Irish Centre for European Law
Trinity College, Dublin
Recent Public Procurement Cases
EU Litigation Update Conference
10 May 2012
Nathy Dunleavy
© Irish Centre for European Law
Recent Public Procurement Cases
The notes below cover some recent public procurement cases in the national courts.
Topics include whether an entity constitutes a ‘contracting authority’; when below
threshold contracts are of cross-border interest; the misapplication of selection
criteria; lifting the automatic suspension; and time limits. The courts in Northern
Ireland continue to lead the way in addressing many of these and other issues that
arise in public procurement litigation. For example, the judgment of McCloskey J in
Easycoach [2012] NIQB 10 contains a very interesting discussion of what constitutes
manifest error in the procurement context.
Together with Minster Brian Hayes TD, Tom Barrett of the European
Investment Bank and procurement heavyweights such as Claudio Romanini of the
European Commission, The Hon. Mr Justice McCloskey will be among the speakers
at the Centre’s Public Procurement conference, which takes place in Dublin on 28
June 2012.
© Irish Centre for European Law
Cases
A. Threshold Issues – Which procurement rules apply?
1. QDM Capital QDM Capital Ltd v Athlone Institute of Technology (IEHC,
Birmingham J, 3 June 2011)
2. JBW Group Limited v Ministry of Justice [2012] EWCA Civ 8
3. Alstom Transport v Eurostar International Ltd [2012] EWHC 28 (Ch)
B. Part B/Below threshold contracts
4. Sidey Limited [2011] CSOH 194
C. Selection Criteria
5. Easycoach Limited v Department of Regional Development [2012] NIQB 10
6. Clinton v Department for Employment and Learning [2012] NIQB 2
D. Automatic Suspension
7. First4Skills Limited v Department of Employment and Learning [2011] NIQB
59
E. Time Limits
8. Easycoach Limited v Department of Regional Development [2012] NIQB 10
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A.
Threshold Issues – Which procurement rules apply?
1.
QDM Capital QDM Capital Ltd v Athlone Institute of Technology
(IEHC, Birmingham J, 3 June 2011)
(i)
Issue
1.
The applicant in this case challenged the failure of the respondent third level
institute to advertise a contract for the refurbishment of buildings. The
question arose as to whether the contract at issue was a works contract or, as
the applicant argued, a mixed services/supply contract. If the former, then the
higher financial threshold (€4.845m) for application of the formal public
procurement rules would have applied instead of the lower threshold
(€193,000) for services/supply contracts. As the contract value was between
these two thresholds, the categorisation of the contract was a crucial threshold
question in the case. Kelly J directed that the question whether the contract
was a works contract be tried as a preliminary issue.
(ii)
Holding
2.
Following a review of the relevant directives and Irish Regulations and the
case law on the categorisation of contracts and having examined in detail the
subject matter of the contract, Birmingham J held that the essential obligation
under the contract was the carrying out of works of a
construction/refurbishment character and it was that obligation which gave the
contract its character. The contract was therefore a works contract, to which
the higher monetary threshold for application of the formal procurement rules
applied, meaning that the respondent Institute had not been required to
advertise the contract in the Official Journal. The Court rejected out of hand
the applicant’s argument that works referred only to the construction of new
buildings.
(iii)
Significance
3.
The case illustrates the importance of contract categorisation. Whether a
contract is categorised as a works contract or a service/supply contract can
determine whether the formal public procurement rules apply. It is also an
example of what seems to be an increasing trend in commercial litigation for
preliminary issues to be tried or modular trials of different issues ordered.
4.
Note that Birmingham J issued a separate judgment on the question of costs on
6 July 2011, applying the normal rule that costs follow the event and rejecting
the applicant’s contention that the application of this rule would render the
public procurement legislative scheme and the Remedies Directive inoperable
and in particular would preclude many SMEs from exercising their rights.
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2.
JBW Group Limited v Ministry of Justice [2012] EWCA Civ 8
(i)
Issue
5.
The English Court of Appeal dealt with the question whether contracts for
bailiff services to be provided to magistrates courts were service concession
contracts, which were excluded from the scope of the formal procurement
rules, or public service contracts to which the procurement Regulations
applied.
(ii)
Holding
6.
While the contracts did not fit neatly into either category and lacked many of
the typical features of a concession, Elias LJ ultimately concluded that the
contracts were concessions, although conceding that the categorization was ‘a
very difficult question’ (§52).
