Procurement in a nutshell – protection of confidential information in procurement disputes

This update outlines the circumstances leading to the hearing in Bombardier Transportation Ltd v Merseytravel [2017] EWHC 575 and the approach taken by the Court.

The background

Bombardier Transportation Limited made an unsuccessful bid for the award of a number of contracts which formed the Merseytravel Rolling Stock programme.

Following the award of the contract to Stadler, Bombardier issued a claim for damages, making various allegations against Merseytravel regarding the procurement process.

Another unsuccessful bidder (who was not a party to the claim) attempted to obtain copies of the documents on the Court files. Their request was rejected on the basis that the documents were marked as “private” and therefore not available for public access.

Following a complaint by the third party’s solicitors, Bombardier made an application to the Court to ensure that neither the particulars of the claim nor the annexes to it were disclosed to third parties.

The principle of open justice versus “legitimate commercial interests”

Justice Coulson outlined that the starting point in approaching the matter is that all documents in civil cases should be publicly available.

The nature of the case as a procurement dispute does not per se justify the documents being labelled as private.

However, there may be “legitimate commercial interests” in a procurement dispute which would warrant information being designated as confidential.

“Guidance Note on Procedures for Public Procurement Cases”

The Judge was directed by the position taken in the draft “Guidance Note on Procedures for Public Procurement Cases” which is pending publication, subject to the approval of the Master of the Rolls.

The guidance recognises the need to ensure that the matter of confidentiality does not cause undue costs or complexities in litigation.

The contents of a document should be thoroughly analysed to determine whether and to what extent the information is confidential, and then processed accordingly. An assertion of confidentiality must be “properly warranted”.

Justice Coulson acknowledged that major public contracts, such as the one at issue, attract the same group of tenderers who regularly compete against each other for such transport-related contracts.

Therefore it is possible that information in a tender may appear to be of no commercial significance to an onlooker but in fact represents meaningful intelligence to a competitor.

Some practical steps for ensuring the protection of confidential information in procurement disputes are provided in the guidance:

• Papers and communications should be passed directly to the relevant Judge’s clerk to limit the risk of inadvertent disclosure;
• Confidential information should be made easily identifiable using coloured paper;
• A hierarchy of confidentiality should be made apparent with the use of stamps or marks or by a particular colour of paper;
• Where appropriate, redacted copies of documents should be provided in order to permit public access to those documents.

Why is this important?

An unfortunate consequence of the ongoing tightening of the public purse is the increased appetite for procurement challenges.

The protection of confidential information in procurement disputes will be a real prospect for CAs, if not already a live concern.

CAs engaged in a procurement dispute would be wise to heed the advice in the Guidance; taking an overly cautious approach to marking documents as confidential may only serve to attract further challenge, creating additional costs which could be avoided.

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 0191 204 4464.