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Public procurement: New case highlights pitfalls for those challenging award decisions

  • United Kingdom
  • Competition, EU and Trade
  • Litigation and dispute management
  • Public procurement

04-08-2017

On 21 July the Technology and Construction Court handed down judgment in relation to two applications made in the case of Perinatal Institute v Healthcare Quality Improvement Partnership. This interesting judgment highlights two potential pitfalls for disappointed tenderers seeking to challenge the outcome of procurement procedures.

The judgment related to (i) an application by the claimant (a disappointed tenderer for a contract to supply a software tool) to amend its Claim Form and Particulars of Claim to include a fresh claim relating to the conduct of the procurement; and (ii) an application by the defendant to have the claimant’s original claim struck out.

Application to amend

The claimant’s application to amend its Claim Form and Particulars of Claim was made in order to introduce a fresh claim based upon information made available to the claimant on 13 March 2017, approximately 9 months after the original Claim Form was issued. The application to amend the Claim Form and Particulars of Claim was made on 21 March 2017 and served on 23 March 2017. The application was heard on 8 June 2017, more than 30 days after the claimant first became aware of the information upon which the fresh claim was based.

The defendant resisted the application on the basis that the fresh claim was time barred, i.e. it was made outside of the 30 days limitation period for issuing claims set out in Regulation 92 of the Public Contracts Regulations 2015. The claimant argued that the issuing of the application amounted to “issuing a claim” for the purposes of Regulation 92. This was not accepted by the Court, which confirmed that in the case of applications to amend, the date upon which a claim is issued is the date of the hearing (i.e. the date upon which the amendments are allowed). This reflects the position adopted by the Court of Appeal in DWF LLP v The Secretary of State for Business, Innovation and Skills.

Although in this case the Court exercised its discretion under Regulation 92 to extend the period of time for issuing a claim, this is a cautionary lesson for those involved in procurement challenges as to the potential pitfalls arising when new information is received during the course of a challenge, for example during the disclosure process. If new information indicates that a claimant may have a new (or additional) cause of action, careful consideration should be given at an early stage as to how best to advance such a claim. This case, together with the Court of Appeal decision in the DWF case, suggest that the safest course of action would be to issue a new Claim Form and then seek appropriate directions regarding the management of all related cases, as opposed to simply making an application to amend the existing Claim Form and Particulars of Claim.

Issuing a new Claim Form may result in the need to pay an additional Court fee but, if the alternative is that such claims may become time barred, this seems a relatively small price to pay.

Strike out

This judgment also deals with the defendant’s application to strike out the claimant’s original claim, which should be considered in the context of the claim’s procedural history.

The claim was issued on 27 July 2016 by way of a Claim Form and Particulars of Claim, which sought an order setting aside the decision to award the contract to the successful tenderer. In October 2016, the defendant successfully applied to lift the automatic suspension of the contract award process which had been triggered when the claimant issued its Claim Form. The contract was entered into with the successful tenderer on 21 December 2016.

Importantly, when the claimant issued its Claim Form, it only included a claim for an order setting aside the decision to award the contract to the successful tenderer. It did not seek damages in the alternative. Indeed, during the application to lift the automatic suspension, the claimant argued that it would not suffer a monetary loss as a result of the defendant’s alleged breach of the Public Contracts Regulations 2015 for which it could be compensated (albeit that the court found otherwise).

Following the defendant’s application to lift the automatic suspension, and the subsequent award of the contract to the successful tenderer, the claimant did not take any steps to amend its claim to include a claim for damages. As a result, the defendant applied to have the claimant’s claim struck out on the basis that it no longer sought a remedy which the court was able to grant.

The court agreed with this analysis. The judge referred to Regulation 98(2) of the Public Contracts Regulations 2015 and noted that in circumstances where the relevant contract had already been entered into, the court only had the power to make an award of damages in respect of any breach of the Public Contract Regulations 2015 relating to that contract. As the claimant’s claim did not include a claim for damages, the judge concluded that there was no purpose in continuing with the original claim as it could not result in any remedy in the claimant’s favour. On this basis, the claimant’s claim was struck out.

Potential claimants may see advantages in limiting the remedies sought in a claim under the Public Contract Regulations, not least because this could significantly reduce the court fees associated with such a claim. However, such claimants should also be aware of the potential pitfalls associated with such a course of action, particularly if the defendant successfully applies to lift the automatic suspension and enters into contract with the successful tenderer.

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