(iii)
Significance
7.
The case is a further recent illustration of the importance of contract
categorisation. It is noteworthy that the Court found the task of categorisation
to be very difficult. This is a reminder that in practice, the nature of many
contracts may present categorisation problems and there may be some doubt
as to whether the correct categorisation has been made and therefore, the
correct procurement procedures, have been followed.
_________________________________
3.
Alstom Transport v Eurostar International Ltd [2012] EWHC 28 (Ch)
(i)
Issue
8.
A challenge was brought by the unsuccessful bidder, Alstom, to the
procurement by Eurostar for new trains. The question of whether Eurostar was
subject to the public procurement regime was tried as a preliminary issue.
Among the questions the Court considered was whether Eurostar was a
‘utility’ for purposes of the UK Utilities Regulations or a ‘contracting
authority’ under the Public Contracts Regulations.
(ii)
Holding
9.
An entity would be a utility only if it pursued a specified activity. The activity
potentially applicable here was the provision or operation of a network
providing a service to the public in the field of transport by railway. Roth J
held that Eurostar was not operating a network and so did not meet this
‘activity’ condition and therefore was not a utility.
10.
In examining whether Eurostar was a ‘contracting authority’, the question
arose as to whether it met needs in the general interest and did not have an
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industrial or commercial character (these were elements of the definition of a
contracting authority in the UK Regulations and arise also in the definition of
‘bodies governed by public law’ in the underlying EU directives). While
meeting needs in the general interest was a low threshold that was met here,
Roth J held that Eurostar was of a commercial character and therefore not a
contracting authority or a body governed by public law. Even though Eurostar
was the only operator of trains in the Channel Tunnel, Roth J considered that
future competition (with Deutsche Bahn’s entry is planned for 2013) was
relevant in considering whether Eurostar had a commercial character. The
Court also considered whether the fact that Eurostar had received significant
amounts of State aid and could not have continued trading without that aid
precluded it from being of an industrial or commercial character within the
terms of the procurement directive. Roth J held that the criterion looks to the
‘character’ of the undertaking, not its profitability. While it was only able to
continue with State aid, that aid had been given to Eurostar precisely to enable
it to operate in the future as a commercial entity. It was restructuring aid
which was part of a package of measures designed to ensure Eurostar’s longterm viability and make the company independently sustainable. Ultimately,
Roth J was in no doubt that Eurostar was of a commercial character and
consequently, not a contracting authority (see paras 83-94 on this question of
industrial or commercial character).
(iii)
Significance
11.
Once again, the case illustrates the importance of threshold questions about
whether the public procurement rules in fact apply in a particular case and
shows that these issues can be heavily litigated. The discrete issue of whether
Eurostar was operating a network, and therefore satisfied the ‘activity’
condition in the Utilities Regulations, is an interesting point in itself. The
decision that Eurostar was of a commercial character, even though it was in
receipt of significant State aid, is also an interesting one. Roth J noted (§89)
that the question had not previously been considered so to that extent, the
judgment offers new guidance and is clear that the receipt of State aid will not
affect the commercial character of an entity.
12.
This case is currently on appeal to the Court of Appeal.
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B.
Part B/Below threshold contracts
4.
Sidey Limited [2011] CSOH 194
(i)
Issue
13.
An issue in this case was whether a local authority contract for the
replacement of kitchens and bathrooms, which was below-threshold (a works
contract valued at £2,500,000), was of sufficient cross-border interest so as to
impose EU law obligations on the local authority.
(ii)
Holding
14.
The Outer House of the Scottish Court of Session held that the contract was
not of sufficient cross-border interest so as to attach EU law obligations. Lord
Brailsford found that features in the tender documentation which were
suggestive of a cross-border interest were not conclusive of there being such a
cross-border interest. The fact that the local authority employees involved in
the tender did not even consider whether there was a cross-border interest was
held to be a more telling factor. Lord Brailsford explained his reasoning
further at §19:
It seems to me that such employees familiar both with the nature and
scope of the contract in question and with the placing of contracts of this
sort in general would be likely to be aware whether or not a contract had
the potential to generate any cross-border interest. Failure to consider the
issue is in my view likely to be indicative of, in a pragmatic sense, lack of
potential for cross-border interest. This view is strengthened by a
consideration of both the nature of the contract and the value thereof. This
was a contract for, in commercial terms, a relatively modest, contract
price. It involved work of a fairly labour intensive nature in a relatively
large number of local authority houses where it would be necessary to
have local staff on the ground. When these facts are considered I do not
find it surprising that the respondents' employees responsible for the
contract, whilst conceding that they did not consider the matter at the time
of issuing the contract documents, did not consider that the contract would
have generated cross border interest. Looked at as objectively as I can I
have therefore formed the view that the position of the respondents is
correct and that there is no question of cross-border interest in this
contract.
