REUTERS | Dani Cardona

Public procurement case digest (January 2015)

January’s case digest includes a High Court judgment considering if a bidder can be prevented from claiming damages due to a failure to challenge before the end of the standstill period.

Please feel free to submit a comment below or send us an Ask query if you have any views on the cases covered, or think that we have missed a case that should be brought to the attention of public procurement practitioners.

Damages for breach of the public procurement rules are not discretionary (Energy Solutions EU Ltd v Nuclear Decommissioning Authority).

In a ruling on a preliminary issue in a public procurement dispute, the High Court has held that there is no discretion in relation to the grant of damages for losses suffered as a result of the public procurement rules. In this case the claimant, an unsuccessful tenderer, did not bring an action until after the end of the “standstill” period. There was, therefore, no automatic suspension of the award of the contract. Once a contract is awarded a claimant is only entitled to damages to compensate for harm resulting from any breach of the procurement rules.

The defendant contracting authority argued that the claimants’ actions broke the chain of causation or, at least, by acting differently it could have mitigated or avoided any loss. The High Court held that questions about whether the claimants could have avoided loss by bringing the action during the standstill period were questions of fact that could not be determined as a preliminary issue. However, it doubted that the exercise of the choice (permitted under the rules) to bring an action after the end of the standstill period could be said to be unreasonable. These doubts are well founded in our view.

The High Court also held that, having established a breach of the duty owed by the contracting authority under the procurement rules, the award of damages to compensate for the losses suffered is not discretionary and (absent failure to mitigate) should be assessed on ordinary principles. The award of damages is not dependent on the level of gravity of the breach, or any other such factor, and so is not dependent on an exercise of judicial discretion or judgment.

No new contract was awarded to Atos to administer childcare scheme (R (Edenred (UK Group) Limited) v HM Treasury and others).

The High Court has dismissed a claim by Edenred (UK Group) Limited challenging HM Treasury’s (HMT) decision that the government’s new tax free childcare (TFC) scheme will be administered by National Savings and Investments (NS&I) via a private company (Atos). The High Court first found that there was no contract between NS&I and HM Revenue and Customs (HMRC) or HMT in relation to the delivery of these services. Although there was a memorandum of understanding with HMRC, this was not legally binding or enforceable but merely reflected the internal arrangements made between government departments to deliver a policy set by HMT.

The High Court also concluded that, to deliver the TFC scheme, there would not need to be a material variation to the contract between NS&I and Atos. All the services needed for these purposes were covered by the original tender. The fact that the tender documents did not expressly refer to the provision of services to support the provision of childcare accounts under the TFC scheme did not affect those who did or might have bid for the contract.

The High Court decided, therefore, that there had not been any breach of the Public Contracts Regulations 2006 or Article 56 of the TFEU. In any event it concluded that Edenred had failed to discharge the burden upon it of establishing that any such breach caused it to suffer any loss. There was not a real prospect that if it bid for a contract to deliver childcare accounts it would have been awarded the contract.

General Court annuls European Parliament decision in tender for translation services (Veloss International SA and Attimedia SA v European Commission).

The General Court has handed down a judgment in an appeal against a decision of the European Parliament in a tender for the procurement of Greek translation services. The applicants had been ranked second in the tender and so were not awarded the main contract. The General Court found that the Parliament had breached its obligations to provide adequate reasons for this decision. The Parliament had not provided details of the financial aspects of the successful tenderer’s bid. Therefore, it had not, as required, provided details of the characteristics and relative advantages of the successful tender.

The General Court, therefore, annulled the Parliament’s decision to rank the applicants in second place. However, it dismissed a claim for compensation. The causal link between Parliament’s error and the alleged damage had not been shown. There were no grounds for concluding that the Parliament would have awarded the contract to the applicants if the statement of reasons for the contested decision had been adequate.

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