buyer’s solicitors will request sight of the following documentation. It may be useful to ensure that these documents are in one easily accessible location:

Documents showing the practice complies with appropriate laws

  • Pressure vessel inspection certificates
  • Pressure vessel insurance
  • X-ray testing certificates
  • Evidence of compliance with HTM01-05
  • PAT testing certificates for electrical equipment
  • CQC registration certificate and copies of any CQC assessment/inspection reports
  • Fire risk assessment
  • Asbestos risk assessment
  • Legionella risk assessment/report
  • Evidence of maintenance of fire extinguishers
  • Evidence of maintenance of emergency drugs
  • Evidence of compliance with tax laws
  • Data protection registration
  • A PRS licence if you play music or listen to the radio
  • A TV licence if you use a TV on the premises

NHS documents

  • Paperwork relating to the GDS contract (for example, copies of breach notices)
  • Copies of reports following any NHS practice inspections

Employee documents

  • PAYE and National Insurance records
  • Copy statements of terms and conditions for all staff
  • Copies of any staff handbooks or manuals
  • Health and Safety policy statements and a copy of your accident book
  • Work permits for any non EU staff
  • ID for all staff
  • DBS checks for appropriate staff
  • Professional Indemnity Insurance for qualified clinical staff
  • GDC registration for qualified staff
  • Evidence of employer’s liability insurance dating back 6 years

Although this list is lengthy, it is not exhaustive. The actual enquiries that may be raised will depend on the solicitor that represents the buyer, and the buyer’s own specific requirements.
If you are considering selling a dental practice early discussions, before even placing the practice on the market, with a specialist lawyer can ensure that the process runs smoothly. Our expert team can help in preparing your practice for sale.

 


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Statement of Intent on the Data Protection Bill
Wednesday 9th August 2017

The latest on the Data Protection Bill as the Statement of Intent is published 

The Government yesterday released its statement of intent in relation to the forthcoming Data Protection Bill. In his foreword to the statement Minister of State for Digital and Culture Matt Hancock said that “We already have the largest internet economy in the G20. This Bill will help maintain that position by giving consumers confidence that Britain’s data rules are fit for the digital age in which we live”. The Bill needs to be implemented by 25 May 2018 in accordance with the EU General Data Protection Regulation (“GDPR”) as discussed in our previous blog.

Under the Government’s plans individuals will be able to exert more control over their data by having “the right to be forgotten”. They can also ask social media companies to delete their personal data. How this will work in practice and what steps social media providers will take to comply with the Bill remains to be seen. The Bill aims to make it easier for individuals to withdraw their consent for use of personal data. It also provides for parents and guardians to give consent for their children’s (under 13) data to be used.

Organisations are now required to obtain explicit consent before sensitive personal data may be processed. The definition personal data will also be amended to contain IP addresses, internet cookies and DNA. The Bill retains close links with EU’s GDPR which applies to anyone handling European’s data anywhere in the world. This will allow UK and European businesses to exchange data easily despite Brexit.

The Bill will see the Information Commissioners Office gain more teeth, being furnished with powers to impose greater fines with a maximum of £17m or 4% of global turnover. The statement proposes a new criminal offence of intentionally or recklessly re-identifying individuals from anonymised data. A further office of amending records with the intention of withholding documents from data subject access request will also be added.

For more information or advice on data protection, the GDPR or how to best prepare for the new Data Protection Bill please contact a member of our Commercial Team.


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A Dental Lawyer’s Thoughts on the Need for an Expense Sharing Agreement or Partnership Agreement
Tuesday 1st August 2017

All too often when I am speaking to dentists I hear the words “We don’t need a formal expense sharing agreement because…”. This is of course followed by a myriad of reasons; they have worked together for many years and never encountered any disagreements, they are working with a spouse or family member, their practice isn’t very large, they can’t afford one, they don’t like dealing with lawyers. As a lawyer specialising in the dental sector it may seem obvious that I will tell those dentists that they would be best protected in getting one, but it seems prudent to explain why.