15.
However, the petitioner was successful on the ground of legitimate
expectation, with the tender documents having created an expectation that the
contracting authority would follow the principles of equal treatment and
transparency (see paras 20-22). Additionally, Lord Brailsford found
substantial merit in the argument that the respondents failed to apply their
procedures correctly or rationally (§23).
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(iii)
Significance
16.
The case provides an interesting illustration of how national courts grapple
with the question of whether a contract that is wholly or partly outside the
formal public procurement regime, has a sufficient cross-border interest so as
to invoke EU law and the general principles of transparency, equal treatment,
proportionality etc. It is arguable that this decision grants overly generous
deference to contracting authorities by suggesting that if employees of
contracting authorities did not consider the issue of cross-border interest, this
is indicative of the fact that there is none. However, it is also apparent from
the judgment that the nature of the contract and its low value were important
considerations in deciding that the contract was not of cross-border interest.
17.
Note that the obligation on contracting authorities to carry out tenders in
respect of contracts that are not, or not fully, subject to the public procurement
directives flows from the requirements of EU law. However, the application of
EU law will only be relevant where there is a cross-border interest.
18.
In Case C-226/09 Commission v Ireland, judgment of 18 November 2010,
Advocate General Mengozzi stated at §22 of his opinion that ‘if a public
contract involves a cross-border interest, even if merely a potential crossborder interest, the rules that arise from the Treaty must apply’. The Court of
Justice does not yet seem to have explicitly endorsed this view that merely a
potential cross-border interest is sufficient to trigger the application of the
Treaty rules to a tender. However, the case law cited by Advocate General
Mengozzi does, arguably, implicitly approve the test of a mere potential crossborder interest, with the Court of Justice stating at §34 in Case C-91/08 Wall
AG [2010] ECR I-2815 in respect of concessions, that the ‘obligation of
transparency applies where the service concession in question may be of
interest to an undertaking located in a Member State other that in which the
concession is awarded.’ This formulation has been cited a number of times by
the Court, including in Commission v Ireland (§32) itself, which concerned a
Part B service contract.
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C.
Selection Criteria
5.
Easycoach Limited v Department of Regional Development [2012] NIQB
10
(i)
Issue
19.
This is a lengthy judgment that contains a number of issues concerning the
formulation and application of selection criteria.
20.
The plaintiff challenged the award, to two winning bidders, of contracts for
certain transport services across four regions of Northern Ireland for persons
who for reasons of disability or age had difficulty using public transport. The
value of the contracts was £14.5 million. An automatic suspension preventing
conclusion of the contracts was in place following the issuing of proceedings
and the court refused to lift this.
21.
The plaintiff’s challenge focused on the formulation and application of certain
selection criteria. The trial was stayed for a month at one stage to enable the
defendant Department to carry out ‘due diligence’ to check whether the
plaintiff’s complaints about the application of the selection criteria to the
winning bidders had force. The defendant affirmed the impugned decisions
following this exercise. The plaintiff was given leave to include a claim that
through the due diligence exercise, the defendant committed/perpetuated
manifest error.
22.
Six claims were considered by the Court: the first claim was that the selection
criteria were unlawfully formulated, due to lack of objectivity and/or lack of
transparency; the second to fourth claims were of lack of transparency,
inequality of treatment and/or manifest error in application of the selection
criteria; the fifth claim was that the ‘due diligence’ exercise resulted in the
commission/perpetuation of the same manifest errors; and the sixth claim was
of breach of an implied contract.
23.
Among the complaints about the application of selection criteria was that one
of the winning bidders, Quinns, failed to comply with a mandatory
requirement in respect of transport licenses, as in its bid, it indicated that it
was intending to use six third parties to provide some of the services (possibly
up to 50%) were it successful. There was no evidence in the tender that any of
these six subcontractors held the necessary statutory license.
24.
The plaintiff also claimed that both winning bidders, Quinns and Out and
About, did not comply with the selection criteria (or minimum standards) in
certain ways and that the Department’s conclusion to the contrary gave rise to
manifest error. For example, in respect of Quinns, serious issues were raised
about its experience, and whether, in fact, its experience of providing transport
services was of the extent suggested by its tender.
