REUTERS | Brian Snyder

Public procurement case digest (July 2014)

July 2014 saw public procurement making an appearance in the Supreme Court, which considered what a “reasonably well-informed and normally diligent” tenderer actually is.   In a busy month, other issues considered by the courts included automatic suspension, development agreements and cross border interests.

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.

Supreme Court rules that consideration of award criteria is an objective test (Healthcare At Home Ltd v The Common Services Agency [2014] UKSC 49)

The Supreme Court has handed down its judgment on an appeal by Healthcare at Home Limited against a judgment of the Scottish Court of Session, which dismissed its challenge to a public procurement procedure. Healthcare at Home claimed that the lower courts had erred in concluding that the award criteria were sufficiently clear. The Supreme Court examined the nature of “reasonably well-informed and normally diligent” tenderer test that has been developed in order to establish the standard of clarity required to satisfy the principle of transparency in procurement procedures.

In a welcome decision, the Supreme Court confirmed that this is an objective legal standard, applied by reference to a hypothetical tenderer. The relevant question is not whether it had been proved that all actual or potential tenderers had in fact interpreted the criteria in the same way, but whether the court considered that the criteria were sufficiently clear to permit of uniform interpretation by all reasonably well-informed and normally diligent tenderers. The lower courts had applied the correct legal test in this regard. Therefore, the Supreme Court dismissed the appeal.

If it’s a works contract, it’s a works contract even if a court of last instance has said it’s not (Impresa Pizzarotti & C. Spa v Commune of Bari (Case C‑213/13))

The ECJ handed down a ruling on a reference from an Italian court on the interpretation of the concept of “public works contracts” under the old Public Works Contracts Directive 93/37. The project in question involved a contract to be concluded between the Commune of Bari and a private undertaking for the construction and future lease of a building. The ECJ concluded that the primary object of the proposed contract was the construction works. Therefore, it constituted a public works contract, despite having certain characteristics of a lease.

The ECJ also ruled that to the extent that it is authorised to do so by the applicable domestic rules of procedure, a national court which has given a ruling at last instance, without a reference having first been made to the ECJ, that has led to a situation which is incompatible with the EU legislation on public works contracts must either supplement or go back on that definitive ruling so as to take into account any interpretation of that legislation provided by the ECJ subsequently.

Particulars of claim can be amended and automatic suspension lifted in part (DWF LLP v Secretary of State for Business Innovation and Skills, Acting on Behalf of the Insolvency Service [2014] EWCA Civ 900)

In a case about the award of a contract to provide legal services to the Insolvency Service, which is of interest for two reasons, the Court of Appeal has held that:

  • A claimant’s amendment to its particulars of claim, which was made after further evidence was revealed, was not a new cause of action. The case had been developed from one based on an inference to one based on an explanation, but remained the same.
  • The automatic suspension on the award of the contracts should be lifted in relation to the bidders who had been scored highest, but retained in relation to the award of a contract to the bidder with whom the claimant was fighting for selection.

High Court considers when there will be a cross border interest (Mansfield District Council v Secretary of State for Communities and Local Government [2014] EWHC 2167 (Admin))

The High Court has ruled that a local authority had been in breach of contract and EU law when it failed to consider whether there was any realistic prospect of a cross-border interest in tendering for two town centre improvement projects, and to advertise those opportunities appropriately. The High Court reiterated that the only way that the public procurement requirements can be met is by the publication of a sufficiently accessible advertisement prior to the award of the contract. Even where the contract falls below the threshold of the Public Contracts Regulations 2006, it may be subject to general EU principles, in particular of equal treatment, and non-discrimination on grounds of nationality and transparency.

These breaches entitled the Secretary of State to claw back 25% of the grant payments that had been awarded to the authority for the two projects from the European Regional Development Fund. The High Court found that it had no grounds to interfere with the amount of the claw back. The applicable guidance did not suggest any scope to depart from the 25% recommended figure in the authority’s situation.

Law excluding social security infringers compatible with TFEU (Consorzio Stabile Libor Lavori Pubblici v Comune di Milano (Case C-358/12))

The ECJ has handed down a ruling on a reference from an Italian court about the proportionality of measures to exclude from tender procedures those who have breached obligations relating to social security contributions. The ECJ ruled that Articles 49 and 56 of the TFEU and the principle of proportionality did not preclude Italian rules which required contracting authorities to exclude from award procedures for works contracts (below the EU thresholds) a tenderer who has committed an infringement relating to social security contributions where the difference between the sums owed and those paid exceeds EUR 100 and is greater than 5% of the sums owed.

Reclassification of bids following complaint did not follow proper process (Euroscript – Polska Sp zoo v European Parliament (Case T-48/12))

The General Court has held that a decision to reclassify the position of tenderers on the list of bidders for a contract for the provision of translation services into Polish should be annulled. The reclassification decision followed a request for review of the tender proceedings by an unsuccessful bidder. The General Court found that the request for review was in fact time-barred. It also found that the European Parliament did not suspend the proceedings, but merely convened a further meeting of the bid evaluation committee, without notifying any of the bidders notified of the original decision.  In the interests of transparency, such a review did require the European Parliament to suspend the award of the contract and inform the bidders. Further, the European Parliament had proceeded, contrary to the procedure laid down by the Financial Regulation and the Implementing Rules, to conduct a new evaluation of one of the competing tenders, namely that the company requesting the review, but not of all bids submitted to it, in breach of the principle of equal treatment.

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