Challenging an Authority's decision in a procurement

Usually the first time you are aware that you may wish to challenge is on receipt of the contract award notice (or Standstill Letter) advising that you have been unsuccessful. However, the time limits for challenge start to run from whenever you were aware of the issue so if your concern is, for example, a change of criteria or an unclear instruction in the ITT you should challenge that immediately and not wait to find out if you have been successful or not. 

For the purpose of this guidance, however, we have assumed that the Standstill Letter is the first date of knowledge. 

Check the Standstill Letter

It must set out:

• The name of the winning bidder
• The respective scores of the winning bidder and your bid
• The characteristics and relative advantages of the winning bid compared to yours and with sufficient detail to enable you to make an informed decision about the merits of a challenge
• When the standstill period will end. This will be midnight usually at the end of the 10th day after the date on which the last bidder receives notice.

If the Standstill Letter is defective then the Contracting Authority takes a risk in proceeding to award the contract which might amount to an unlawful direct award giving rise to a remedy of ineffectiveness. 

On receipt of the Standstill Letter: 

• Check the scores awarded
• Check the reasons given
• Do the scores and reasons look adequate?

If you have concerns either seek legal advice or consider a written request to the Contracting Authority along the lines set out below. 

Initial Letter to Contracting Authority

This should set out, concisely:

• Any concerns you have about scores
• Queries about the reasons given for a mark or the adequacy of the information given
• Ask for the standstill period to be extended
• Ask for documents and we suggest that you ask for: 
  o The evaluation notes of individual evaluators 
  o Notes of evaluation meetings particularly moderation meetings 
  o The report required under Regulation 84

Standstill Period

Contracting Authorities are not obliged to extend the Standstill Period if requested but will often do so especially in light of the TCC Guide on Procedures for Public Procurement Cases. NB-extension of the Standstill Period does NOT extend the 30 day period within which to bring a claim.

The TTC Guide On Procedure for Public Procurement Cases 

The vast majority of claims about a breach of the Regulations are heard in the Technology & Construction Court (TCC). As a result a Guide has been approved by the TCC (and annexed to the TCC Guide) for the conduct of procurement claims including how the parties should behave pre-action.

Whilst not mandatory a failure to follow the Guide, particularly where a Contracting Authority has refused to give early disclosure of documents, could lead to costs penalties if litigation arises which might have been avoided.

The Guide puts an emphasis on pre action conduct by both parties which is co-operative, reasonable and proportionate and which focuses on trying to resolve the dispute before it reaches a court. 

The procedures for issuing proceedings and conducting litigation are not covered by this note. Legal advice is strongly recommended before you take such a step and the procedure is covered by: 

• The Civil Procedure Rules
• The TCC Guide
• Practice Direction 51N on Shorter/Flexible Trials

It should be noted that the Regulations require proceedings to be issued in the High Court and that the preference is generally to issue in the TCC.

The effect of issuing proceedings is that the Authority cannot go ahead and award the contract. It automatically imposes a suspension on the procurement process. Once the automatic suspension has arisen the Authority may only award the contract if the claim is settled or the court orders that the suspension should be lifted following a hearing.

Lifting the Automatic Suspension

A contracting authority may apply to the court to lift the automatic suspension. The key points to note when such an application is made are:

• It should be made as soon as possible
• When considering whether to lift the automatic suspension the court will consider: 
  o If there is a triable issue 
  o The “balance of convenience” ie whether the prejudice to the Authority of continuing the suspension outweighs the prejudice to the Claimant of being deprived of a remedy and losing the right to compete for the contract. 
  o The nature of the contract: this is an aspect of balance of convenience but the suspension is more likely to be lifted where the contract to be let is for critical services which cannot await the outcome of a trial than if it is for a less critical service. 
  o Whether damages are an adequate remedy. If the court concludes that a bidder can be compensated in damages then the automatic suspension is likely to be lifted.
• For more commentary on circumstances in which the automatic suspension might be lifted see the Remedies section of our blog.

If the automatic suspension is lifted then the claim may still continue for damages even though damages can often be difficult to calculate in procurement cases. If it is not lifted then an expedited (within 6 months) trial is likely to be ordered probably adopting aspects of the Flexible Trial practice direction. 

Ineffectiveness

The above all supposes that there has been a procurement process and award of contract that you know about but sometimes the problem is that you simply do not know about the procurement because it has not been advertised and a direct award has been made. In those circumstances you may have a remedy of asking the court to declare the contract ‘ineffective’. Again, if you think this might apply then legal advice should be sought urgently as the grounds for claiming ineffectiveness are not straight-forward. In summary there are three grounds for an ineffectiveness claim:

1. Where a contract is awarded without prior publication unless certain exceptions apply.
2. The contract has been entered into either during the standstill period or during the period of any automatic suspension AND there has been a breach of the Regulations.
3. Relates to contracts under framework agreements or dynamic purchasing systems where the contract has been awarded in breach of the requirements for these under the Regulations unless certain exceptions apply.

If any of the above apply then a bidder may apply to the court for a declaration that the contract entered into is ineffective. That means that the contract ceases to be in force and all future obligations under it are discharged. In addition a court may make an order for compensation and it will impose fines and penalties on the contracting authority. 

The reality is that although ineffectiveness is often threatened where a standstill letter is defective in the 7 years since it has been available as a remedy it has almost never been considered by the courts.

A particular issue which arises in procurement disputes is the confidentiality of documents particularly documents belonging to 3rd parties. A classic example is the pricing of the winning bidder.

A number of ways have evolved to deal with the issue of confidentiality including the creation of what are known as ‘confidentiality rings’ which permit only a limit number of people, sometimes only legal advisers, to view and consider documents.