Public Procurement

July 16th, 2012

Re. David Connolly’s Application for Judicial Review [2012] NICA 18 (12 June 2012):

1.     The Northern Ireland Court of Appeal held that a shareholder and director of a disappointed tenderer cannot use judicial review to have a ‘second-bite’ at challenging a procurement process where the tendering company has previously litigated a claim under the Public Contracts Regulations 2006 (“the Regulations”) in respect of the same procurement.

2.     In 2010, the Department of Regional Development (“DRR”) awarded Traffic Signs and Equipment Limited (“TS”) two (out of a total of twenty one) contracts for the supply of traffic signs. TS was dissatisfied and brought proceedings under the Regulations.

3.     The Court held that if the procurement award criteria had been properly applied TS would have been awarded three further contracts. Accordingly, DRR’s decision in respect of those three contracts was set aside. However, TS’s challenge to the award of the remaining 15 contracts was rejected.

4.     Mr Connolly was a shareholder and director of TS. Rather than TS appealing the decision under the Regulations, Mr Connolly tried to bring judicial review proceedings in respect of the award of the remaining 15 contracts.

5.     The Court held that Mr Connolly was not entitled to pursue a remedy via judicial review.

6.     If TS was dissatisfied with the Court’s decision in respect of its claim under the Regulations it should have appealed. It had not done so: [26]

7.     The substance of the issues that Mr Connolly wished to raise under judicial review was effectively identical to the subject-matter of TS’s claim under the Regulations. Res judicata and the doctrine of former recovery prevented the re-litigation of the same issues: [26]

8.     While the English Court of Appeal’s judgment in Chandler tentatively supported the view that a third party with sufficient interest could seek judicial review for breach of the Regulations, there was ‘considerable force’ in the argument that no such remedy should be available to an economic operator that had a statutory remedy under the Regulations: [28]

9.     Mr Connolly’s only interest in the proceedings, as a shareholder and director of TS, was not a sufficient interest to maintain an application for judicial review: [29]

Comment

10.  It would be surprising if an economic operator could have a second-bite at the cherry, by re-litigating a failed procurement challenge under the Regulations via judicial review, simply by having a shareholder (or some other connected party) issue the judicial review application in his or her own name.

11.  The judgment highlights that there remains scope for doubt about the two obiter dicta statements in Chandler to the effect that: (i) non-compliance with the Regulations is a true ‘public law wrong’ that in principle should be susceptible to judicial review; and (ii) third parties should have a remedy in judicial review for such breaches, despite the fact that in enacting the Regulations Parliament has prescribed that only economic operators should be granted a right of challenge.

Shetland Line (1984) Limited v Scottish Ministers [2012] CSOH 99 (29 May 2012)

12.  The Scottish Court of Session allowed an application to lift an automatic stay, holding that the grounds of challenge were weak and the balance of convenience favoured allowing the contracting authority to enter into the proposed contract.

13.  Shetland Line (“SL”) advanced two grounds of challenge against the Scottish Ministers’ decision to award a contract for ferry services in the north of Scotland to a rival operator, Serco, following a competitive dialogue process. The proceedings arose from the Scottish Ministers’ application to lift the automatic stay.

14.  SL brought two grounds of challenge.

15.  First, that the ITT breached the Regulations and general Treaty principles by failing to prescribe what level of ferry service, and thus resources, tenderers would be required to provide under the contract. This lead to Serco winning the procurement with a proposal that provided a significantly lower level of service coverage than that proposed by SL, at considerably lower cost.

16.  The ITT stated that proposals must be able to meet ‘anticipated future demand’. That interfere with sperm production, which means that is viagra viagra online canada generic yet it must be treated. Houston, texas alsay how to use tadalafil research peptides recently hosted. That what does generic cialis look like changed ed so nicely, that a. It included historical data about usage, but did not prescribe any minimum level of expected future service. Bidders were therefore required to form their own view about what level of service would be necessary in future.

17.  SL asserted that the level of service postulated in Serco’s bid would not be sufficient to meet the level of freight needs described in the ITT. The Scottish Ministers were therefore said to have breached the Regulations by accepting a non-compliant bid. Relatively extensive witness evidence was advanced in support of the assertion that the solution proposed by Serco would not prove sufficient.

18.  Second, for similar reasons, it was claimed that the ITT breached the requirement to specify the contract requirements against which bids would be assessed with sufficient objectivity and precision. It was said that the approach adopted effectively left it open to bidders to define the service that would be provided.

19.  These alleged breaches were said to have prevented equal competition and thus breached the obligations of transparency, equality of treatment and non-discrimination.

20.  The Court rejected both grounds.

21.  The appropriate standard of review to a challenge of this sort was manifest error. The Judge held that it would be “quite wrong for it to trespass on the jurisdiction clearly given to the contracting authority to exercise a broad discretionary judgment as to the identification of the most economically advantageous bid”: [26]

22.  One of the main factual grounds of the challenge was incorrect, in that Serco did provide a standby vessel to cover the risk of breakdown or accident. This undermined the assertion that its proposal was insufficient to meet the contracting authority’s needs: [27]

23.  It was (or should have been) obvious to all bidders from the ITT that: (i) there was no absolute requirement as to the details of the service to be provided, and (ii) it was up to each bidder to frame their proposal using their expertise and experience, in the context that the emphasis would be on efficiency rather than maximisation of freight capacity: [28]

24.  Demand is not static and is subject to multiple variables, including the effect of competition. It was thus difficult to claim a priori that the successful bid would not be sufficient to satisfy such demand as might exist in future: [29]

25.  The requirement that proposals met “current and anticipated demand” was sufficiently precise to allow the bidders to determine the subject matter of the contract and the authority to award it. There was nothing objectionable in asking bidders to identify the appropriate number of vessels, schedules, capacity, etc. and allowing the contracting authority to assess them and select the most economically advantageous tender. The whole purpose of the competitive dialogue procedure is to cater for circumstances where it is not appropriate for the contracting authority to be specific about the technical means necessary to satisfy its needs or objectives: [30]

26.  It would be surprising if compliance with the competitive dialogue procedure required the kind of detailed specification asserted by SL. This was particularly so where there could be no certainty about the future demand for freight capacity and freight sailings which any new operator would experience: [32]

27.  There was no requirement for the Scottish Ministers to be more specific in describing the contract requirements. This was because of: (i) the uncertainties and complexity of the contact; (ii) the scope for imaginative and individual proposals; and (iii) the indefinite nature of the content of the most economically advantageous tender.

28.  Competitive dialogue under the Regulations did not deprive the contracting authority of the option of leaving the bidder to assess exactly what should be offered, price it, and then await the evaluation of the contracting authority. If this were not so, contracting authorities would lose the potential of the full benefit of competition between expert bidders, all operating on an equal footing in terms of information and dialogue: [34]

29.  At best, the Claimant therefore had a weak prima facie case: [34]

30.  The balance of convenience, including the public interest and private interests of Serco, favoured lifting the stay: [35]-[39]

Comment

31.  This decision will be welcomed by contracting authorities as affirming the generous margin of flexibility and discretion that is enjoyed under the competitive dialogue procedure. Despite bidders having widely differing interpretations of what the ITT required them to provide, the Court’s view was that the Scottish Ministers were entitled to require parties to make their own projections about future service needs and then decide the winner based on which estimate it regarded as most realistic/advantageous. This was the case notwithstanding the fact that this approach necessarily meant that in one important sense the comparison of bids was not conducted on a ‘like for like’ basis.

32.  It is unlikely that a contracting authority would be permitted to adopt such a relaxed approach to defining contract specifications under the other procedures provided by the Regulations.

 

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