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The suspension of a procurement challenge

Wednesday November 27th, 2013

David Hansom, partner and head of procurement law at VWV, reviews the recent important decision of Covanta Energy Ltd and Merseyside Waste Disposal Authority [2013] EWHC 2922 (TCC).

Since the 2006 procurement rules were introduced, there have been only two cases where the court has maintained the claimant’s automatic suspension/injunction of the award of the contract (Letting International Limited v London Borough of Newham [2008] EWHC 1583 (QB); and Morrison Facilities Services Limited v Norwich City Council [2010] EWHC 487 (Ch)). The Covanta litigation marks the third – and whilst the claim has now settled on confidential terms, the comments of the court mark an interesting shift in jurisprudence to a less authority-friendly stance.

David Hansom

David Hansom

The claim related to a long-term waste disposal contract with a contract value of circa £1bn. The competitive dialogue process took in excess of six years and Covanta was one of two bidders, but was eventually unsuccessful. It brought a claim against the authority on various grounds including manifest error in the evaluation.

Covanta sought an injunction on the principles from the American Cyanamid case (American Cyanamid Co v Ethicon [1975] AC 396) which the court awarded. It was held that damages would not be an adequate remedy due to the complications with quantification of the loss of chance and damages for allegations that the authority did not follow the competitive dialogue procedure correctly. It was found that on the balance of convenience an injunction should be granted, preventing the authority from awarding the contract until the conclusion of the trial. The court emphasised the importance of public authorities complying with the rule of law and  that it was important that public money be spent appropriately. It also decided that after six years of the procurement exercise and the length of the contract, the impact of another delay would be “modest”.

Practically, this case does not introduce any new points of law but it does show a change in tone and direction of the court which has perhaps taken a pro-authority stance in earlier case law on automatic suspension, where the suspension has typically been lifted on a balance of convenience/public interest type test. It will be interesting to watch this space.

 

David Hansom

Online: www.vwv.co.uk

Twiter: @vwvlawfirm

LinkedIn: David Hansom

 

Gov Opps training partner PASS (Procurement Advice and Support Service) runs training courses for both the public and private sector, including an Introduction to Public Procurement, Legal Impact on Public Procurement, The New EU Procurement Directive and Drafting a Compliant PQQ. For a full list of events, click HERE

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