PLC Public Sector reports:
With the high level of publicity and debate surrounding the Government’s decision to put public money into the private finance initiative, we should not be surprised to hear that the first project supported by the Government’s Infrastructure Finance Unit, the £3.8 billion Greater Manchester waste PFI, is set to end up in the courts.
The challenge is not however to the Government’s policy, but rather another example of an unsuccessful bidder exploring the options available to compensate them for their failure to secure a tender.
The aggrieved bidder in question is Sita (UK), which has launched proceedings against the Greater Manchester Waste Disposal Authority (GMWDA) for “unlimited” damages. The main thrust of Sita’s claims are that:
- The contract let to the successful bidder, Viridor/Laing was for a sum significantly in excess of the figure that Sita had tendered.
- There had been significant changes to the project after the appointment of Viridor/Laing as preferred bidder and yet no other bidder was given the opportunity to revise their tender to take account of these changes.
- The GMWDA’s actions were in breach of the European Treaty principles of equal treatment and transparency.
Historically, these arguments have frequently arisen in procurements, particularly those in fast moving sectors such as waste or ICT where the services which the market can offer will often develop at a quicker pace than the procurement is running. These problems should have been resolved by the introduction of the competitive dialogue procedure. It is simply no longer an option to engage in lengthy negotiations, heavily revising the ambit of a project, with a preferred bidder. Only fine tuning is now permitted once final tenders have been received.
Unfortunately however, the Greater Manchester waste PFI began prior to the introduction of the competitive dialogue procedure and was therefore let using the negotiated procedure which allows a much more flexible approach, providing the opportunity for the situation outlined above to arise.
However, using the CDP does not definitiviely address the issue of what to do if a procurement needs to change prior to completion. The best way for an authority to decide what action it needs to take if it is proposing to revise the parameters of a procurement is to ask itself two questions:
Is this still the same procurement?
This may seem like a strange question, but unless the authority can look at the procurement before and after the proposed change and reasonably claim that, while some of the detail may be different, it is to all intents and purposes the same procurement, it will need to go back to square one and restart the procurement. Even if it can answer yes to this question, it should then ask:
Would this change have had an impact on a bidder or potential bidder had it taken place at an earlier stage of the procurement?
If a service provider which originally elected not to bid would have submitted a bid had the change taken effect from the start of the process, or if a bidder which was rejected at an earlier stage would not have been rejected in light of the change, then it will be necessary to restart the procurement. Alternatively, if you are really lucky, it may be possible to unpick the procurement back to when the change would have had an impact and re-integrate the relevant bidder(s) into the process.
These questions are usually difficult to answer and specific legal advice should always be taken in relation to any proposed changes to a procurement.
Whether it has happened or not in this case (something we should find out in due course), this latest court action highlights that changes to a procurement cannot be pushed through on the quiet in the hope that none of the other bidders will notice. This approach will only lead to one place … court.