Time limits for procurement challenges

By Ruth McNaught, Solicitor,  Harper Macleod LLP

Public authorities familiar with the procurement rules will be aware that any breach of the rules is potentially actionable by any person affected by the breach, as long as an action is raised within prescribed timescales.

A recent case in England (Mears Ltd v Leeds City Council [2011] EWHC 40 (QB)) has brought the issue of timescales into sharper focus.

Leeds City Council (the ‘Council’) ran a procurement for works for social housing in the Leeds area. One of the shortlisted contractors, Mears Ltd, had been invited to participate in a competitive dialogue.

After the deadline for submission of tenders had closed and all tenders had been received, the Council issued a clarification by letter, dated 14 May 2010, to all the tenderers. The letter required that tenderers take into account certain new information, to which Mears responded with revised pricing.

On 2 July 2010, Mears was informed that following evaluation, its tender had been unsuccessful.

On 12 October 2010, Mears raised an action against the Council for amending pricing aspects during consideration of the tenders and not giving tenderers sufficient time to respond to the amendments.

What was the issue?

The procurement rules require a third party to raise proceedings within three months from the date on which they knew (or ought to have known) of the breach of the rules.

The Council argued that Mears had not complied with the procurement rules because the company had failed to raise proceedings within the required period of three months from 14 May 2010 or, at the latest, 18 May 2010 (the date by which tenderers were expected to respond to the new information) and that there was no good reason for the court to extend the period.

What did the court decide?

The court summarised the position on this issue as follows:

• The ‘date when grounds for the bringing of the proceedings first arose’ will depend on the nature of the claim.

• The grounds for making certain claims may arise before there has been any decision to eliminate a tenderer from the procurement process or not to award a contract to a tenderer.

• Where the claim is based on breach of the procurement rules during the tender process, the date when the grounds arise will depend on when the claimant knew or ought to have known of that infringement.

• The requirement of knowledge is based on the principle that a tenderer should be in a position to make an informed view on whether there has been a breach and whether such breach merits a claim being made.

In this case, it was clear that Mears had full knowledge of both the contents of the letter of 14 May 2010 and the time allowed to respond. By the time the period given in the letter of 14 May 2010 had expired – that is, at the latest, 18 May 2010 – Mears had sufficient knowledge to take an informed view as to whether there had been breach of the procurement rules for which it was appropriate to bring proceedings. As a result, the action by Mears was raised too late.

Comment

This case highlights that tenderers must be alert to the date of any breach and be proactive in commencing proceedings. Failure to do so may well result in the claim being timed out, as was the case here.

Ruth McNaught is a solicitor at Harper Macleod LLP and can be contacted on ruth.mcnaught@harpermacleod.co.uk