Practical Law

PLC Public Sector reports:

Our public procurement case law digest for July 2012 features a public sector claimant being no more successful than one in the private sector in keeping a suspension of a contract award decision in force and the latest case law on the relationship between claims brought under the regulations and judicial review. 

Please feel free to submit a comment below or contact us at: feedback@practicallaw.com 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. 

Suspension lifted in NHS fall out (Newcastle Upon Tyne Hospital NHS Foundation Trust v Newcastle Primary Care Trust & Ors [2012] EWHC 2093 (QB))

On 24 July 2012, the High Court granted an application by four NHS Primary Care Trusts to lift the automatic suspension under Regulation 47G(1) of the Public Contracts Regulations 2006. The NHS Primary Care Trusts were, therefore, able to proceed with entering into a contract for the provision of diabetic retinopathy screening services despite an ongoing challenge to their award decision by an unsuccessful bidder. The High Court did not reach a view on whether the claimant’s claim raised a serious question to be tried. However, it concluded that damages would be an adequate remedy for the claimant but not for the defendants. It also considered that the balance of justice lay in lifting the suspension due, in particular, to the impact of the likely delay in resolving the merits of the dispute.   The case, which is the first we are aware of its type where the claimant is a public sector organisation, is perhaps most significant for this fact.  In a climate of public sector cuts, it could be seen as disappointing that public funds are being used to pursue claims between public authorities.

Only one bite of the cherry allowed (Traffic Signs and Equipment Ltd and David Connolly’s Application (Leave Stage) [2012] NICA 18.) 

The Court of Appeal in Northern Ireland dismissed the appellants’ renewed application for leave to appeal a decision to award 15 contracts for the supply and delivery of permanent and temporary traffic signs and signposts, which had been the subject of an earlier challenge in civil proceedings in 2011. It confirmed that it agreed with the High Court’s refusal to grant leave on the basis that:

• The appellants, Traffic Signs and Equipment Ltd and a director and shareholder of the company (DC) were making a collateral challenge to an earlier decision.
• As a non-economic operator, DC was seeking a remedy by way of judicial review that was not available to him under the Public Contracts Regulations 2006.

Although both the High Court and the Court of Appeal (NI) acknowledged the principles in R (Chandler) v Secretary of State for Children, Schools and Families [2009] EWCA Civ 1011 that a non-economic operator may have standing to bring judicial review proceedings to prevent a breach of the Regulations, the reality was that DC was the effective promoter and director of the company, which had litigated the relevant issues in the civil proceedings in 2011. Although he had an interest in the outcome of the procurement process, he was not a person on whom there was a direct impact arising from the decision to let the contracts.

Teckal control must be substantive (Case C‑182/11 Econord Spa v Comune di Cagno, Comune di Varese and Case C‑183/11 Econord Spa v Comune di Solbiate, Comune di Varese)

On 19 July 2012, Advocate General Cruz Villalón gave an opinion on a reference from an Italian court on the conditions for applying the “in-house” exception to the application of the public procurement rules in a situation where a local authority has only a minority shareholding in the in-house service provider. The Advocate General examined the conditions for the satisfaction of the requirement that the contracting authority exercises control over the company to which it awards the contract, which is similar to that which it exercises over its own departments. The Advocate General concluded that reliance on the in-house exception is not possible in a situation where each of the contracting entities involved holds a single share in the municipal company and where the shareholders’ agreements entered into by the partner public authorities are not such as to give a shareholding municipality any effective and proportionate power of control over the company. It is a case worth following by anyone involved in trying to put together a public sector shared services project.

General Court update: evaluation and debrief 

On 12 July 2012, the General Court handed down its judgment rejecting an appeal against a procurement process carried out by Frontex (the European Agency for the Management of Operational Co-operation at the External Borders of the Members States of the European Union) finding it had not committed any manifest errors of assessment in the evaluation of the claimant’s tender and that the statement of reasons provided by Frontex was adequate.