Public sector breakfast clubJanuary 2017, Exeter

Procurement law update 2017

Peter WarePartner, Browne Jacobson LLP

The amending….• The Public Procurement (Amendments, Repeals

and Revocations) Regulations 2016– Regulation 57 (Exclusion Criteria) amended to include

offences under section 2 or 4 of the Modern Slavery Act2015 (i.e. human trafficking)

– Duration of Exclusions for tax offences - Regulation57(11) removal of specified exclusion periods

– Permitted Modifications Regulation 72(1) (b) deletion of “or” and replaced with

“and” between (i) and (ii) Regulation 118 (5A) to (5D) confirms Edenred decision

Standard Selection Questionnaire

• Procurement Policy Note 8/16

• Replaces standard PQQ

• Applies to all contracting authorities

• N/A to health services or works contracts (or goods& services “needed in relation to the works”)

Standard Selection Questionnaire

• Must allow bidders to self-certify

• Must report deviations which are:– Changes to the standard wording– Additional questions which aren’t specific to the

procurement in question

• Must use electronic submissions from 18 April 2017

Woods Building Services v Milton KeynesCouncil [2015] EWHC 2172 (TCC)

• Heavily criticised for lack of explanation of scores inevaluation records – cast doubt on scores awarded

• Court went further in assessing scoring than previouscases

• Damages available even though contract not awarded –suggests right to abandon a process is not absolute

Grupo Hospitalar Quiron SA v Departemento deSanidad del Gobierno Vasco and Instituto deReligiosas Siervas de Jesus de la Caridad

• “technical specifications shall afford equal access fortenderers and not have the effect of creating unjustifiedobstacles to the opening up of public procurement tocompetition”

• Tender required: “the health-care centres proposed must besituated in the municipality of Bilbao.”

• Challenger could meet all other criteria but was a hospitalbased in a neighboring area

• Court held that the requirement as to a geographicallocation was not compatible with article 23 as it was notimperative for the performance of the contract

Lightways (Contractors) Limited vInverclyde Council [2015] CSOH 169

• Council purported awarded a contract to acompany under a framework agreement

• Unfortunately for them that company was not aparty to the framework agreement

• Court had no option but to declare this was anillegal direct award and the contract ineffective

Counted4 Community Interest Company vSunderland City Council [2015] EWHC 3898

• Procurement for the provision of substance misuse treatment and harmreduction services for substance users

• This application was in relation to the lifting of automatic suspension• American Cyanamid test was still the correct test in that whether or not to

lift the injunction the court will consider:– Is there a serious Issue to be tried?– If so, what is the balance of convenience

• The court found that there was a serious issue and balance favoured themaintenance of the injunction due to:– the reliance of the company on this contract;– the potential loss of all its highly trained workforce; and– the evidence did not support assertions made by the council

• Justice Carr was very unhappy at the approach of the Council to the claim.

Kent Community Health NHS Foundation Trust v NHS Swale andNHS Dartford, Gravesham & Swanley Clinical CommissioningGroups [2016] EWHC 1393 (TCC)

• CCGs ran an exercise for adult community services, incumbentTrust was unsuccessful and issued a claim.

• Both sides agreed serious issued to be tired the issue before thecourt was the adequacy of damages and balance of convenience

• Trust argued that this was not an ordinary case in that failing towin the contract would mean impact on integrated care and arequirement to make other savings elsewhere within the Trust.

• Counted4Community distinguished• Court found that just because the claimant was not profit making

did not mean that damages were not adequate remedy and couldstill be assessed

• Public interest inputting the contract in place was given greaterweight and so the Trust lost on upholding the automatic

Newlyn Plc v London Borough of WalthamForest [2016] EWHC 771 (TCC)• Procurement was not subject to the PCR 2015• Original claim wrongly pleaded and the Court would not turn Newlyn's Part 7

claim into a claim for Judicial Review.• The court could not see how the pleadings in a Part 7 claim could be amended

to comply with the detailed forms required under CPR 54.1, particularly thestandard claim for Judicial Review.

• The Court also held that it was clear from case law that the Council's decisionwas not one that was amenable to Judicial Review, on the basis it concerned aprocess leading to a commercial decision.

• The matters that Newlyn raised in the pleading were incapable of sensibleargument, whether on the basis of legitimate expectation or on ordinaryJudicial Review grounds. The Court considered there was no point in allowingthe basis of Newlyn's claim to be amended since its view was that the claimwould fail in any event.

