Procurement in a Roasted (Chest)Nutshell – The 12 days of Christmas
21st December, 2018
In this Procurement in a Roasted (Chest)Nutshell, we wish you all a very Merry Christmas and look back at the twelve most memorable Nutshells over the past year – one for each day of Christmas.
On 30 November 2018, we published our Nutshell examining the Court of Appeal’s much anticipated judgment in Faraday Development Ltd v West Berkshire Council which analysed the requirement that there must be a definitive obligation present before a development agreement constitutes a “public works contract”.
The ruling reminds Contracting Authorities that, in situations where they are perhaps uncertain as to the nature of the contract that they are entering into, they should be certain to ensure all necessary regulatory and procedural requirements are complied with.
In addition to the examination of development agreements, the Faraday case also considered whether the Contracting Authority’s use of a Voluntary ex ante Transparency (VEAT) notice was successful in preventing a finding of ineffectiveness being made after it awarded the contract without the prior publication of a contract notice.
The judgment reiterated that before issuing such a notice, Contracting Authorities should ensure that they are: (1) able to rely on such a notice; and (2) adequately set out the justifications for this, in addition to complying with the other requirements for a VEAT notice to be considered valid – such as providing an adequate description of the contract.
On 18 October 2018, the rules on the use of electronic communications fully entered into force meaning that, going forwards, all Contracting Authorities must comply with the requirements as set out by the Public Contracts Regulations.
Importantly, Contracting Authorities are reminded that:
“the tools and devices to be used for communicating by electronic means, and their technical characteristics, shall be non-discriminatory, generally available and interoperable with the information and communication technology products in general use and shall not restrict economic operators’ access to the procurement procedure.”
In August, the High Court was tasked with deciding whether or not to lift the automatic suspension which was imposed under the Public Contracts Regulations following a challenge being made to the contract’s award. In keeping with previous case law, the Court stated that when considering whether or not to lift the automatic suspension, it must first establish the following issues:
- Is there a serious issue to be tried?
- If so, would damages be an adequate remedy for the Claimant if the suspension were lifted and it succeeded at trial?
- If not, would damages be an adequate remedy for the Defendant if the suspension remained in place and it succeeded at trial?
- Where there is doubt as to the adequacy of damages for either or both parties, which course of action is likely to carry the least risk of injustice if it transpires that it was wrong, that is, where does the balance of convenience lie?
In September, in the Ocean Outdoor case, the High Court provided a degree of clarity in relation to whether the Concession Contracts Regulations 2016 could apply to a tender procedure for new leases.
In this instance, the Court held that irrespective of the fact that there was the transfer of an operating risk to the organisation taking on the new leases, in addition to the fact that one objective of entering into the lease arrangement was to exploit the advertising rights, the primary objective of the landlord was to obtain a guaranteed income stream from the rental payments.
As such the contract was classified as a land transaction and the contract was exempt from the Concession Contracts Regulations.
In February, our Nutshell “How to treat a convicted tenderer” analysed a decision of the Court of Justice of the European Union which held that national legislation could permit Contracting Authorities to exclude a bidder for failing to declare a criminal conviction of one of its directors
Importantly, it is worth noting that the fact that the convicted director ceased to hold a position of office for the tenderer did not preclude the application of that ground for exclusion.
On 25 May 2018 the General Data Protection Regulation (GDPR) entered into force in what was the biggest change to data protection legislation in recent years.
Consequently, any contracts which involve the processing of personal data must now include “mandatory processor” clauses providing that:
- “The processor may only process personal data in accordance with written instructions unless they are required to do so by law”; and
- “The processor must obtain a commitment of confidentiality from anyone it allows to process the personal data, unless they are already under such a duty by law.”
Given that the majority of public contracts include some form of personal data it is essential that organisations take all necessary actions to ensure that they achieve compliance.
In relation to the duty of a Contracting Authority to investigate abnormally low tenders, the case of SRCL Limited v NHS England helped clarify the uncertainty introduced by the Public Contracts Regulations 2015 – holding that there is a not a ‘blanket duty’ to investigate all such tenders.
With regard to this the Court stated:
“There is no basis for imposing a general duty to investigate such tenders in all cases. If, in any particular competition, the Contracting Authority considers that a particular tender has the appearance of being abnormally low, and the Contracting Authority considers that the tender should be rejected for that reason, there is a duty upon the Contracting Authority to require the tenderer to explain its prices.”
In addition to examining the legal position covering abnormally low tenders in the SRCL case, the Court also considered the time limits for starting procurement proceedings – as set out by Regulation 92 of the Public Contracts Regulations 2015.
In doing so, the Court reiterated that under the Regulations:
“such proceedings must be started within 30 days beginning with the date when the economic operator first knew or ought to have known the grounds for starting the proceedings had arisen.”
Furthermore, the Court explained that this period would only be extended where “there was a good reason” to do so. Such a reason was explained as “something out of the Claimant’s control” which in turn prevented them from issuing the proceedings e.g. some form of illness.
In January, we examined the High Court’s judgment in the case of MLS (Overseas) Limited v The Secretary of State for Defence. The Claimant alleged that the Contracting Authority had breached its obligations of transparency and equal treatment after it did not specify in the Invitation to Tender that a failure to submit a response to a particular question would result in a tender being excluded.
In this regard, the Court held:
“In the context of invitations to tender for public contracts: the award criteria must be formulated in such a way as to allow relatively well informed and normally diligent tenderers to interpret them in the same way… Accordingly, the [Contracting Authority] acted unlawfully, in breach of its obligations of transparency and equal treatment in applying criteria that were arbitrary or not sufficiently clear”.
In July, the Court of Justice of the European Union ruled that where a Contracting Authority requires tenderers to provide proof of a particular mark, origin or production of goods – they are obligated to submit this in their tender.
The rationale behind this conclusion was that, in line with the principles of equal treatment and transparency, all tenderers must be in a position of equality when their tenders are submitted. If a tenderer was permitted to prove its equivalence after submission of its tender then all tenderers would not be subject to the same conditions at the time when they were assessed.
The final aspect of procurement law we would like to remind you of is the need to take and maintain proper and contemporaneous notes detailing the rationale behind any decisions made during a procurement process.
With regard to this, in the Lancashire County Council case, Mr Justice Stuart-Smith usefully and emphatically sought to remind Contracting Authorities of this point by stating:
“a procurement in which the Contracting Authority cannot explain why it was awarded the scores which it did fails the most basic standard of transparency.”
Why is this important?
We hope you have enjoyed our 2018 series of Nutshells in addition to finding them a useful tool in keeping you abreast with the latest developments in procurement law.
When taking part in procurements, whether it be as a Contracting Authority or as a tenderer, it is essential that you consider and take into account each of the points referred to above in order to ensure that you are able to achieve your commercial objectives.
If you have any queries on the issues raised or on any aspect of procurement, please contact us via our procurement hotline on 0191 204 4464 or please click here to access our procurement page.
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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