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(ii)
Holding
General Principles
25.
The judgment of McCloskey J contains a discussion of general principles at
Chapter VII. Two aspects of this general commentary are worth noting, the
discussion of the principle of objectivity and the question of manifest error. At
§63, the learned judge comments as follows on the principle of objectivity:
‘The essence of the principle of objectivity is somewhat elusive … I
consider one of the main purposes of the requirement of objectivity to be
the avoidance of unrestricted freedom of choice by the contracting
authority as this, in turn, will promote the overarching aims and standards
of the procurement law regime, including in particular the promotion of
the open market principle and the related principles of non-discrimination
(vis-à-vis non nationals) and equality of treatment. Thus the court will be
alert to any selection or award criteria which are formulated so as to
confer excessive discretion and subjective assessment on the contracting
authority … The evident rationale is that excessive freedom of choice on
the part of the contracting authority is inimical to the overarching
principles of free and fair access to the market concerned, nondiscrimination and equal treatment.’
26.
Discussing manifest error, McCloskey J repeats the comments of Morgan J in
Lion Apparel Systems v Firebuy [2007] EWHC 2179 (Ch) to the effect that
whereas a contracting authority has no margin of appreciation vis-à-vis
compliance with obligations of equality, transparency or objectivity, it does
have a margin of appreciation in matters of judgment, such that a court should
only disturb the authority’s decision where it has committed manifest error. ‘A
case of ‘manifest error’ is a case where an error has clearly been made’ (Lion
Apparel, §38). McCloskey J commented at §65 that a manifest error in this
context ‘is illustrated particularly, though not exclusively, by a demonstrated
mistake in an evaluation panel’s marking exercise’. McCloskey went on, at
§88, to emphasise that a lack of blameworthiness on the part of the authority
was irrelevant to the question whether it had committed manifest error. Were
it otherwise, a contract award decision influenced and contaminated by false
or misleading information in a bidder’s tender, would escape censure by the
court on the ground that the authority had acted blamelessly, a result that
would undermine the aims and objectives of the EU procurement rules.
Breaches in respect of formulation and application of selection criteria
On the plaintiff’s claims, McCloskey J first dealt with the claim that the
formulation of the selection criteria was a breach of objectivity/transparency
in that it afforded too much discretion to the selection panel (a time limit point
arose in respect of this ground of challenge; see §48 below for discussion of
this aspect). All four selection criteria invited bidders to provide details of ‘a
relevant project’ in the previous three years ‘similar in nature to the services
required by DRD’. While acknowledging the Department’s contention that
this formulation was aimed at encouraging broad interest and a suitable level
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27.
of competition (the Department’s witness had stated that if it asked for
experience identical to the services sought, it would effectively exclude
everyone but the incumbent), aims which were ‘unquestionably appropriate’,
McCloskey J held at §72 that the selection criteria were ‘amorphous’ and that
the selection panel struggled to correctly apply the criteria. The criteria invited
‘subjectivity and intuition to the detriment of objectivity and, consequently,
transparency’. Consequently, the selection criteria ‘were not apt to establish
fairly, transparently and objectively that bidders possessed specified minimum
standards of technical and professional ability for the purpose of delivering the
regional project/s for which they were tendering’. However, despite this
finding, it was ultimately held (at §74) that this claim was not actionable as the
plaintiff had failed to show, as it was required to do by Regulation 47C of the
Public Contracts Regulations 2006, that it suffered, or risked suffering, loss or
damage from the breach of duty. The court was unable to find that the
shortcomings identified in the formulation of the selection criteria operated to
the plaintiff’s disadvantage.
28.
As to application of the selection criteria, breaches were found under three
headings. First, the Department breached the principle of transparency in
assessing Quinns’ bid. The tender concerned transport services in four regions
in Northern Ireland and bidders could bid in respect of one or more of these
regions. Bidders were specifically required, if bidding for more than one
region, to address the selection criteria for each area they were bidding for.
The Department had pleaded in its defence that it evaluated Quinns’ bid in
respect of each area bid for, and not the four areas as a whole. However, the
evidence indicated that the selection panel were unaware, when applying the
selection criteria, of how many regions Quinns was bidding for. The selection
panel took an ‘in the round’ approach. The court found that the Department
had failed to evaluate tenders by the published methodology and that by
applying an ‘in the round’ or ‘lowest common denominator’ approach, it
applied evaluation tools that were unpublished, inaccessible and manifestly
lacking in transparency (see paras 76-77).
