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Procurement

Sustainability and Climate Change: the new public interest in procurement disputes?

This decision contains an important reminder of the factors considered by a Court when considering summary judgment applications and applications to lift automatic suspensions in public procurement processes.

Neology UK Ltd v The Council of the City of Newcastle Upon Tyne & Ors [2020] EWHC 2958 (TCC) (06 November 2020)

Background

The Claimant, Neology, was one of three tenderers who had submitted bids in a tender process run by Newcastle for a contract to use automatic number plate recognition in the Tyneside area to check the status of vehicles (electric/petrol/emissions). The technology was key for the observation and enforcement of a Clean Air Zone (CAZ) in Newcastle, to help the government in complying with its obligations under the Air Quality Directive to reduce levels of nitrogen dioxide in the air.

Neology lost the tender and issued a claim. Neology then brought a summary judgment application against Newcastle on the basis that the authority had no real prospect of success at trial and that there were errors in the evaluation of tender responses. Newcastle had applied to lift the automatic stay on the award of contract to allow the project to proceed, arguing that Neology’s claim was weak.

Outcome

Despite Neology’s claims, the High Court found that the case was “wholly unsuitable” for summary judgment, as the criticisms raised were disagreements on scoring and the reasons for those scores, rather than allegations of breach of the fundamental principles of procurement.

The Court explained that the case came “nowhere near administering the knock-out blow” which would be needed for summary judgment. There was no flaw found with the procurement which showed obvious unfairness or manifest disparity of treatment between tenderers.

Neology had contended that, in losing this contract, Neology would be driven out of the UK CAZ market completely. However, the Court did not find this a convincing argument, due to the lack of evidence provided about the market impact of the loss of this tender.

The Court was not willing to continue with the automatic suspension restricting Newcastle from signing the contract with the successful tenderer, and that Neology’s claim could be dealt with via damages. There was also a clear public interest in achieving the implementation of the CAZ in Newcastle, which would be hindered if work was not able to begin straight away to get the automatic number plate recognition system set up in the city.

Key takeaways

Automatic suspension and summary judgment can be useful tools for an unsuccessful bidder in any procurement challenge. However, such a suspension can be hard to maintain if you are not an incumbent supplier and public interest factors are against maintaining the suspension. Similarly, a summary judgment application should only be pursued if it is clear that the other party’s case has no real prospect of success and there is no other reason why the matter should go to trial.

This decision is an important discussion of the factors considered by a judge when deciding whether to allow the automatic suspension to continue.

Any arguments that the loss of a contract will have more than a negative financial impact have to be well evidenced, and are more difficult to make as a non-incumbent supplier.

The public interest arguments in this case included sustainability aims and climate change targets – which is an expansion of the types of public interest seen in other cases about matters such as patient care in contracts in the health sector. One to watch for in future procurement cases – as the sustainability agenda for government, organisations and businesses continues to grow.

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