Quickfire round

In public procurement circles, the issue of timing and when a ground of challenge arises – thereby triggering the window for issuing proceedings – is a hot topic in the courts. Lucy James and Olivia Carter analyse a recent case showing contractors must act quickly.

Matrix-SCM Limited v London Borough of Newham [2011] is the most recent in a succession of cases which affirms the important principle that contractors must act quickly if they have concerns as to the legality of a procurement process, even if this involves challenging the process at a time when they still have a chance of successfully securing the contract. As explained below, the importance of doing so has been further reinforced by the recent changes to time limits as introduced by the Public Procurement (Miscellaneous Amendments) Regulations 2011.

The case involved the procurement by the London Borough of Newham of a 'vendor neutral managed services' contract for the provision of temporary agency workers (the Contract). The Invitation to Tender (ITT) was issued on 18 March 2010 and this document set out the criteria on which Newham would base its decision to award the Contract. The ITT contained a description of the way in which both the pricing element and the savings element (together constituting 30% of the marks) would be evaluated and a table setting out some worked examples.

Matrix learned on 30 September 2010 that it had been unsuccessful. There was a de-briefing session and ongoing correspondence between the parties. Matrix did not fully formulate its grounds of challenge until 26 October 2010.

Contractor's claim

Matrix contended that Newham had failed to properly apply the pricing element; that it had failed to apply the test set out in the ITT and as a result it had got its maths wrong. Matrix also contended that due to the way the savings element worked, Newham had failed to award the Contract to the most economically advantageous bidder. Further, Matrix claimed that Newham had failed to act transparently and consistently, as the manner in which the pricing and savings elements would be calculated was unclear when the bids were submitted.

Whilst Newham denied any unlawfulness in any event, the issue to be determined was simply whether the above claims were time-barred on the basis that such claims ought to have been brought by 18 June 2010 at the latest (ie 3 months from the date of the ITT being issued) and, if so, whether an extension of time for bringing the claim should be granted.

Matrix contended that on pricing, the breach did not become apparent until the decision to award the Contract was made and Matrix was informed of how the pricing calculations had been done, which was different, they said, from the approach in the ITT. In the alternative, and in respect of the savings element challenge, Matrix submitted that a reasonable tenderer could not have known of Newham's alleged infringements at the time they received and were able to review the ITT.

The Court's decision

On Newham’s application for summary judgment (an early hearing at which the Court will decide whether the claim has a realistic prospect of success and should be able to proceed to trial), the Court firmly held that the claims were time-barred and that no extension of time should be granted. This was on the basis that Newham had applied the correct pricing test (as set out in the ITT) and that the approach that Newham took in evaluating the pricing and savings elements had always been clear from the ITT. The Court considered that the table containing the hypothetical scoring calculations (provided by the Council as part of the ITT) was an integral part of the evaluation model, which demonstrated what Newham's approach would be by providing clear and straightforward examples. Even if there had been any inconsistency between the text and the table (as argued by Matrix), this would have been apparent from the face of the ITT.

What the claimant ought to have known

Whilst there have been numerous cases dealing with timing and a contractor's actual knowledge of a breach, Matrix goes further as it deals with the issue of constructive knowledge. The judge stated that "a claimant will have constructive knowledge if, upon reasonable enquiries, it should have discovered the alleged infringement". It is therefore a question of what the claimant ought to have known, rather than what it necessarily did know.

However, it was accepted by the judge that "the Court should be cautious not to impose too onerous a standard on tenderers who do not have actual knowledge of an infringement, and equally, should not require a claimant tenderer to take steps that would be regarded as unreasonable to discover the infringement." Notwithstanding that a cautious approach should be taken, this case clearly highlights the importance of carefully reading the ITT in its entirety and raising clarifications at the time if there are any areas of confusion or inconsistency.

Lessons for the future

Accordingly, a contractor that waits to find out the outcome of a tender process, can deprive itself of the ability to challenge if it waits to see what the outcome is. This will be an even greater risk in view of the shortened timescales for challenge as introduced by the Public Procurement (Miscellaneous Amendments) Regulations 2011, which came into force on 1 October 2011. Where the date of knowledge of the alleged breach occurs after 1 October 2011, the challenge should now be brought within 30 days. Whilst the Court retains a discretion to grant an extension of time where there is good reason to do so, it can only do so up to a maximum of 3 months from the date of knowledge. Consequently, the lesson from Matrix that contractors should not sit on their hands and await the outcome of a tender process has been further reinforced.

Lucy James is a partner and Olivia Carter is a senior associate at Trowers & Hamlins. They acted for the London Borough of Newham in this case. Lucy James can be contacted on 020 7423 8776 or by email at This email address is being protected from spambots. You need JavaScript enabled to view it..