29.
Second, the Department committed manifest error in applying the mandatory
requirement that operators have a license. Quinns had indicated in its tender
that it would use sub-contractors for as much as 50% of the contract but it had
failed to supply any licenses for such operators. When applying the selection
criteria, the panel did not have access to the part of Quinns tender which
indicated its intention to use sub-contractors. Consequently, the panel could
not have sensibly evaluated the question whether Quinns complied with this
mandatory requirement. This was clearly manifest error (see §80).
30.
Third, the Department committed manifest error in various respects in
concluding that Quinns and Out and About satisfied minimum requirements in
the selection criteria. There was a comparator requirement, in that bidders
were asked to put forward projects ‘similar in nature and scale to the services
required by DRD’, with full supporting evidence. McCloskey J held at §85
that this called for a ‘reasonably comparable project’. Quinns had set out in its
bid details of its transport project with the Tyrone County GAA Board as its
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comparator project. This was held to fall manifestly short of being a
comparable project and was demonstrably lacking in full supporting evidence.
Defects here included the fact that Quinns’ tender contained false signatures
from a Tyrone GAA representative and purported to include a reference from
the Tyrone County GAA Board which was in fact from a fundraising
organisation, Club Tyrone (see §37). There were also defects in the details
provided in respect of services provided to individual clubs, with the tender
containing no particularisation and no supporting evidence of the services
allegedly provided. The Department also committed manifest error in
assessing Out and About’s tender, as it demonstrably failed to satisfy any of
the four selection criteria – it was relying exclusively on the capacities of other
entities and while this was not impermissible under the Regulations, it was
required, by virtue of Regulation 25(3) to prove to the contracting authority
that the resources necessary to perform the contract would be available. It had
failed to do so (see §92).
Due diligence exercise and implied contract
31.
In examining the due diligence exercise which occurred mid-trial (when the
Department considered whether its award decisions were vitiated by manifest
error etc.) a question arose as to whether this exercise was subject to the
procurement Regulations or, alternatively, the general common law and
principles of judicial review. McCloskey J held that the Regulations applied
and in particular that the due diligence process could be considered as coming
within the ambit of the provisions in Regulation 26 which enabled a
contracting authority to seek clarifications of details in a bidder’s tender.
Ultimately, however, McCloskey J held that the discrete ground of challenge
that manifest error was committed/perpetuated in the due diligence exercise
did not add any substance to the fourth ground of challenge (manifest error in
application of the selection criteria) (see paras 93-103). McCloskey J went on
to hold that had it been concluded that the due diligence exercise was not
subject to the Regulations, the court would have found that the Department
breached an implied contract whereby the Department was obliged fairly to
assess the allegations levelled by the plaintiff against the tenders of the two
successful bidders. The Department had treated the plaintiff unfairly
throughout this process by inadequate inquiry and insufficient scrutiny, to the
plaintiff’s detriment (see paras 104-106).
(iii)
Significance
32.
This case provides a striking example of the importance of a proper and
rigorous application of selection criteria. All of the selection criteria at issue
were, effectively, mandatory or minimum requirements (as the selection
criteria were assessed on a pass/fail basis) and it is apparent from the judgment
that in the view of the court, the contracting authority made a series of
significant and glaring errors in carrying out its assessment. In that context the
judgment provides guidance on the question of manifest error, a ground of
challenge that is invariably pleaded in procurement cases.
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33.
Even though this particular ground of challenge failed and the comments of
the court are therefore strictly obiter, the treatment of the formulation of
selection criteria in the judgment offers guidance to contracting authorities and
emphasises that selection criteria cannot be framed in a vague manner that
leaves undue discretion in the hands of the evaluation panel.
34.
McCloskey J also makes a number of interesting comments at the end of the
judgment, about the importance of specialised training for those involved in
carrying out procurement and the possibility for a contracting authority to
‘hold its hands up’ when faced with a challenge, and acknowledge the
commission of errors in the tender process.
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6.
Clinton v Department for Employment and Learning [2012] NIQB 2
(i)
Issue
35.
