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EU Law during a procurement process and formation of a contract in tendering stages

  • United Kingdom
  • Litigation and dispute management
  • Public procurement

02-12-2021

 

Introduction

The extent to which EU law continues to apply to UK procurement procedures post-Brexit has been a hot topic ever since the UK left the EU. The recent case of Adferiad Recovery Limited v Aneurin Bevan University Health Board [2021] EWHC 3049 (TCC) provides some clarity on this issue, at least in respect of procurements conducted in England and Wales, as well as touching upon the issue of contract formation during the tender stage.

Background

The claimant, Adferiad Recovery Limited (“ARL”), is a registered charity providing services to those with mental health issues, substance misuse problems and similar complex needs. ARL submitted a tender in response to a procurement commenced by the defendant, Aneurin Bevan University Health Board (“the University”), for the provision of pre-crisis / early intervention services for those experiencing personal crisis or emotional distress. The University advertised their requirements as having a value of £122,000 and a term of 12 months.

ARL was ultimately unsuccessful and brought proceedings against the University, alleging breaches of public procurement law (in particular with regards to transparency and equal treatment), general principles of retained EU law (namely the general principles of equal treatment, transparency, non-discrimination, non-arbitrariness, proportionality, good administration, procedural fairness, and the protection of legitimate expectations) and breach of the terms of a tender contract which required the University to evaluate ARL’s tender fairly, in good faith, in accordance with the tender procedure set out in the tender documentation, and without manifest error.

The University, in response, applied for summary judgment on the grounds that (i) the value of the procurement fell below the relevant financial thresholds, so ARL could not bring any claim under the Public Contracts Regulations 2015 (ii) ARL’s claim in relation to the alleged breach of general principles of EU law was precluded under the European Union (Withdrawal) Act 2018 and (iii) there was no express or implied contract governing the University’s conduct of the procurement.

The Court’s decision

The High Court found that ARL had no real prospect of success and therefore ruled in favour of the University, granting its summary judgment application for the following reasons:

1. the value of the procurement was stated as being £122,000 throughout the procurement documents, which is below the relevant financial thresholds. Even if the true value was £488,000 (as ARL had alleged), this would still fall below the relevant financial thresholds as the procurement was for the provision of social and other specific services listed in Schedule 3 (which at that time had a threshold of £663,540). There was also no evidence that by advertising the value of the procurement as £122,000, the University was trying to avoid the application of the relevant financial thresholds;

2. as the procurement was below the relevant financial threshold, ARL could not bring a claim for a breach of retained EU law under Regulations 89 and 91 of the Public Contracts Regulations 2015. The Court also concluded that ARL could not bring a claim based solely on a breach of retained general principles of EU law (i.e. general principles of EU law existing as at 31 December 2020). The Judge held that under the European Union (Withdrawal) Act 2018 ("the 2018 Act"), retained general principles of EU law (i.e. general principles of EU law existing as at 31 December 2020) were essentially interpretative rules for domestic law that is classed as "retained EU law" as a result of the 2018 Act. Against this conclusion, the Judge considered Section 3(1) of Schedule 1 of the 2018 Act to be clear: “There is no right of action in domestic law on or after IP completion day based on a failure to comply with any of the general principles of EU law”. Even if he was wrong on this point, the Judge considered that the relevant general principles of EU law would not be enforceable in this case as they relate to the operation of the single internal EU market. As such, the principles of EU law only regulate procurements if there is a realistic prospect of cross-border interest (which was not the case here); and

3. the invitation to tender issued by the University and ARL’s tender submitted in response expressly stated that it was not intended to give rise to any legally binding obligations. As such, the obligations contended by ARL did not arise, whether expressly or impliedly. Further, the obligations on a contracting authority arising as a result of an implied tender contract would usually be limited to an obligation to consider a tender submitted in accordance with the requirements of the tender documents in good faith. Any contract which went beyond this limited obligation would only be implied if compelling factual grounds existed (which was not the case here). As such, even if an implied tender contract did exist, it would not have assisted ARL as there was no suggestion that its tender had not been considered in good faith.

Comment

This case makes it clear that, post-Brexit, disappointed tenderers are unlikely to be able to bring a successful claim against contracting authorities or utilities based solely upon alleged breaches of retained general principles of EU law (albeit that such principles may still be relied upon when interpreting retained EU law), particularly where there is no cross-border interest in the relevant opportunity. This is likely to make it even more difficult to bring an effective challenge in respect of below-threshold procurements.

The judgment also provides a useful reminder for contracting authorities of the importance of including wording in tender documents which expressly clarifies that they are not intended to give rise to any contractual obligations (express or implied).

 

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