Practical Law Public Sector reports:
The headlines in October were dominated by a dispute between Covanta Energy Ltd and Merseyside Waste Disposal Authority which has led to an injunction being granted at the end of a seven-year procurement process and also the court considering an application for early disclosure.
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The seven year itch…to grant an injunction (Covanta Energy Ltd v Merseyside Waste Disposal Authority  EWHC 2922 (TCC))
This case concerned a procurement process started by the Merseyside Waste Disposal Authority (MWDA) in July 2006 for a high value and long term contract for a new waste disposal facility, which they hoped to have completed over seven years later in August 2013. However, that is not now the case after the High Court granted an injunction preventing the MWDA from entering into a contract pending the outcome of an action by an unsuccessful bidder, Covanta Energy Ltd. Covanta claimed the process was flawed given that its tender had been rejected as fundamentally unacceptable even after six years of competitive dialogue. Despite arguments to the contrary from Covanta, as the procurement procedure in this case was launched prior to 20 December 2009, the automatic suspension regime introduced by the Public Contracts (Amendment) Regulations 2009 was not applicable and this case therefore consisted of a claimant applying for an injunction.
Two things seem to have been key in the court reaching the decision that an injunction was appropriate: the time the procurement had taken and the amounts of money involved (both with regard to how to calculate and the sheer scale of it). The court held that:
- Damages would not be an adequate remedy for the claimant due to the difficulties in quantification, in particular it could be virtually impossible to assess damages arising from alleged failures in the way the competitive dialogue procedure was conducted.
- The impact of a further delay in the award of the contract would be modest given the length of the procurement procedure.
- If the injunction was not granted and the claimant was successful at trial, its financial claim would be considerable and would result in a burden on tax payers.
As a result, the High Court concluded that the balance of convenience was in favour of granting the injunction.
The war lost, despite an earlier battle won – early disclosure had been refused (Covanta Energy Ltd v Merseyside Waste Disposal Authority  EWHC 2964 (TCC))
Covanta was successful in obtaining an injunction despite having earlier failed to obtain early disclosure of certain information from the MWDA. The High Court has refused the application for early disclosure prior to the application for an injunction holding that it was not reasonably necessary for the categories of documents requested to be disclosed in order for there to be a fair hearing of the injunction applications. A decision that in the light of the outcome of the injunction applications seems fair. This decision is part of a growing body of case law on disclosure applications in public procurement claims, for more information see Calum Lamont’s recent post on the Practical Law Construction blog.
National law cannot limit number of other entities a bidder can rely on (Swm Costruzioni 2 SpA, Mannocchi Luigino DI v Provincia di Fermo (Case C‑94/12))
Not for the first time a reference from an Italian court required the ECJ to consider if an Italian law complied with the requirements of the procurement regime. The relevant law in this case stated that a candidate or tenderer for a public works contract could only rely on the capacity of one third party to meet selection criteria relating to its economic and financial standing or technical and/or professional ability. Somewhat unsurprisingly the ECJ held that such a law was contrary to the provisions of Directive 2004/18. The Directive permits the combining of the capacities of more than one economic operator for the purpose of satisfying the minimum capacity requirements set by a contracting authority, provided that the candidate or tenderer relying on the capacities of one or more other entities proves to that authority that it will actually have at its disposal the resources of those entities necessary for the execution of the contract.
General Court decisions
The fortunes of EU institutions before the General Court has been mixed with:
- Two actions by the Greek company Evropaiki Dinamiki (European Dynamics) against the rejection of its tender in a procurement process organised by the European Commission’s Directorate-General for Informatics (DIGIT) being dismissed. The actions had alleged numerous failings including: a failure to conclude that the winning consortium should be excluded on the ground of grave professional misconduct; that DIGIT had infringed Articles 106 and 107 of the Financial Regulation in finding that the winning consortium should not have been excluded because one of its subsidiary companies relied on work carried out in a country which was not signatory to the Agreement on Government Protocol; that DIGIT had made manifest errors of assessment in the evaluation of the European Dynamic’s tender; and that the statement of reasons was adequate. (European Dynamics v European Commission (Case T-457/10) and, European Dynamics v European Commission (Case T-474/10.)
- A further action against a decision by the European Medicines Agency (EMA) to reject a tender submitted by European Dynamics for the supply of services in the area of software applications being upheld and the decision annulled. The General Court found that the EMA’s decision rejecting European Dynamics’ tender did not contain a sufficient statement of reasons as to the grounds for the rejection. Therefore, the General Court annulled the EMA’s decision not to award the contract to European Dynamics. (European Dynamics v European Medicines Agency (Case T‑638/11).)