This case concerned a tender for Part B services contracts for the provision of
training and apprenticeship programmes in Northern Ireland. The plaintiff was
eliminated at the selection stage, having been found not to comply with the
first selection criteria, which required bidders to demonstrate necessary
experience in delivering high quality training programmes in the previous
three years. ‘Dates, outcomes and explanations as to why the experience was
relevant’ were called for. In rejecting its tender as having failed to meet this
minimum requirement, the selection panel informed the plaintiff that no data
had been provided in respect of achievements, success rates or destinations
into positive outcomes and that the outcomes listed were generic and did not
provide specific detail.
36.
The plaintiff’s challenge had two strands. First, it argued that the panel’s
assessment that the plaintiff failed to provide ‘data in respect of achievements,
success rates or destinations into positive outcomes’ reflected the application
of undisclosed, or alternatively, ambiguous, selection criteria, and a
consequent breach of equal treatment and transparency. Second, the plaintiff
alleged that in seeking clarifications from thirteen other bidders, but not from
the plaintiff, the Department breached the principle of equal treatment and/or
the rules of the tender competition.
(ii)
Holding
37.
The court found for the plaintiff on both grounds. The fundamental question in
respect of the first ground was whether the first selection criterion was
susceptible to a uniform interpretation. The court applied the Siac test,
whether the criterion was formulated ‘in such a way as to allow all reasonably
well informed and normally diligent tenderers to interpret it in the same way’
(Case C-19/00 Siac Construction Ltd v County Council of County of Mayo
[2001] ECR I-7725, §42). The court acknowledged that the hypothetical
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tenderer at issue was not invulnerable to a degree of error and so it had to
consider the industry concerned, in which the professionals at issue were not
lawyers. In applying the Siac test, the court focused on the word ‘outcomes’,
the meaning of which had been hotly debated, a fact that in itself went against
the Department’s contention that the word ‘outcomes’ had an obvious
meaning that was broadly recognised and well established in the industry.
Ultimately, the question for the court was one of degree – objectively, was the
meaning of the first selection criterion sufficiently clear? On balance,
McCloskey J held that it was not sufficiently clear, finding at §40 that ‘the
Department’s expectation that compliance with this criterion would require the
provision by all bidders of data relating to achievements, success rates and
destinations into positive outcomes arising out of previously delivered
programmes is expressed with insufficient clarity in the criterion as a whole
and in the word “outcomes” in particular’. The way in which the criterion was
phrased gave rise to an unacceptable degree of doubt and uncertainty and so
failed the test of sufficient clarity. McCloskey J went on to hold at §41 that the
selection panel’s misinterpretation of the first selection criterion gave rise to
manifest error.
38.
On the second ground, concerning clarifications, which were sought from
thirteen bidders but not the plaintiff, the court first noted that the rules of the
tender competition, as set out in the ITT, conferred a discretion on the
Department to seek further information from tenderers. The selection panel
took the view that it could not seek clarifications unless there was some
perceived ambiguity or lack of clarity in the tender. McCloskey J held at §42
that this was a misdirection and an error of law, as neither threshold was
specified in the tender rules. The panel concluded that the information in the
plaintiff’s tender bearing on quality was insufficient. The panel had a
discretion under the tender rules to seek clarification and its failure to
appreciate the existence of this discretion was a clear error of law. This error
was material as the panel considered itself precluded from seeking a
clarification and in these circumstances, McCloskey held at §43 that the
Department committed a manifest error:
‘I conclude that, as in Tideland, a manifest error was committed in
consequence. To have requested further information from the Plaintiff
would not have entailed any infringement of the duty of equality of
treatment (infra). Furthermore, bearing in mind the underlying
philosophy of the Tideland decision, to have done so would, in my view,
have been harmonious with the principles of legal certainty and good
administration – while the converse proposition applies equally.’
39.
The court still had to consider whether the plaintiff made out a breach of equal
treatment, caused by the fact that the Department sought clarification from a
number of bidders but not from the plaintiff. A central consideration here was
the comparability of the circumstances. The Department argued that the
circumstances were not sufficiently similar, as the clarifications issued to the
other bidders sought information on qualifications and subjects to be taught.
Were these sufficiently similar to what could have been sought from the
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plaintiff by way of clarification, i.e. data of achievements, success rates and
destinations into positive outcomes? While clearly not identical, the court held
that the two situations were not materially different – both concerned further
information bearing on quality, credentials and expertise and the stimulus for
both types of clarification request would have been perceived incompleteness
of information in the tender. It was also accepted that the Plaintiff would have
been able to supply the data concerned to the Department in an acceptable
format and there was consequently obvious detriment to the plaintiff in not
having been requested to provide the clarification. McCloskey J also
considered, at §47, that the failure to seek the clarification was
disproportionate, as such a request would have been ‘fair, modest and
reasonable in all the circumstances’.
