Procurement in a Nutshell – The recovery of costs
18th October, 2019
A dispute between Iridium Concesiones de Infraestructuras SA (the "Claimant") and Transport for London ("the Defendant") following the Defendant delaying putting forward its grounds justifying the lifting of an automatic suspension.
Following the Defendant’s proposal for the construction of a new tunnel under the Thames in east London, the Defendant awarded the contract to the Riverlinx consortium.
The Claimant, who was unsuccessful, complained that there were fundamental issues with the tender process and proceeded in issuing a claim which resulted in the automatic suspension of the award process. In correspondence, the Defendant asked that the Claimant lift the suspension, in response, the Claimant requested that the Defendant set out its case in full for lifting the suspension, which it did not do.
The Defendant submitted its application which led to the suspension being lifted, however the Claimant argued that the Defendant should not have the costs or all the costs of its application.
The Claimant complained that had the Defendant set out its case on lifting the suspension in correspondence with them, then the application that they submitted would not have been necessary. As a result of the application, the Claimant argued that the Defendant had increased costs and delays to the process, which could have been avoided.
Had the Defendant put a case forward showing substantial financial detriment from suspending the process and detriment to the public interest, it would have been very difficult for the Claimant to deny it on an interim basis.
There was force in the argument that had the Defendant set out its detailed case in correspondence, no application would have been necessary. The Defendant did not set out its case but rather asked the Claimant to provide reasons for its refusal to consent. This placed responsibility on both the Claimant and Defendant to respond as quickly as possible. There was a large difference between what had been discussed before the application was made and what the Defendant produced as evidence. There had also been some delay in dealing with the confidential information, which was not about the successful bidder, but rather with regard to the Defendant.
The Judge came to the conclusion that the Defendant was able to recover only 60% of its costs which amounted to £105,000 of the total £175,000.
Why is this important?
This judgment demonstrates that a Contracting Authority, if it feels it has a good case to lift an automatic suspension, must explain its case before making an application to court if it is to avoid unnecessary costs.
How can I find out more?
If you have any queries on the issues raised or on any aspect of procurement, please contact us via our procurement hotline on 0330 137 3451.
Please note that this briefing is designed to be informative, not advisory and represents our understanding of English law and practice as at the date indicated. We would always recommend that you should seek specific guidance on any particular legal issue.
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