Public procurement challenges require strict and swift approach

15th January 2020

Gwendoline Davies and Lynsey Oakdene offer practical advice arising from the High Court’s decision in a recent public procurement challenge.

Why is Royal Cornwall Hospitals v Cornwall Council of interest?

Earlier this year we published an update on public procurement challenges, which highlighted key lessons arising from the Kenson Contractors and Amey cases.  Another recent case emphasises the need for any disappointed or unsuccessful bidder to assess their options and, if appropriate, to issue a challenge, with real urgency.

What practical advice arises?

Any organisation which competes for business via public procurement tenders will be aware that the process can be highly complex and often involves the investment of significant time and effort from staff and senior management. Tender outcomes can have a substantial commercial impact and so the ability to obtain legal redress when things go wrong is essential.

Where the Public Contracts Regulations 2015 (PCRs) apply [1], there are legal and procedural hurdles which a claimant must overcome if it is to be able to pursue a public procurement challenge.  For example (non-exhaustively):

• Regulation 92 provides that a claim for breach of the PCRs must be brought within 30 days of the date when the economic operator [2] first knew or should have known that grounds for commencing proceedings arose.
• The Regulation 92 time limit can be extended by the court where it considers that there is good reason to do so…
• …but investigating the viability of a tender may not be a sufficiently good reason.
• The PCRs impose obligations on contracting authorities to act in a proportionate, transparent manner; to treat economic operators equally and without discrimination; and to disclose certain information, including reasons for rejection of a tender and the characteristics/relative advantages of a successful tender…
• …but those duties are not owed to economic operators after they have decided not to participate.

There are important policy considerations underpinning the PCRs – not least the wider public interest in ensuring that tenders are conducted as quickly and efficiently as possible.  The recent case of Royal Cornwall Hospitals NHS Trust v Cornwall Council [3] confirms that a claimant wishing to pursue a procurement challenge must adopt a swift and strict approach to the assessment, issue and formulation of its claim.

Immediately a tenderer is dissatisfied with any aspect of the procurement process, or is disappointed with any decision, it should seek specialist legal advice.

What happened in the particular case?

The claimant NHS Trust was the incumbent provider of health services in Cornwall.  The defendant contracting authority invited tenders, providing relevant documents on 25 February 2019.  The claimant then assessed whether it could submit a compliant bid and informed the defendant, on 18 March 2019, that it would not bid.  The defendant awarded the contracts to a third party and notified the claimant of this on 9 May 2019.

The claimant issued proceedings on 24 May 2019.  Its primary claim, that the defendant had breached its obligations as to “proportionality and/or good administration and/or in manifest error… in specifying tender requirements that are impossible to satisfy and/or irrational and/or unreasonably risked patient safety and/or clinical effectiveness of the services to be provided“, arose from the defendant’s tender requirements themselves.  The limitation period therefore began to run on 25 February and the proceedings were issued outside the 30 day time limit.

The claimant argued that the time limit should be extended because it had had to spend time investigating the viability of the tender.  That argument was rejected by the court, which held that the claimant had all the information it needed so that it knew or ought to have known of grounds for commencing proceedings as from 25 February.  (In addition, the claimant had completed its investigations by 18 March, which still left a week or so within the limitation period during which the claimant failed to issue proceedings.  Furthermore, even if the claimant had been able to establish that the limitation period did not start running until 18 March, the proceedings would still have been issued out of time.)

The claimant also alleged that the defendant had breached its obligations of transparency and disclosure.  Pending receipt of further information and disclosure, the claimant argued additionally or alternatively that the defendant had breached obligations as to “equal treatment and/or good administration and/or would be irrational and/or manifestly erroneous, having regard in particular to the importance of the services to be provided” by accepting an abnormally low bid from the successful third party.  Those aspects of its claim were apparently not time-barred, but they were also rejected by the court.

The claimant had argued that the PCRs conferred rights on economic operators without qualification, and that the defendant was therefore obliged to provide disclosure to the claimant even after it had decided not to participate.  The court disagreed: that was an extreme and far too wide reading of the PCRs, which create rights for parties wishing to participate in procurements.  Once the claimant had decided not to participate, the defendant owed no PCR duties to it.  In any event, even if duties had been owed, the court did not believe, on the facts, that the defendant had committed any breach: any loss suffered by the claimant would have been as a result of its decision not to bid.  The court also decided that the claimant’s latter complaints were, in reality, just a reformulation of its challenge based on the defendant’s tender documents.  As such, they were time-barred after all.

[1] subject to limited exceptions, the PCR apply to public supply, works and services contracts unless their value falls below the relevant threshold (see Crown Commercial Service PPN 04/17 for current thresholds)

[2] that is, any entity which offers the execution of works, the supply of products or the provision of services on the market

[3] [2019] EWHC 2211 (TCC)