Keep the principles in mind

Wednesday April 27th, 2011

By Ruth McNaught, Solicitor, Harper Macleod LLP

The Court of Appeal in England and Wales has upheld a decision of the High Court to dismiss a claim against a contracting authority on the basis that there were “no reasonable grounds for bringing the action”. In so doing, the automatic injunction placed on the contracting authority was also lifted. In terms of the procurement rules, a contract award procedure is automatically suspended when court proceedings alleging breach of the rules are raised and served on a contracting authority. The suspension remains in force until the court brings it to an end or until the proceedings are determined, discontinued or otherwise disposed of.

In the case in question, Countryliner Ltd v Surrey County Council, the Council had issued an Invitation To Tender (ITT) for the supply of bus services in its area. As part of the tender process, tenderers were required to demonstrate their capabilities to implement the services, including the provision of evidence that they had all necessary planning permissions for performing the services. Countryliner submitted a tender naming one of its sites as the relevant bus depot, but did not have planning permission to operate a bus depot from that site and, consequently, could not provide the required evidence. As a result, the Council rejected Countryliner’s tender.

Countryliner brought proceedings alleging breaches of the Public Contracts Regulations 2006 (the Regulations) and applied for an injunction to prevent the Council from continuing with the tender process.

The High Court was tasked with determining whether the Council had made the significance of the requirement for planning permission evidence clear in the ITT. The judge determined that the requirement was indeed clearly expressed. Accordingly, Countryliner’s application for an injunction failed and the claim struck out.

Countryliner was dissatisfied with this outcome for two reasons:

1.         The fact that it had failed in its application for an injunction did not mean that its claim should be struck out.

2.         It was not right to use the existence of a planning dispute as a reason for rejecting its tender, since it had been using that site as a bus depot for a number of years.

The Court of Appeal upheld the decision of the High Court, finding that the ITT made it clear that the Council required documentary evidence demonstrating the relevant planning permission. It was not enough that Countryliner had operated a bus depot for a number of years. There was, therefore, no reason to let the case proceed to trial.

Again we see that, in practice, where contracting authorities are transparent about their requirements and apply them fairly to all tenderers, they are more likely to be found to comply with the Regulations. It may well have been a different outcome if the Council’s requirement for evidence of planning permission had not been expressed clearly, or if the Council had treated the tenderers unequally by accepting less than the required evidence of planning permission from another tenderer. Further, it was also important that the significance attached to a tenderer being able to provide evidence of planning permission was proportionate.

Keeping the principles of transparency, proportionality, fairness and equal treatment in mind when carrying out procurement procedures will help to ensure that tenderers are competing in a fair process. This will not, of course, prevent tenderers feeling aggrieved by an unsuccessful outcome, but is likely to assist a contracting authority in defending its position in the event of a challenge.

Ruth can be contacted on ruth.mcnaught@harpermacleod.co.uk

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