Public Procurement

July 30th, 2012

Turning Point Limited v Norfolk County Council [2012] EWHC 2121 (TCC)

  1. This is the first case to consider the 30-day limitation period that now applies to claims under r.47D of the Public Contracts Regulations 2006 (“the Regulations”). It confirms that, notwithstanding the very short period of time the Regulations now allow claimants, the Courts will enforce the limitation period strictly and that good reason will need to be established for any extension.
  2. The judgment also provides helpful guidance on: (i) the circumstances in which contracting authorities can exclude bids that are subject to qualifications or caveats; (ii) whether there is an obligation to seek ‘clarification’ of qualifications; and (iii) the scope of the obligations on contracting authorities that might arise in implied contract.
  3. Norfolk tendered a five-year contract for various drug and alcohol treatment services. The ITT expressly stated that the procurement would be conducted using the restricted procedure.
  4. The PQQ provided that Norfolk’s only contractual obligation would be to comply with statutory requirements i.e. the Regulations. It also stated that TUPE was expected to apply and that workers currently providing the service would likely transfer to the successful bidder, with resulting pensions and redundancy costs.
  5. The ITT stated that it might not include all information that tenderers require and that Norfolk would have the right to exclude bids that did not comply with its terms. In regard to TUPE (and related pensions and redundancy costs), the ITT required tenderers to include adequate financial provision for such liabilities in the pricing of their bids. It also explicitly stated that no qualifications, caveats or variant bids would be accepted.
  6. On 20 December 2011, Norfolk provided TPL with various TUPE information for those employees expected to transfer. TPL regarded the information as insufficient and submitted some 20 clarification requests. Norfolk’s responses broadly refused to provide further information.
  7. TPL was concerned that in formulating its bid it did not have the information necessary to estimate what its likely TUPE and redundancy costs would be e.g. dates of birth, match between specific job roles/locations and the information given and the redundancy policies of existing providers etc.
  8. Consequently, when TPL submitted its tender on 9 February 2012, it included a note in its pricing section stating that because of the ‘lack of full and complete TUPE information’ its bid was priced on the basis that there would be no TUPE/redundancy costs.
  9. On 12 March 2012, Norfolk wrote to TPL informing it that its tender had been excluded because it included a non-compliant qualification. Norfolk subsequently confirmed that if TPL submitted an unqualified bid at the same price it would have won the contract.
  10. TFL issued proceedings on 28 March 2012. In addition to its claim under the Regulations it also asserted the existence of an implied contract that included an obligation to treat its tender ‘fairly’.
  11. Norfolk sought strike out/summary judgment on grounds of: (i) limitation; where to buy kamagra jelly 100mg in canada and (ii) no arguable case.
  12. Akenhead J formed the ‘clear’ view that that the complaint about the inadequacy of TUPE information was barred by the 30-day limitation period: §36.
  13. TPL must have had knowledge of the relevant breach, failure to disclose sufficient information, by the time it submitted its tender on 9 February 2011 (at the latest). Knowledge of the alleged breach had probably crystallised by 19 January 2012, more than 10 weeks before the Claim Form was issued.
  14. The Court firmly rejected the suggestion that Norfolk was subject to any implied obligation to continue to provide further information to bidders after tenders had been submitted. It was noted that no such requirement applies under the Regulations and it could not be said to be necessary to imply such an obligation in contract: §36(f).
  15. TPL contended that if the 30-day limitation period had expired, then the Court should exercise its jurisdiction under r.47D(4) to extend time. The Court refused to do so.
  16. Akenhead J held that TPL had not demonstrated ‘good reason’. On the facts, it was likely that TPL was aware of timing issues during the procurement process. The fact that the requested extension was for a relatively short period of time, said to be 14 days, was not a ‘good reason’. The statutory limitation period was 30-days, not 30- days plus a further ‘short and reasonable’ period.
  17. For circumstances to constitute a valid ‘good reason’ they will usually be something that is beyond the claimant’s control. Examples could include significant illness or detention of members of the bid team: §37.
  18. The Judge formed the ‘clearest view’ that TPL’s note must be treated as a qualification or caveat to its bid. To assess its effect, the note had to be construed objectively as a potential contractual document. TPL’s subjective intention was therefore irrelevant. The effect of the note was that TPL had not accepted that it would be liable for redundancy costs and that these costs would therefore fall to Norfolk. Under the ITT, it was therefore entirely legitimate to exclude the bid: §39.