(iii)
Significance
40.
Like Easycoach, the case highlights the importance of formulating clear
selection criteria.
41.
The consideration by the court of the question of when clarifications ought to
be sought by the contracting authority is also of interest. This is often a
question that arises in practice. The court’s conclusion on this point was
influenced by the important judgment of the General Court in Tideland Signal,
which stipulated that the Commission (the awarding authority in that case)
was required to exercise its power to seek clarification ‘in circumstances
where clarification of a tender is clearly both practically possible and
necessary’ (Case T-211/02 Tideland Signal Ltd v Commission [2002] ECR II03781, §37).
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D.
Automatic Suspension
7.
First4Skills Limited v Department of Employment and Learning [2011]
NIQB 59
(i)
Issue
42.
The defendant Department applied to have the automatic suspension,
preventing it from entering into a contract, lifted. There had already been
another challenge brought in respect of the same tender process and the
Department had applied unsuccessfully vis-à-vis that challenge to have the
automatic suspension lifted (with the court’s decision issued the day before the
hearing in the present case). Nonetheless, it brought a separate motion seeking
to have the automatic suspension lifted in this case.
(ii)
Holding
43.
McCloskey J held that the suspension could not be lifted given the earlier
refusal to lift the suspension in the related proceedings. It would be plainly
inappropriate and manifestly illogical for the court to make an order in the
second application conflicting with its order in the first application, and
indeed, if the application were granted it would allow something which was
unlawful under the court’s first order (see §10). Although this disposed of the
application, the learned judge nonetheless went on to consider the merits of
the application.
44.
McCloskey J agreed with the recent English decisions to the effect that the
correct approach in applications of this type was to apply the American
Cyanamid principles (American Cyanamid Co v Ethicon [1975] AC 396), with
no suggestion that maintenance of the automatic suspension should somehow
be favoured.
45.
McCloskey J first held that the plaintiff had, by a narrow margin, made out a
serious issue to be tried and that a good arguable case had been made out
(§21). The plaintiff had put forward two ground of complaint, first, that there
was a breach of the principle of proportionality in the failure by the
Department to clarify its non-compliance with a selection criterion and
second, that there was a breach of equal treatment in that the Department
appeared to have sought clarifications from other tenderers but not the
plaintiff.
46.
In assessing the balance of convenience, the court considered, at §23, the
projected savings to the public purse; the improvements in the proposed new
contractual arrangements; the advantages to both trainees and employers; the
requirements of legal certainty; the limitation on any potential contract
extension; and the desirability of uniformity throughout the United Kingdom
in the provision of training to apprentices. The court noted that in the related
proceedings, such factors did not hold sway. Although finely balanced,
McCloskey J held that the balance of convenience pendulum tipped
marginally in favour of the plaintiff, taking into account the twin factors of the
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plaintiff’s cross-undertaking in damages and the reasonable prediction that the
proceedings would be completed to the stage of judgment in advance of
March 2012, when the contract extension would expire.
(iii)
Significance
47.
The issue of when the automatic suspension will be lifted is an important one
in procurement litigation. It should be noted that the UK Regulations
(applicable in England and Wales and Northern Ireland; separate Regulations
apply in Scotland) differ from the Irish Regulations on this subject. The courts
in England and Wales and Northern Ireland have derived from Regulation
47H(2) – which provides that the court must consider whether, were
Regulation 47G(1), which provides for the automatic suspension, not
applicable, it would be appropriate to make an interim order requiring the
contracting authority to refrain from entering into the contract – that the
American Cyanamid principles should be applied to the issue of whether the
automatic suspension should be lifted. The Irish Regulations do not contain a
provision similar to Regulation 47H(2) and there is currently some doubt as to
what test will be applied in Ireland where a contracting authority applies for
the automatic suspension to be lifted. It is noteworthy that the Northern Irish
High Court refused to lift the suspension in this and the related case (an
application to lift the suspension was also refused in a recent case concerning
the provision of security services: see Resource (NI) Ltd v Northern Ireland
Courts and Tribunal Service [2011] NIQB 121, §6; and as already noted, the
court in Easycoach Limited v Department of Regional Development (NIQB,
28 February 2012) also refused to lift the automatic suspension).
48.
