Procurement disputes - Life Jim but not as we know it

Published on
5 min read

Any body which has had commercial contact with the public sector has probably heard the phrases “OJEU process”, “above threshold”, “Alcatel Period” or “framework agreements”. These phrases have become a shorthand for the need for public bodies to comply with the requirements of EU competition directives for awarding contracts over a certain value for goods and services.

Competition for public contracts is undeniably a good thing.  Despite the UK’s departure from the EU on 31 January 2020 the framework for competition established by numerous EU Directives will continue probably well beyond the end of the transition period on 31 December 2020.  Indeed, the Public Contracts Regulations 2015 are incorporated into English law so would have to be repealed and replaced something which appears unlikely in the short to medium term despite the fact that procurement has attracted the attention of the Prime Minister’s principal adviser, Dominic Cummings.

Given the attractions of the public sector as a customer and the size of some public contracts (think HS2, new hospitals and even emergency ferry services) there is a lot at stake so if you bid and lose there is a considerable incentive to challenge the outcome.  As a result, for a number of years now, the English courts have been involved in reviewing the procurement of a significant number of major public projects from, well, HS2 to those disastrous ferries.  Since a means of competitively procuring these contracts is unlikely to go away any time soon these procurement disputes will continue to come before the courts.

Over the years, procurement disputes have developed characteristics which look a little like “standard” High Court litigation but which in fact contain numerous traps for the unwary.  The idiosyncrasies of procurement litigation are such that the Technology & Construction Court developed a specific Guidance Note on Procedures for Public Procurement Cases.  This is currently Appendix H to the TCC Guide but is likely to be given a more formal status, as well as being up-dated, in the current review and re-write of that Guide.

So what are the distinctive factors in procurement litigation?

Limitation

First and most seriously, the limitation period is short, very short.  Potentially for the remedy of “automatic suspension” (of which more below) it is as short as 10 days and is only as long as 30 days unless….the contract has already been awarded in which case it can be up to 6 months!  Confused?  Yes, it can be confusing, so close attention to the time limits and possible remedies is vital.

Location, location, location

Secondly, procurement claims must be brought in the High Court and over the years the TCC has become the court most favoured by practitioners to the point where a procurement claim not issued in the TCC will be transferred there.

Automatic Injunctions

Thirdly, and uniquely, if you issue proceedings in a procurement claim you automatically obtain an injunction.  This is by virtue of the “automatic suspension” under Regulation 95.  When proceedings are issued the Authority can no longer award the contract until the court has determined the matter.  The Regulations allow an Authority to go to court to ask for the suspension to be lifted in which case the application will be considered along American Cyanamid principles.  In other words, the court will look at American Cyanamid to decide if the injunction should be lifted rather than imposed: the kind of balancing of common law principles and EU law that the English courts have been so good at over the years.

Timing

Fourthly, once you issue you only have 7 days to serve the Claim Form and the knock on effect of that under the CPR is that you only have those 7 days as well to prepare and draft the Particulars of Claim.  Bear in mind that you might have had as little as 10 and at the most 30 days to bring a claim and this can be a very tall order.

To overcome what is a very clear information imbalance between what the Authority knows about how it evaluated and what the potential claimant thinks it knows about how the evaluation was done the TCC Guide very strongly encourages early disclosure of relevant documents and pre-action disclosure of some material is very much the norm.  Even so, it is very rare for the potential claimant in a procurement dispute to have all the information it might need to make a realistic assessment of the risks before it is required to issue proceedings.

Confidentiality

Once statements of case have been exchanged then procurement disputes resume a more or less normal path save in respect of disclosure where the Disclosure Pilot in Practice Direction 51U does not apply and something called a confidentiality ring will often be agreed.

A confidentiality ring is there to protect the confidential information of third parties (such as pricing or innovative methodologies) which formed part of the bid and the reason why it was successful.  Although the terms of these do vary they are becoming more and more standardised and will deal with how confidential information is identified, disclosed and handled.  To the dismay of many successful bidders it is common for a representative of the claimant to be inside the confidentiality ring and therefore to see confidential information albeit subject to a number of restrictions including on their ability to be involved in other bidding opportunities.

It is fair to say that the English interpretation of the EU Directive on remedies for a breach of procurement law is regarded in some quarters as potentially obstructive to justice rather than facilitating the resolution of a genuine grievance.  It is expensive to issue and the short limitation periods mean that issuing is often a “shot in the dark” with no real understanding of the prospects of success.  This is why the cases that come before the courts tend to be very high value public contracts such as HS2, Eurotunnel where such significant sums are at stake that the costs and risk are justified.

If you want to know more about procurement please go to our procurement portal.

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