To those dentists who have been working together for many years without any formal agreement and have not encountered any problems. Firstly congratulations, on successfully maintaining your relationship and ensuring that the business is profitable. You are the exception rather than the rule if you have never encountered a dispute or underlying resentment for the business decisions of your partners or expense sharers. However, the very fact that you have worked together for many years may now be the very reason you need to start formalising your relationship. If you are considering retirement how will this affect your relationship? Will you both wish to retire and sell the business at the same time? What if one of you wishes to buy the other out, how will the price be ascertained? What if your retirement is blocked by a co-owner who doesn’t wish to work with an incoming partner?

To those dentists who are working with a spouse or family member; I firmly believe it is you that will benefit more than any other in formally documenting your business relationship. Disputes with colleagues can be fraught; disputes with colleagues with whom you also have a close personal relationship can tear families apart. A formal document detailing the nature of your business and working relationship will make it clear from the beginning where each of you stand, it can ensure that each of you pulls their weight and avoid the need for arguments in the future.

To the dentist who believes their business is not sufficiently large to justify a formally documented expense sharing or partnership agreement; most dental businesses are a significant asset to their owners. Whether you spend one day a week within the business or whether you work in that business full time it is likely that the business is a significant part of your life. It makes sense to ensure that small businesses can run smoothly, and if problems within a management of a business arise for these to be settled quickly and efficiently by reference to a pre-planned procedure as documented in a partnership agreement.

To the dentist who feels that they can’t afford to put a formal document in place; give us a call it might be less expensive than you think. It is also worth bearing in mind the potentially massive costs you could encounter should a dispute arise, or whether your partner starts to incur liabilities on your behalf for which you are held responsible.

To the dentist who doesn’t like lawyers; we aren’t monsters. The healthcare team at Brabners pride ourselves in being approachable, with a genuine understanding of the needs of our dental and other healthcare clients. We don’t try to baffle you with language and our pricing represents true value in terms of the benefits to yourself and your business.


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Bidders must comply with the exact requirements of a Public Procurement Process
Friday 12th May 2017

The recent case of Gfi PSF Sarl v European Commission is a reminder that bidders who fail to follow the exact requirements set out by a contracting authority in its invitation to tender will likely face immediate rejection of their bid. 

In 2015 the Publications Office of the EU published an invitation to tender for technical services for internet sites. The invitation to tender included several specifications about how the bid should be made. Unlike most procurements, the Publications Office required a physical tender submission (rather than electronic submission) and specified how this should be achieved. In ‘pass the parcel fashion’, each bidder was asked to place the technical and financial elements of their bid in two separate envelopes, place these envelopes in a third envelope and then put this one in to a fourth envelope. All envelopes had to be sealed. Gfi PSF Sarl (“Gfi”) duly bid but was subsequently informed by the Publications Office that its bid had been rejected without consideration because the bid envelope was open when received and therefore confidentiality could not be guaranteed. 

Gfi lodged an action with the General Court alleging that the Publications Office infringed the obligation to state reasons as per Article 111(4)(b) of Regulation 2015/1929 (the Financial Regulation). The Financial Regulation governed this particular procurement, however the requirement to state reasons is roughly analogous to the principles behind the requirements of standstill letters.

Gfi first contended that the Publications Office’s initial letter rejecting Gfi’s bid did not contain a sufficient statement of reasons. A statement of reasons should be appropriate to the issues, setting out clearly the reasoning followed so as to allow the person in receipt to understand the reasoning and to enable a court to exercise its power of review. In the Gfi case, the Court considered the Publications Office’s letter to be a sufficient statement of reasons and found Gfi’s letter of response to be evidence that they understood why their bid was rejected.

Gfi also argued that the Publications Office were wrong to reject Gfi’s bid. They produced a photograph of their bid envelope being passed to a courier in perfect condition. In addition, they asserted that a member of the Publications Office had signed for the tender upon receipt but had not noted on this document that the envelope was damaged or open, nor had this been raised with the courier.

The European Commission (acting for the Publications Office) disputed Gfi’s arguments and produced a note signed by a member of the Publications Office and the Courier indicating the fourth envelope was in fact open upon receipt, as well as producing reasons regarding why the signature relied on by Gfi existed. In addition, they provided a photograph of the open envelope. The photograph also showed that parts of the bid were loose and not in the separate internal envelopes as required.