The trend in England in recent cases has been for the High Court to lift the
suspension (e.g. Indigo Services (UK) Ltd v The Colchester Institute
Corporate [2010] EWHC 3237 (QB); Exel Europe Ltd v University Hospitals
Coventry and Warwickshire NHS Trust [2010] EWHC 3332; Halo Trust v
Secretary of State for International Development [2011] EWHC 87;
Metropolitan Resources North West Ltd v Secretary of State for the Home
Department [2011] All ER (D) 43 (Apr)).
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E.
Time Limits
8.
Easycoach Limited v Department of Regional Development [2012] NIQB
10 (Time Limit issue)
(i)
Issue
49.
This case has already been considered above. A time limit issue arose in
respect of the first of the six grounds of challenge advance by the plaintiff, that
selection criteria were formulated in a nebulous way, breaching the
Department’s duty of transparency. This ground was clearly time barred (the
applicable rule at the time provided for a three-month time limit beginning
with the date of knowledge, actual or constructive) and the question for the
court was whether time should be extended. An extension could be made
where there was ‘good reason’.
(ii)
Holding
50.
In holding that there was a good reason to extend time, the court emphasised
two factors: (i) the case before the court involved a broadly based challenge,
involving six grounds of challenge altogether, five of which had no limitation
issue; and (ii) the court could take into account the apparent strengths and
merits of the ground of challenge in question. These two factors warranted the
court exercising its discretion to extend time, despite the fact that the plaintiff
‘failed to put forward in its evidence any clear justification for extending time’
(§73). In addition, the court placed emphasis on the fact that there was an
absence of prejudice to the Department in the inclusion of this ground of
challenge. The court also referred to a balancing test between, on the one
hand, the goal of enabling public contracts to be entered into without undue
delay and, on the other, the disappointed tenderer’s interest in vindicating
some complaint about the process and the related public interest, linked to the
rule of law, in permitting such actions. In this case, McCloskey J held that the
balance of these competing factors tipped in favour of the plaintiff, in
particular, given that there was a suspension on entering into the contract in
place, which would remain pending the final order of the court.
(iii)
Significance
51.
Time limit issues frequently arise in procurement cases, not least because the
time limits are so short. The time limit in the Irish Regulations, as stated in
Regulation 7(2) of each of SI 130/2010 and SI 131/2010, is ‘30 calendar days
after the applicant was notified of the decision or knew or ought to have
known of the infringement alleged in the application’. A 30-day time limit
now also applies in the UK (tied to knowledge only), although the time limit at
issue in Easycoach was the previous three-month time limit.
52.
The approach of McCloskey J to an extension of time appears eminently
reasonable, if not ungenerous to an applicant (although it should be noted that
the court’s holdings on this issue are strictly obiter, as it was ultimately held
that the ground of challenge to which they relate was not made out). It is
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apparent however, that in deciding that there was good reason to extend time,
the learned judge was particularly cognisant of the fact that there was no
limitation issue in respect of the other five grounds advanced by the plaintiff.
The court’s approach might have been different were the time limit an issue in
respect of the other grounds. It is worth noting here the approach adopted to a
similar question by the Irish High Court in Veolia Water UK plc v Fingal
County Council [2007] 1 IR 690, in which Clarke J considered at §54 that ‘an
applicant should not be permitted to “piggy back” a set of grounds in respect
of which an extension order would not properly be made on other grounds
where it is appropriate to make such an order’.
53.
It is also noteworthy that McCloskey considered that the strength of the
ground in respect of which the extension was sought, was a factor, while an
evidential justification for the delay was not a pre-requisite to the exercise of
the court’s discretion to extend time. This can be contrasted with the approach
that the onus ought be on the Applicant to show that there are reasons which
both explain and afford a justifiable excuse for the delay (see, eg, the decision
of Costello J in O'Donnell v Dun Laoghaire Corporation [1991] ILRM 301).
54.
Other recent cases dealing with time limit issues include Traffic Signs and
Equipment Ltd v Department for Regional Development [2010] NIQB 138;
SITA UK Ltd v Greater Manchester Waste Disposal Authority [2011] EWCA
Civ 156; Mermec UK Ltd v Network Rail Infrastructure Ltd. [2011] EWHC
1847 (TCC); Henry Bros (Magherafelt) Ltd v Department for Education for
Northern Ireland [2011] NICA 59.
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