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Establishing Standing in Public Procurement Cases


Friday, April 28, 2017

Two recent cases (one decided in the UK and another in the Irish High Court and as summarised below) consider the issue of standing in the context of public procurement cases and demonstrate the difficulty applicants can face. Both cases adopted quite a restrictive approach to the issue of standing and should be considered closely by potential litigants and contracting authorities alike.

Wylde and others v Waverley Borough Council [2017] EWHC 466

    This case concerned a development agreement entered into in 2003 following a competitive tender process conducted by Waverley Borough Council (the “Council”). The agreement (which was classified as a public works concession contract under the UK public procurement regulations) provided for a two-fold viability condition under which a minimum profit level was set for the developer and a minimum valuation of the relevant Council site was set at £8.76m. In 2016 changes were made to the agreement which allowed the development to proceed on the basis of a reduced site valuation of £3.19m. Changes were also made to the level of the developer’s profit share. Five claimants challenged the changes to the development agreement on the basis that they amounted to a new contract, which ought to have been put out to tender under a fresh process. Two of the claimants were parish councillors while the other claimants were members of local civic societies. The Council contended that the claimants were unable to demonstrate standing. After proceedings had commenced, the Council published a Voluntary Ex Ante Transparency Notice (“VEAT”) to advertise its intention to enter into the amended contract without holding a fresh procurement competition. Significantly, the Council did not receive any response from any economic operator in relation to it.

    The court found that the regime provided for under the public procurement regulations is clearly focused on those directly engaged with and actively seeking the benefit of obtaining public contracts that fall within the scope of those regulations. The Judge found it entirely consistent with the purpose of the regulations to confine standing in any judicial review claim to only those who “can show that performance of the competitive tendering procedure might have led to a different outcome that would have had a direct impact on him”. In this case, the claimants had difficulty showing that any competitive tendering exercise for the varied contract would produce a different outcome. In support of this point, the Judge relied on the fact that the VEAT Notice did not demonstrate that there was any competing interest available. In addition, the Judge found that the claimants were unable to demonstrate any direct impact upon them which would arise as a result of a competitive tendering exercise. Whilst the claimants’ concerns were found to be entirely genuine and expressed in the public interest, the Judge ultimately found that they were unable to demonstrate standing to bring the claim.

    Wylde and others v Waverley Borough Council [2017] EWHC 466

      The issue of standing was also recently considered by the Irish High Court in the case of Copymoore Limited and others v Commissioners for Public Works Ireland [2016] IEHC 709. Here, ten applicants challenged a tender process conducted by the Commissioners for Public Works for the award of a framework agreement for the supply of printers and related services. Each of the applicants are suppliers of printers and claimed to have an interest in obtaining the contracts under the framework agreement.

      Six of the applicants did not submit tenders on the basis that they were not in a position to meet the qualification criteria which they alleged were disproportionate and discriminatory. These six applicants also claimed that forming relationships with other SME’s or larger enterprises in order to submit a tender was unrealistic because the applicants were competitors in the relevant market. The remaining four applicants submitted a tender as part of a group but maintained that they were still entitled to bring proceedings because as individual companies they could not comply with the qualification criteria and so were precluded from submitting a tender on an individual basis.

      Both the applicants and the respondent relied upon the decision in Grossmann Air Service v Austria (Case C-230/02) [2004] 2. C.M.L.R.2. which in summary found that those who have not submitted a tender are not entitled to standing save in exceptional circumstances where the applicants’ successful participation in the process is made impossible due to the conduct of the Contracting Authority, for example, by setting unlawful requirements.

      Here, the Judge was not satisfied that there was any substance in the submission that the four applicants who submitted tenders as part of a group or consortium can also maintain the position that the process in which they have engaged is unlawful and therefore found that these four applicants were not eligible to bring and maintain proceedings in these circumstances. However, it was found that the six applicants who did not submit tenders were eligible to bring proceedings on the basis of their submission that the qualification criteria rendered it impossible for them to submit a bid.

      Copymoore Limited and others v Commissioners for Public Works Ireland [2016] IEHC 709

      Should Third Parties be Permitted Access to Pleadings in Public Procurement Cases

        Bombardier Transportation Limited and Merseytravel [2017] EWHC 575 (TCC)

        During the course of a public procurement case, a law firm representing an unsuccessful tenderer (who was not a party to the case) wrote to the Judge in charge of the case seeking access to certain pleadings. In the UK, interested parties are generally denied access to public procurement claims as these claims are marked “private”. At the same time as this access request was made, the Claimant made an application to the court that neither the particulars of its claim nor the confidential annexes attached to it should be provided to non-parties to the dispute.

        The Judge considered the starting point to be the principle of open justice noting that unless there is good reason otherwise, all documents on the court file should be publically available. However, it was acknowledged that there are sometimes legitimate commercial interests which may justify a limitation of the principle of open justice, for example protecting the confidential elements of tenders. In addressing the conflicting interests of open justice and confidentiality, the Judge relied on a Guidance Note on Procedures for Public Procurement Cases (the “Guidance Note”). Whilst still in draft form, the Guidance Note was found by the Judge to be directly applicable to the issue at hand and the Judge resolved the issue by reference to paragraphs 27-31 of the Guidance Note as set out below.

        27. Public procurement claims frequently involve the disclosure of, and reliance upon, confidential information. Confidentiality is not a bar to disclosure . However, the need to protect confidential information needs to be balanced by the basic principle of open justice. Managing the use of confidential information in the proceedings tends to increase both the cost and complexity of the litigation. The Court will seek to manage the proceedings so that confidentiality is protected where genuinely necessary but ensuring that the issue of confidentiality does not give rise to unnecessary cost or complexity. Assertions of confidentiality should only be made where properly warranted.
        28. Once a case has been allocated to a particular TCC judge, papers and communications, particularly those which are to be treated as confidential, should generally be passed through the relevant Judge’s Clerk to limit the risk of inadvertent disclosure.
        29. Papers delivered to and communications with the Court and the Judge’s Clerk should be marked as “Confidential” if they are confidential.
        30. It is recommended that documents containing confidential material are provided on coloured paper so that their confidential status is immediately apparent (practitioners are asked to take care that the print remains legible when printed on a coloured background). Where relevant, the level of confidentiality should be identified either by a stamp or mark (e.g. “Confidential 1st Tier” ) or by a particular colour of paper.
        31. Where necessary to protect confidential information the Court may, if requested, make an order restricting inspection of the Court files. Requests to restrict inspection should only be made where necessary. Any member of the public may seek an order from the Court varying any such restrictions. Consideration should be given to providing appropriately redacted pleadings for the Court file so as to permit public access to them. As to the management of confidential information in pleadings generally, see paragraph 11 above.”

        The Guidance Note which also addresses issues such as pre-action processes, case management and early disclosure is due to be published by the UK’s Technology and Construction Court (the “TCC”) shortly. In this jurisdiction, applications must be made to secure access to court pleadings. It remains to be seen as to whether a similar “open justice” approach would be adopted by an Irish Judge. However, given the extent of procedural issues which arise in public procurement litigation, those involved in Irish procurement litigation will likely take a keen interest in the Guidance Note.

        Bombardier Transportation Limited and Merseytravel [2017] EWHC 575 (TCC)


Author

Jean-Anne Young

SENIOR ASSOCIATE


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