The Court was not persuaded by Gfi’s arguments and found that the bid was damaged and open when received by the Publications Office.

Gfi separately argued that, as the other three envelopes within the outer one were unopened, the Publications Office was wrong to dismiss the bid. The Court disagreed and referred to the photograph produced by the Commission showing loose documents within the fourth envelope, again meaning that confidentiality could not be guaranteed.

The Court decided the Publications Office was correct to reject Gfi’s bid without examining it.

This case underlines the importance of following the tender process and ensuring the mandatory steps of the process are followed at all times, no matter how procedural or minor they may seem. To do otherwise is to run the risk of a carefully prepared tender not even being considered. For any queries regarding the evaluation process, or public procurement in general, please visit our procurement page or contact Michael Winder.


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Can third party organisations bring a challenge relating to a development when they are not bidders or potential bidders?
Wednesday 5th April 2017

In the recent case of Wylde v Waverley Borough Council 2017 EWHC 466, the claimants sought judicial review of a decision by the local authority 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.

In the Waverley case, there were 5 claimants, who comprised of 2 councillors from the town council and 3 members of local civic societies. The local authority had entered into a conditional development agreement after a competitive process, which did not follow the procurement rules for a works concession contract. The local authority wanted to vary the development agreement due to the financial crisis in 2008. The local authority issued a voluntary ex ante transparency (VEAT) notice advertising its intention to vary the contract. There were no responses to the VEAT from any potential bidders and this was considered to be a significant factor by the court.

The claimants were not economic operators and had not bid for the original development. The court had to consider whether they had sufficient standing to bring a claim for judicial review. The judge applied the rationale from an earlier case and stated that the claimants could only make a claim for judicial review if they had “sufficient interest in the matter to which the application relates”. In order to show sufficiency of interest, as the claimants were not economic operators and had not bid for the contract, they had to show that if the varied contract for the development had been competitively tendered, it might have led to a different outcome that would have had a direct impact on the claimant.

The judge noted that the variation reflected a change in the ultimate value the land should achieve once developed and the revised value had been confirmed by the authority’s professional valuers as satisfying the authority’s best consideration duty under the Local Government Act 1972 as it reflected best value for the authority at the time. The judge therefore concluded that the claimants would have difficulty in showing that a further tendering exercise for the varied contract would have resulted in a different outcome, partly due to the lack of response to the VEAT notice. The judge also held that the variation did not have a direct impact on the claimants as they did not have the status of economic operators under the procurement regime and the outcome of the development would not have been changed by the variation. On this basis, the claimants did not have legal standing to bring a judicial review claim.

In reaching its decision, the judge considered earlier cases including Winchester (referred to above), in which a local councillor brought a claim against the local authority following various variations made in 2014 to a development agreement which it was claimed resulted in a contract which was materially different in character such as to demonstrate the intention of the parties to renegotiate the essential terms of the contract to make the scheme financially viable for the developer. The High Court applied the Pressetext test to see if the variations were materially different in character from the original contract and found that the variations to the development terms altered the economic balance in favour of the developer and, had those terms been available at the time of the competitive process, other economic operators would have bid for the opportunity.

Whilst on the face of it, the facts of each of these cases appear similar, there are significant differences between them. In the case of Winchester, the council had not tendered the original opportunity for the development or the proposed variation and the variations did materially alter the nature of the development agreement. The judge noted that the failure to tender the original opportunity was a breach of the procurement rules but not one that could be remedied at the time of the claim. Also, the council did not argue the issue of whether the claimant had standing to bring the claim and the judge accepted that as a resident, a council tax payer and a city councillor, the claimant had a legitimate interest in ensuring public funds were spent wisely and secured the most appropriate development for the city through open competition.

In Waverley, the original development had been competitively tendered and it was considered that the variations to it would not have resulted in a different outcome for the claimant. Waverley highlights the use of a VEAT notice as an important tool in ensuring any challenges are brought quickly before the authority and the developer enter into binding obligations. However, the decision appears to make it more difficult to bring a challenge against a procurement by way of judicial review as it requires the claimant to show a link between the decision and how it affects them.


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