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Case Note - R (The Good Law Project) v Minister for the Cabinet Office

  • United Kingdom
  • Litigation and dispute management
  • Public procurement

15-06-2021

 

Summary

On 9 June, judgment was handed down in R (The Good Law Project) v Minister for the Cabinet Office – a copy of the judgment can be found here.

This was a Judicial Review claim brought by the Good Law Project in respect of the Cabinet Office’s decision to award a contract for Covid-19 related services to Public First, a company founded by friends and ex-colleagues of the Minister for the Cabinet Office, Michael Gove, and the then Chief Adviser to the Prime Minister, Dominic Cummings, without advertising the opportunity or running a competition under the Public Contracts Regulations 2015 (the “PCR”).

Although the Court rejected arguments that the requirement for extreme urgency under Regulation 32(2)(c) was not satisfied, and that the resulting contract was disproportionately long, it did find that the decision to award the contract to Public First was unlawful due to apparent bias (notwithstanding the fact that the Court did not find that there had been any actual bias in this case).

The judgment provides useful guidance as to the circumstances in which Regulation 32(2)(c) will permit contracting authorities to award contracts without prior advertisement or following one of the standard procedures required by the PCR, and the factors to take into consideration when considering the length of such contracts. It is also interesting in its approach to ‘standing’ of parties other than economic operators in Judicial Review claims based on breaches of the PCR, suggesting that the test for standing in such cases may not be as narrow as previously thought.

The Court’s Findings

Extreme Urgency and the duration of the Contract

Referring to both the European Commission guidance on the operation of the EU procurement regime during the pandemic,1  and the Cabinet Office’s own policy note on responding to Covid-192, the Court made the following findings regarding the use of Regulation 32(2)(c):

 

  • Regulation 32(2)(c) should be relied upon to avoid the need to conduct open and transparent procurements in exceptional circumstances only and only where strictly necessary.
  • When determining if there is sufficient time to carry out a procurement exercise in accordance with the PCR, the time taken to prepare the tender documentation, evaluate the tenders and communicate the awards should be taken into account.
  • Even if Regulation 32(2)(c) is engaged, the scope and duration of the resulting contract must be limited to what is strictly necessary.

 

The Court accepted that in this case, the circumstances which gave rise to the need to award a contract to Public First were exceptional and that there was clear evidence that the time limits specified in the PCR for conducting a competition could not be satisfied because the relevant services were needed as a matter of extreme urgency. The Judge also confirmed that although contracting authorities must be able to demonstrate that the relevant contract period was no longer than strictly necessary, “Regulation 32(2)(c) does not limit the duration of any contract falling within its ambit to the shortest period of time required to conduct a competitive procurement exercise”.4 In this case, the Court concluded that a contract term of 6 months did not go beyond what was strictly necessary and was not disproportionate.

In reaching this conclusion, the Court highlighted a number of factors in this case which supported its decision including the degree of uncertainty as to the length of any crisis/urgency, and a need to ensure continuity of service for the entire duration; the need for flexibility in any such contracts (e.g. the ability to “pay as you go” and/or termination rights enabling the contract to be terminated when the immediate crisis / urgency has passed); and, the impact on those who would need to run the procurement process for the replacement contract.

Apparent Bias

The Court did not accept that the relationships between Mr Gove and Mr Cummings and key individuals at Public First was sufficient to establish apparent bias, nor require recusal from the decision-making process, particularly as those relationships were a matter of public record. However, the Judge went on to state: “The court recognises that everyone involved was acting under immense pressure and the urgency of the Covid-19 crisis did not allow time for reflection. The time constraints justified the Defendant in its derogation from the usual procedures required under the Public Contracts Regulations 2015. But they did not exonerate the defendant from conducting the procurement so as to demonstrate a fair and impartial process of selection.”5

The Court’s view was that it was incumbent on the Cabinet Office to ensure that there was a clear record of the objective criteria used to select Public First. The Court found that these issues were not properly considered or documented by the Cabinet office, and that the reasons for awarding the contract to Public First provided during the Court proceedings were not part of the decision-making process at the time the Contract was awarded. Further, no objective criteria had been used to assess whether Public First was the appropriate supplier, nor was the possibility of using an alternative agency considered. As a result, the Court concluded that in all the circumstances, a fair minded and informed observer would have concluded that there was a real possibility, or danger, of bias. As a result, the award of the contract to Public First was unlawful.

In reaching its decision, the Court referred to Regulation 24 of the PCR as a useful indicator of the circumstances in which a conflict might arise or the circumstances that might give rise to apparent bias.6  Such circumstances include where individuals have, directly or indirectly, a financial, economic or other personal interest which might be perceived to compromise their impartiality and independence in the context of the procurement procedure.

Standing

The Court also considered whether the Applicant had ‘standing’ to bring the Judicial Review claim.

In the case of R (Wylde) v Waverley Borough Council, the Court adopted a narrow approach to standing in respect of a Judicial Review claim based upon breaches of the PCR. In that case it was held that standing should only be given to those individuals or entities who could demonstrate that they would have been directly affected by a different outcome resulting from the conduct of a public procurement exercise. In this case the Court found that Good Law Project had standing despite not being directly affected by the decision to award the Contract to Public First. The Court highlighted the following points in favour of granting standing:

 

  • Good Law Project had a genuine interest in promoting good public administration, which includes compliance with the PCR and lawful conduct of the public procurement regime. It had no ulterior motive in pursuing its claim;
  • where there had been no competition, there was no unsuccessful bidder who might have challenged the Contract award. An economic operator would have needed to establish financial loss in order to bring a challenge, which in this case posed such a high hurdle that they are unlikely to have done so. As such, the claim was not one that an economic operator could have realistically been relied on to bring;
  • the gravity of the issues raised justified scrutiny by the Court and the grant of a public law remedy.

 

The willingness of the Court to accept the applicant had standing could suggest that contracting authorities awarding contracts with a significant public interest may be more susceptible to public law challenges by pressure groups and campaigners than had previously been thought.


 

 

1 Guidance from the European Commission on using the public procurement framework in the emergency situation related to the COVID-19 crisis (2020/C 108 I/01)

2 Procurement Policy Note – Responding to COVID-19 (PPN 01/20)

3 Para 109

4 Para 117

5 Para 164

6 See also Procurement Policy Note PPN 04/21 which cross refers to the Boardman Review and the guidance it contains regarding dealing with actual and potential conflicts of interest.

 

 

 

For more information, contact: Ed Williams, Rhiannon Fletcher