Strengthening the remedies available to aggrieved bidders

The number of challenges being brought in the UK for breaches of public procurement law continues to rise, with the courts demonstrating an increased willingness to provide remedies for bidders where there has been a breach of the rules. A number of recent cases in the UK and EU have strengthened the hand of aggrieved bidders, with the new EU Remedies Directive set to improve further the remedies available through the courts.

The Letting Case

The Court of Appeal recently upheld an interim injunction awarded by the High Court preventing the London Borough of Newham ("Newham") from awarding a framework contract. Letting International Limited ("Letting"), one of the bidders, considered that Newham had breached the Public Contracts Regulations 2006 (the "Regulations") through its improper use of award criteria and its scoring methodology, including the undisclosed use of 28 sub-criteria refining the main weighted award criteria. It therefore sought an injunction to stop the process. The Court found that there was a lack of transparency around the award criteria that would be used to evaluate bids. The Court held that in order to satisfy the overarching principles of transparency and equal treatment, contracting authorities must make tenderers aware of all of the features that will be taken into account in order to identify the most economically advantageous offer, and, if possible, their relative importance, in the tender documentation. In this respect, the judgement clarified that the focus of the courts will be on substance, not on whether something is called a "criterion", "methodology", a "sub-criterion" or even a "sub-sub-criterion" etc. As there was no evidence that Newham would suffer serious harm if prevented, prior to trial, from awarding the framework contract, the Court upheld the interim injunction.

The Letting case indicates the growing importance of the principle of transparency in public procurement law and applies the recent decision of the European Court of Justice (ECJ) in Emm G Lianakis AE v Alexandroupolis (C-532/06).

Information Disclosure

In circumstances where an aggrieved bidder suspects that there has been a breach of the transparency requirement, or a serious breach of the procurement rules more generally, concerns should be expressed in writing to the contracting authority i.e. describing the nature of the alleged breach, including a request for further information such as details of why the bidder was unsuccessful, disclosure of the evaluation documents (methodology, template score sheets), details of the actual scoring of bids and even copies of the post award documents, such as the contract itself.

In practice, such a request in writing will amount to a request under the Freedom of Information Act 2000, or, where applicable, the Environmental Information Regulations 2004, and will often represent the first step in ascertaining whether to instigate proceedings. However, the disclosure of actual evaluation reports, bidder scores and other more sensitive information will be subject to a duty on the contracting authority to protect information reasonably designated by another bidder as confidential and the right of the contracting authority not to prejudice its own commercial interests.

In the UK, the Information Commissioner has shown a willingness to order the disclosure of public contracts containing confidential and commercially sensitive information, where there are overriding reasons in favour of public disclosure.

The new EU Remedies Directive

Once a contract has been entered into, the current Regulations limit the remedies available to unsuccessful parties to damages, which are often very difficult to prove and quantify in relation to breaches of the Regulations.

Directive 2007/66/EC, the so-called "Remedies Directive", came into force on 9 January 2008 and must be implemented in the UK by 19 December 2009. Notable among the provisions are the inclusion of the following new remedies, in addition to awards of damages:

• the introduction of a new requirement that national review bodies (e.g. the High Court in England and Wales) should have the power to declare illegally awarded contracts "ineffective", in certain circumstances and subject to exceptions; and
• the availability of alternative penalties, in certain circumstances, in the form of:
• the imposition of fines on the contracting authority; or
• the shortening of the contract,

provided such penalties are proportionate, effective and dissuasive.

The Office of Government Commerce invited comments on how best to implement the Remedies Directive in the UK, including on which of two alternative types of ineffectiveness remedy to implement: a retroactive cancellation of the effects of the contract, or simply the cancellation of all remaining obligations under a partially performed contract. The consultation closed on the 24 October 2008.  

Watch this space to learn the outcome of that consultation!

Richard Bakewell
Email: richard.bakewell@michelmores.com .