  19. There was no obligation in the circumstances to seek ‘clarification’:
    (1) the ITT clearly precluded qualifications and the note plainly breached that prohibition. Such rules were common, inherently fair and operated to ensure a level-playing field for other bidders;
    (2) the ITT did not include an express power to seek clarifications in respect of the pricing section;
    (3) there was no implied power or obligation to seek clarification in regard to a qualification on price. Seeking clarification in this context would create a risk of non-transparency, risk alerting the bidder that its tender was receiving serious consideration and create the opportunity for abusive conduct; and
    (4) the Tideland case was concerned with obvious or formal errors such as transposition, formatting or obvious arithmetical mistakes. It could not assist a bidder who submitted a significant qualification on a voluntary commercial basis: §40.
  20. It was arguable that the terms of the ITT created an implied contract, at least to comply with statutory obligations and the ITT’s express terms. However, the express reference to the Regulations precluded any reliance on further ‘implied’ obligations, such as a general duty to act ‘fairly’: §41.
  21. It followed that the claim should be struck out.CommentThe current approach to the 30-day limitation period
  22. We now have a judgment that considers the proper approach to limitation under the new 30-day regime. The Court here adopted a strict approach, notwithstanding the very short term of the statutory limitation period. The approach previously adopted to limitation, and possible extensions of time, under the old three-month regime will continue to be applied with minimal (if any) alteration. This is so notwithstanding the very significant reduction in the time available to challengers in which to issue proceedings. The judgment also indicates that arguments based on the fact that a claim is ‘just a little’ out of time will generally receive short shrift.
  23. In tandem with the strict approach currently being applied to determining the point in time from which limitation will begin to run (i.e. when a potential challenger first has the opportunity to apprehend the fact of non-compliance with the Regulations, rather than the point when it is appreciated that this is likely to cause loss), this analysis presents a formidable obstacle for many potential challengers.
  24. Even for a sophisticated commercial operator that is familiar with the scheme of the Regulations and the possibility of legal challenge, 30 days is not a great deal of time in which to properly investigate a potential breach, obtain appropriate expert advice, make decisions internally and get proceedings on foot. Realistically, many less well- resourced (and savvy) organisations (including many SMEs) are in practice likely to find themselves unable to exercise their legal rights.
  25. For obvious pragmatic reasons, this is welcome news for contracting authorities. However, viewed objectively, it may be questionable whether the current 30-day limitation period (and the rigour with which it is being judicially applied) is consistent with the object and purpose of the Regulations and the requirement of effectiveness under EU law.
  26. For example, it is interesting to speculate as to whether striking out a challenge with strong prima facie merits that is issued shortly outside the limitation period, perhaps because of the complexity of the underlying factual matrix, is defensible.‘No qualification/caveat/variant’ provisions
  27. The judgment also provides a strong endorsement of the use of ‘no qualification’ or ‘no variant’ provisions in ITTs. This will also be welcomed by contracting authorities.Tender clarifications
  28. While Akenhead J’s analysis regarding the use of clarification must be read in light of the fact that the case concerned an impermissible qualification, a number of the features of his reasoning would appear to be of wider application to clarification more generally. In particular:
    (1) it will always be important to consider whether the ITT actually confers a power or duty to seek clarifications upon the contracting authority; and
    (2) because seeking clarifications necessarily poses the risk of abusive conduct and breaches of the principle of transparency, some weighty countervailing factors will need to be demonstrated to justify any asserted right or obligation to take such steps.Implied contract ‘fairness’ obligations
  29. Finally, the judgment follows a line of recent decisions in holding that where a procurement is subject to the Regulations, or adopts their requirements by incorporation, there will be little scope for asserting implied contractual obligations going beyond the content of those provisions.

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