The search for consistency

Do the Public Contracts (Amending) Regulations 2009 apply to procurements commenced but not concluded before 20 December 2009? Tarmina Dent warns local authorities to tread carefully.

Public contract procurements have been subject to a new set of regulations since 20 December 2009. While it is clear that these new provisions apply to all procurements commenced after 20 December 2009, there is a question mark over whether procurements commenced but not concluded before that date also need to comply with the new rules.

As such contracting authorities need to be careful to ensure that they are fully compliant with the new procedures and processes and always consider the EC principles of transparency and fairness, in order to avoid the time, cost and reputational impact that a challenge could cause.

The Public Contracts (Amending) Regulations 2009 (SI 2009/2992) came into force on 20 December 2009 and implement the Remedies Directive (Council Directive 2007/ 66/EC). In the absence of specific mention in either the Regulations or the Directive as to when these provisions apply, the Office of Government Commerce (OGC) has confirmed that the Regulations apply to all procurements commencing after 20 December.

However, given that neither the Directive or Regulations include the OGC exemption for procurements commenced before the 20 December 2009 date, local authorities should exercise caution ensuring they comply with the Regulations not only in respect of procurements commenced post implementation of the regulations but also regarding procurements commenced but not concluded before that date.

Against this backcloth, and given the rise in the number of decisions upholding the principles of EC law irrespective of the national law positions, it is worth considering the position set out in recent case law decision first, before relying on OGC guidance. The following cases highlight the trend towards upholding EC principles.

In Uniplex (UK) Ltd v NHS Business Services Authority, the Court extended the period in which disappointed bidders, may bring a challenge against a procurement decision.

The ECJ considered when time runs from, and whether a requirement for “promptness” in bringing proceedings was consistent with the Directive. Although the Regulations require any challenge be brought “promptly and in any event within three months from the date when the grounds for bringing proceedings first arose,” the Court held that this was contrary to the Directive. It was instead clarified that time would run from the date “the claimant knew or ought to have known of the alleged infringement”.

It also held that while the requirement for “promptness” was in accordance with the Directive requirements for tenderers to challenge promptly, the assessment of “promptness” allowed the national court too much discretion and gave rise to lack of certainty which was contrary to the provisions of the Directive. Therefore it was held that such provision should be precluded.

This case has now been applied in the High Court challenge of Sita UK Ltd v Greater Manchester Waste Authority where it was held that Sita was out of time. This decision is being appealed however.

In the Scottish case of Sidey Ltd v Clackmannanashire Council and Anor [2009] the Court set aside a purportedly concluded contract between Anor and the Council.

Here Reg 47(9) of Public Contracts (Scotland) Regulations 2006, which prevents a contract from being set aside, was held not to be applicable because the contract was awarded and concluded during the standstill period. It was ruled that this was not a concluded contract but only a purported contract. The Court was required to apply a purposive interpretation of Regulation 47(9) to be consistent with the EC principles and jurisprudence.

The proper interpretation of Regulation 47(9) was to prevent the Court from ordering any remedy other than damages if the contract had been properly entered into following expiry of the standstill period. Accordingly, the Court is not prevented from ordering other remedies where a contract is entered into and awarded before the expiry of the standstill period.

In February 2009, in the Scottish case of Plumbing and Heating v Aberdeen City Council [2009] we see a similar conclusion to that in Sidey. Here the Court gave an interim order to set aside a concluded contract on the basis that the contract was entered into prior to the expiry of the 10-day standstill period. The only remedy in such circumstances at the time was damages in accordance with Regulation 47 (9). (Since 20 December 2009 and implementation of the Public Contracts (Amending) Regulations 2009 concluded contracts can now be set aside as ineffective in the event of a substantial breach).

A similar issue arose in the High Court case of Northern Ireland (Federal Security Services) v Chief Constable for the Police Service and resource Group Limited [2009]. The Federal Security Services had previously been awarded a Part B contract for the provision of security, guarding and driving services to the police. It was alleged that the police had breached the procurement rules, in awarding and entering a new contract for the services without a standstill period.

The Court ruled that, although there is no requirement for a standstill period in respect of Part B Service Contracts, the general principles of EC law should apply. An interim order was awarded preventing the police from implementing the contract pending full trial.

The Court reiterated the view that damages are the only available remedy following contract signature provided that the contract complies with the general principles of EC law, including equality of treatment.

These cases all show the Courts interpreting or disregarding national law where they do not believe it to be consistent with EC law or principles. Therefore, given that the Directive nad Regulations themselves make no exemption to procurements commenced before 20 December 2009 but not concluded, it is possible that an unsuccessful bidder will bring a claim for breach of the new Regulations against such a procuring authority and the ECJ will be sympathetic, in order to ensure that EC law and principles are upheld and given due regard.

Given the spiralling cost of bidding for public contracts and the increased remedies available to unsuccessful bidders, together with the pending public sector spending cuts and efficiency drives that will lead to increased competition to win contracts, we are likely to see a continuing upward trend in the number of challenges brought against contracting authorities. Hence the need for authorities to take extra care at all stages of the procurement process.

Tarmina Dent is an assistant solicitor at TPP Law (www.tpplaw.com).