PLC Public Sector reports:
Last week saw the Procurement Lawyers’ Association’s second “annual event”. The event included sessions on the latest developments on Auroux, the most significant procurement ECJ decisions of 2009 and, most interestingly, a mock procurement dispute.
The mock dispute highlighted some interesting points about how the new Remedies Directive may be interpreted by the courts and also the impact it may indirectly have on existing concerns, including:
The role of cross undertakings in proceedings to lift an automatic suspension
While it has been a subject of considerable discussion, the general consensus has been that, while the automatic suspension provides an early trump card to the aggrieved bidder, when the court comes to decide if the suspension should be continued, the aggrieved bidder will face the same difficulties that it would previously have faced in getting an injunction. The most significant of these is the requirement to provide a cross undertaking to compensate the authority if it is subsequently determined that the bidder was not entitled to the relief granted by the court.
However, counsel speaking at the PLA event argued that despite the implicit reference in regulation 47H(3) of the Public Contracts Regulations 2006 (as amended), this is no guarantee and that to deny a bidder a continued suspension solely on the basis that they are not in a financial position to provide an undertaking would mean that the new Remedies Directive had not been implemented effectively in the UK. This view appears to be supported by comments that were made obiter in the recent Buying Solutions case where, although the bidder was unsuccessful in obtaining an injunction, the judge suggested that he would not have refused injunctive relief solely because the bidder was not in a financial position to provide an acceptable cross undertaking.
Legal challenges from successful bidders?
Yes, everyone knows that procurement litigation is a growth industry, but surely this is a step too far? Maybe not. One of the impacts of the increased willingness of aggrieved bidders to litigate is the corresponding willingness of public authorities to unpick or restart procurements to correct errors. While this may appease the initial complainant, counsel argued that it could lead to claims for wasted tender costs (and, depending on how far things have got, implementation costs) from those tenderers that had been successful in the allegedly flawed process.
Such a claim was possible under the unamended regulations – regulation 47 provides that contracting authorities owe a duty to economic operators to comply with the Regulations. By unpicking a procurement it could be seen as an admission that the authority had failed to do so. The wasted tender costs of bidders could be argued to flow from this failure. While counsel were not aware of such a claim ever having made it to court, it may well be only a matter of time.
On this basis, while public authorities should obviously address valid complaints, they should also be aware of the risks of taking the easy path and unpicking a procurement where they don’t actually feel they have done anything wrong, just to avoid court action.
Ineffectiveness and contract extension
The relationship between the Pressetext variation and the remedy of ineffectiveness promises to be an interesting one. Where an ‘illegal’ contract extension or variation is handed to an existing supplier, it will fulfil one of the grounds for ineffectiveness (direct award) but what will the impact be? Exactly what contract will be at risk of being voided? For those authorities struggling against time (particularly where it is due to their own failings), the advice remains that any illegal extension should be proportionate (that is only give them the time they actually need to sort things out) and they should make sure that they get on and rectify the situation as quickly as possible.
For those trying to squeeze extra services into an existing contract specification, the answer may be to think about including suitable “pre-nuptial” clauses to deal with any fall out. Although will these be seen as an early admission of guilt?
Contract notices
The issue of when a contract notice will comply with the new requirements of regulation 32 was also on the agenda (it is never far away). Following a vote from the attendees, it is clear that the OGC’s view that bidders must be given information beyond what the scores were, and be put in a position to understand why they received those scores, has been widely accepted. What is also clear is that providing this information will be much easier where price is the determining factor than when other ‘MEAT’ criteria come into play.
These are only some of the issues that we are likely to see before the court in the coming months and years and it is clear that the pressure on public authorities to get public procurement processes right is growing. Unfortunately, at the same time, it is becoming more difficult as the legislative landscape changes and “policy through procurement” initiatives proliferate.