PLC Public Sector reports:
Our October case digest sees some interesting new High Court decisions on using experts in public procurement claims and a new way of challenging a development agreement, as well as numerous decisions emanating from various EU institutions, including one that considers the old favourite of taking account of tenderers’ experience at the award stage.
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.
Expert evidence not generally allowed for procurement claims (BY Development Ltd and others v Covent Garden Market Authority [2012] EWHC 2546 (TCC)).
In a decision that will be welcomed by contracting authorities, the High Court has rejected an application which would have allowed the claimants to adduce expert evidence at the trial of a public procurement dispute. The High Court concluded that, like in judicial review cases, as the issues raised in public procurement disputes are concerned with manifest error or unfairness, expert evidence will not generally be admissible or relevant. This is due to:
- The limited nature of the review conducted by the court.
- The fact that the court is not substituting its own view for that of the contracting authority.
- The fact that the contracting authority is likely either to be made up of experts or to have taken expert advice.
- Such expert evidence may usurp the court’s function.
The court accepted that expert evidence may, however, be admissible where it is required to provide technical explanations or, unusually, where such evidence is relevant and necessary to allow the court to reach a conclusion on manifest error. Neither of these exceptions to the general principle arose in this case.
This decision is likely to strengthen a contracting authority’s position in resisting a challenge. Claimants will need to show manifest error as opposed to being able to revisit the whole evaluation process with experts going through it with a fine-tooth comb trying to aggregate minor errors in order to build an overall case for a claim.
New type of challenge to development agreement not quids in (AG Quidnet Hounslow LLP v London Borough of Hounslow [2012] EWHC 2639 (TCC))
As case law on the relationship between development agreements and the public procurement regime continues to recede from its high water mark in the ECJ decision in Auroux, a new form of challenge has been mounted to a local authority development scheme and rejected. The High Court concluded that the proposed agreement did not constitute a breach of Article 56 of the TFEU (freedom to provide services). It concluded that the proposed agreement did not engage Article 56 as the proposed contractor would be providing no relevant services to the local authority and the proposed agreement merely provided for the grant of a head lease. The court also held that even if it had reached a different conclusion, the relationship did not have the requisite cross-border element to be caught by Article 56 of the TFEU.
It is worth noting that this new type of challenge has failed for the same key reason as much of the post-Auroux case law, that there is no obligation placed on the private sector party to actually deliver anything. This suggests that the signs are not good for the claimant’s chances in a further, stayed, action it has issued under the 2006 Regulations.
ECJ guidance on establishing minimum economic capacity (Case C‑218/11- Észak-dunántúli Környezetvédelmi és Vízügyi Igazgatóság (Édukövízig) and Hochtief Construction AG Magyarországi Fióktelepe v Közbeszerzések Tanácsa Közbeszerzési Döntőbizottság)
Other than boasting one of the longer case names in public procurement law, this case provides guidance on the approach that the ECJ will take to how authorities seek to establish the minimum economic capacity of tenderers. In the ruling on a reference from a Hungarian court, the ECJ held that a contracting authority may require a minimum level of economic and financial standing to be demonstrated by reference to particular aspects of a company’s balance sheet. This is provided that the minimum level objectively provides a positive indication of the existence of a sufficient economic and financial basis for the performance of the contract, without going beyond what is necessary for that purpose. Further, it held that the requirement for such a minimum level cannot be disregarded solely because it relates to an aspect of the balance sheet where there may be differences between the legislation of member states. Where, due to implementation of group company profit transfer arrangements allowed by its national legislation, an economic operator is not able to satisfy the minimum capacity level set by the contracting authority, it must rely on the economic and financial standing of another undertaking (its parent company), as allowed under Article 47(2) of the Classic Directive.
It has been a busy time over in Europe!
The end of the summer break has seen an explosion in case law emanating from procurements carried out by various European institutions. We have seen the ECJ dismiss an appeal against a General Court judgment that found no errors in a European Commission procurement process for the supply of external information technology services for educational programmes. Meanwhile the General Court has:
- Dismissed an appeal against the European Commission’s decisions in relation to a tendering procedure for IT services for statistical information technologies, finding that that the Commission had not erred by not excluding the successful tenderer from the process and that there had been no conflict of interest in the tender procedure.
- Dismissed an appeal brought by an unsuccessful tenderer to challenge the contract award decisions taken following a tender for services for the Office for Official Publications, finding that the Office had provided sufficient reasons for its decisions and that the applicant’s claims that manifest errors had been committed in the assessment of the tenders against the award criteria were unfounded. Further, there had been no breach of the rules, or the principle of equal treatment, by virtue of the fact that the successful tenderer intended to use sub-contractors established in countries that are not signatories to the WTO Agreement on Government Procurement.
- Upheld an appeal regarding an unsuccessful tenderer’s exclusion from the short list in a procurement process organised by the European Commission for the supply to the Syrian government of technical assistance designed to facilitate decentralisation and local development. The General Court found that the contested decision did not contain an adequate statement of reasons and should therefore be annulled.
- Annulled a decision by the ECJ to reject tenders submitted by the claimant and award contracts for IT services to other tenderers. The General Court found that the ECJ had not, as alleged, confused the selection and award criteria. It had been entitled to consider the curricula vitae of proposed team members during the award phase in order to assess the technical value of the teams proposed, which was relevant to the determination of the most economically advantageous tender. However, the General Court found that the ECJ had failed to fulfil its obligations to provide the unsuccessful tenderer with adequate reasons for its decision. While the outcome went against the Commission, contracting authorities will have been pleased to see the acknowledgement of the Court on the substantive issue that the experience of proposed team members is relevant at award stage.
- Dismissed an appeal regarding a procurement procedure conducted by the European Commission finding that the Commission had not infringed Regulation 1605/2002 (the Financial Regulation) or the principles of transparency, equality of treatment or proportionality in deciding to eliminate the applicants’ bid and that the Commission’s statement of reasons was adequate.
- Dismissed an appeal against a European Commission decision rejecting a tender submitted for the supply in Serbia of rabies vaccines and equipment for surveillance of animal diseases, and of the decision to award the contract to another tenderer, as part of a programme to assist candidate and potential candidate countries in their progressive alignment with the standards and policies of the EU. The General Court dismissed the applicant’s claims that the contracting authority had manifestly erred in applying the technical specifications to the winning tender.
Finally, the European Ombudsmen published a summary of a confidential decision that saw a dispute over a European Commission procurement process resolved by the Commission compensating the complainant for the expenses it incurred in participating in the tender process.