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Procurement

Public Procurement Update – 14 May 2020

PROCUREMENT CHALLENGES: COURT HAS NO TRUCK WITH LATE CLAIMS

In a virtual hearing in Riverside Truck Rental Ltd v Lancashire County Council [2020] EWHC 1018 (TCC) the High Court has confirmed that, when challenging procurement decisions, commercial considerations are not good reasons for issuing claims late, outside of the 30 day limitation period set by the procurement regulations.

What are the rules on time limits for challenging procurement decisions?

For claims brought (as in this case) under the regulations, where the claimant is not seeking a declaration of ineffectiveness, “proceedings must be started within 30 days beginning with the date when the economic operator [usually the challenging/unsuccessful bidder first knew or ought to have known that grounds for starting the proceedings had arisen“. Even where the claimant seeks a judicial review (JR) of a contracting authority’s decision (as was also the case here) the time limit relating to JR of procurements is the same as it is under the regulations, that is 30 days (rather than the usual requirement for JR proceedings to be commenced promptly, and in any event within 3 months of the decision being challenged).

The court can extend these time limits where there is a good reason for doing so, but only for a total of 3 months from the date the challenger knew or ought to have known that grounds for starting proceedings had arisen.

What happened in this case?

The claimant was the incumbent supplier, supplying and maintaining cab and trailer fleets used by the defendant Council in the operation of its waste processing facilities. The Council told the claimant on 29 November 2019 that its bid for a new contract had been rejected, for failing to comply with the ITT requirements. On the last day of the procurement standstill period, 12 December, the claimant informed the defendant that it would be issuing a claim, but did not instruct solicitors until four days later. On 10 January 2020, in response to a request from the claimant’s solicitors, the defendant provided details of its evaluation of the claimant’s and the winning tenderer’s bids, including details of the winning tenderer’s bid price. The claimant believed that this showed it would have been the winning bidder, had its bid not been rejected. The contract was awarded to the winning bidder on 16 January.

The claimant issued two claims on 24 January, the first for a breach of the Public Contracts Regulations 2015 (PCR) and the second seeking JR of the defendant’s decision to reject the claimant’s bid. Applications were also made seeking the court’s permission to extend the time limit to issue the claims, if required. The claimant attempted to argue that the 30 day time limit for commencing its claim should run from 10 January when it was provided with the tender evaluation information.

The court’s decision

Were the two claims were brought out of time?

Yes. The court was more than satisfied that time started running from 29 November, when the claimant was told that its bid was rejected. This was when it had, or ought to have had, knowledge that the defendant was in potential breach of the PCR. Because the rejection of the claimant’s bid resulted in the loss of a chance that was capable of giving rise to an award of damages, the claimant had enough at this stage for an actionable claim, and to commence that claim. The knowledge obtained on 10 January was relevant to the quantification of the value of the claim but was not necessary to commence the claim.

Did the court have the power to extend time in each claim?

One allegation related to the design of a specification requirement in the ITT, which the claimant had knowledge of in September 2019. Even if minded to, the court could not extend the time limit on this element of the claim, as that would take it beyond the maximum limit (3 months) permitted under the PCR.

In relation to the decision to reject the claimant’s bid, the court could extend the time limit from 30 days up to a maximum of 3 months from 29 November, if it considered there was good reason to do so.

Was there a good reason to extend time?

Not in this case. There is no exhaustive list of good reasons for extending time, but factors beyond the control of the claimant that prevent service of the claim form in time will be taken into account. These do not include commercial considerations such as having the relevant information (as obtained by the claimant on 10 January) to understand the potential value and commercial merit of the claim.

COMMENT

In procurement challenges, time can start running before the result of a procurement competition is concluded; it is not necessary for the risk to come to fruition and loss to be suffered for proceedings to be commenced. Time can also begin to run from different dates in respect of different breaches, which means it is not unusual to have multiple proceedings from the same claimant in relation to the same procurement.

The decision in this case highlights the risks of delaying issuing a claim while waiting for further information from the authority (such as to find out the result of the competition, or information that may help in deciding how commercially worthwhile a claim may be). Extensions of time are difficult to obtain – if you are a bidder and losing the chance to be awarded the contract would have a substantial adverse impact on your business, it’s worth at least exploring the issue further, including the pros and cons of issuing a claim, with a specialist legal advisor as soon as you become aware that the authority may have breached its duties under the procurement regulations.

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