PLC Public Sector reports:
Following significant interest in our opinion blog post on our top 10 public procurement cases of 2011, we will be publishing a monthly update looking at the key issues raised by the latest public procurement cases. This first post covers the period from January to March 2012. Going forward, posts will be published at the end of each month looking at the key cases from that month.
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.
Court refuses to tweak process and sets aside decision in its entirety (Resource (NI) v Northern Ireland Courts & Tribunals Service [2011] NIQB 121)
We start with a case from 2011 that only became public at the start of 2012. It is always interesting to see what sort of behaviour/process will lead to a court deciding that a contract award decision must be set aside. What is of particular interest here was the High Court’s view that it was only able to set aside the contract award decision in its entirety, and not to direct a limited re-evaluation of the tenders. This makes it clear that going to court remains something a of a nuclear option, which imposes significant risk not only on the contracting authority but also potentially on a claimant seeking only limited alterations to the procurement process adopted.
Bailiff services are a concession (JBW Group Ltd v Ministry of Justice [2012] EWCA Civ 8)
The question of where the line is drawn between a public services contract and a services concession is one that will have troubled many public authorities and those advising them. Therefore, guidance on the issue from the Court of Appeal is welcome. It will be even more welcome to public authorities in light of the decision to take a broad view as to what will constitute a (largely unregulated … at least for the time being!) services concession. In considering what contracts for the provision of bailiff services awarded by the Ministry of Justice were, the court focused on the fact that risk had passed to the provider, even if control over the way that services were delivered had not, and held that a services concession existed as opposed to a public services contract.
Germany found guilty of unlawful contract splitting (Commission v Germany (Case C-574/10))
Works (as opposed to services) contracts have more often been the subject of allegations of contract splitting, so the ECJ’s judgment finding that the planning services contracts awarded to an architect by the German municipality of Niedernhausen should have been considered a single procurement contract is interesting. In particular, the rejection of Germany’s arguments that it:
- Had not intended to avoid the procurement rules. The ECJ held that this was is irrelevant.
- Was correct to have divided the procurement, as doing so better matched the financial capacity of SMEs. The ECJ held that although this was a worthy objective, it could not be accepted if it would result in the breach of the public procurement rules.
Public law claims must be based on evidence not conjecture (R (Unison) v NHS Shared Business Services Ltd & another [2012] EWHC 624 (Admin))
It is becoming more and more popular to challenge public procurement processes (or in this case the lack of them) through judicial review rather than the public procurement regime. The latest example saw Unison challenge the decision of ten primary care trusts to enter into contracts to outsource certain services without first having conducted a procurement procedure. The Court of Appeal took a narrow view of the test established in Chandler (that a person may have sufficient interest “if he can show that performance of the competitive tendering procedure in the directive or of the obligation under the Treaty might have led to a different outcome that would have had a direct impact on him”). In this case, the court held that use of the word “might” in this test did not mean that a claimant could rely on generalities or speculative possibilities, it must support its case with evidence. Unison had failed to do so and as a result was held not to have sufficient standing to bring a claim.
Muller arrives in the UK! (R (Midlands Co-Operative Society Ltd on the application of) v Tesco Stores Ltd [2012] EWHC 620 (Admin))
Much gnashing of teeth followed the decision of the ECJ in Auroux in 2007 with many practitioners saying it made it impossible to move development projects on. It would be fair to say that the ECJ subsequently stepped back from the high water mark that Auroux represented in Muller, in which it held that for a public works contract to exist the contractor must assume a direct or indirect, legally enforceable obligation to carry out the works.
This decision has now filtered through to the UK with the High Court holding that the sale of land by Birmingham City Council to Tesco did not constitute a public works contract. The Court found that Tesco was not subject to any legally binding, enforceable obligation to conduct any development works in relation to the land. This was the case even though the land was sold in the context of plans for the redevelopment of a wider site and that the planning permission for that redevelopment included obligations relating to the replacement of community facilities currently provided on the land sold. Tesco was not under any obligation to implement that planning permission and start the development works.
Eurostar contract not covered by the procurement rules (Alstom Transport v Eurostar International Ltd [2012] EWHC 28 (Ch))
In its latest attempt to “derail” (pun intended … apologies) the award of a contract by Eurostar to Siemens for the design, supply and maintenance of ten high speed train sets carried, Alstom was unsuccessful in arguing that Eurostar was a:
- Contracting entity/utility for the purpose of the Utilities Contracts Regulations – on the basis that it was not engaged in a relevant utility activity (the operation of a railway network).
- Contracting authority for the purposes of the Public Contracts Regulations due to its commercial character.
The case provides an interesting overview of the way that the courts will approach the question of who will be considered to be a contracting entity/authority.
Automatic [un]suspension (Clinical Solutions International Limited v NHS 24 and Capgemini UK plc [2012] ScotCS CSOH_10)
Finally, the new year has seen the run of success for contracting authorities getting the automatic suspension of award procedures lifted continue. With only one reported decision of a refusal to lift the suspension, does this indicate that the courts are being too lenient or is it just that contracting authorities are only seeking to challenge the suspension where the tenderer’s challenge is weak (as was the case in Clinical Solutions) and are taking a rather more pragmatic approach to cases with more substance?