Faraday Development Limited v WestBerkshire District Council [2016] EWHC 2166

• WBDC entered into a Development Agreement without following aprocedure under the PCRs.

• Case on how far you can stretch the definition of a land transaction• Affirms Midland Co-operative: although the main object of the

development agreement was the execution of works, there was no legallyenforceable obligation to build and therefore no public works contract

• There were services obligations related to planning and site assemblywhich FDL unsuccessfully argued amounted to the legally binding elementof a public works contract

• Case also looked at obligations under section 123

Faraday Development Limited v WestBerkshire District Council [2016] EWHC 2166

• “(i) What is the main object of the contract having regard to (a) the transaction as awhole and (b) any obligations which are essential to the transaction?

• (ii) Does that main object correspond to the definition of one of the three types of"public contract"?

• (iii) If the answer to (ii) is no, then the contract falls outside the scope of publicprocurement legislation;

• (iv) If the answer to (ii) is yes, is the contractor under an enforceable legal obligationto carry out that main object (e.g. works) which is legally enforceable by thecontracting authority?...;

• (v) If the answer to (iv) is no, then the contract falls outside the scope of publicprocurement legislation. If the answer to (iv) is yes, then the contract may fall withinthe scope of that legislation subject to applying other criteria (eg. the definition of"public contracts", the threshold values and the exclusions from the procurementregime).

• If the issues are approached in that order, the error of pre-determining the object ofa transaction by beginning with and simply focusing upon the obligations in thecontract is avoided.”

Energy Solutions EU Ltd v Nuclear DecommissioningAuthority [2016] EWHC 1988 (TC) – how procurementcan go wrong• The procurement exercise for the clean-up of 12

nuclear sites resulted in an incorrectly awardedcontract

• Had the NDA correctly followed its own evaluationrules, the winning party (Cavendish Fluor Partnership –CFP) would have been disqualified

• The NDA had manipulated the evaluation process toavoid disqualifying CFP’s bid

Energy Solutions EU Ltd v NuclearDecommissioning Authority [2016] EWHC 1988(TC) – how procurement can go wrong• The NDA had not met its obligations relating to transparency

and equal treatment under the Public Contracts Regulations2006

• Applying the correct weighting, the adjusted results meantthat Energy Solutions EU Ltd had submitted the mosteconomically advantageous tender

• Energy Solutions EU Ltd was entitled to damages as a result ofthe errors made by the NDA

• Judge heavily critical of record keeping

• Criticism of the number of witnesses called

Finn Frogne A/S v Rigspolitiet ved Center forBeredskabskommunikation Case C-549/14• Original Contract for a communications system awarded by the Danish State in

2007.• Parties got into dispute and as part of the settlement of that dispute the parties

agreed a reduction in scope of the contract and the purchase by thegovernmental body of some server farms.

• Frogne (who had not originally tendered for the contract) challenged thesettlement and the matter was eventually referred to the ECJ who found:– a material amendment cannot be made to a public contract without a new tendering

procedure even in the case where it is part of a court sanctioned settlementagreement: with both parties agreeing to mutual waivers, designed to bring an end to a

dispute the outcome of which is uncertain: and which arose from the difficulties encountered between the parties in carrying out

that contract.– It would only be permissible if the contract provided in complete terms for such

amendment.

Remondis GmbH & amp, Co. KG Region Nord vRegion Hannover and others (Case C-51/15)

• A case about the classification of public contracts• Two public bodies came together to establish, by regulation, a new

entity certain competences were conferred onto that body.• The body enjoyed autonomy in the performance of the tasks but

was required to abide by decisions of a general meeting of the twopublic bodies.

• The division of competences within a member state was protectedby Article 4(2) of TFEU which included the protection of the powerto reorganise and reallocation of powers between public bodies ina member state

• Only a contract concluded for pecuniary interest could fall withinthe scope of the Directive 2004/18

What does this mean?• This would seem to confirm the position of:

– Section 75 agreements– Joint Committees– DelegationsAs being outside of the procurement regime

• This is provided that:– A genuine transfer of competences (although this does

not need to be permeant) is made both theresponsibilities and the powers that go with those; and

– The new body must have decision making and financialautonomy

Brexit• Immediate impacts?

– EU law continues to apply until we formally leavethe EU

– Public procurement must continue to comply withthe PCR 2015

– PCR 2015 is UK legislation so will not cease to applyafter formally leaving the EU

– PCR 2015 would need to be specifically repealed oramended by Parliament

Post-Brexit Procurement• Regulated procurement regime is highly likely even in

the longer term• Regulations based on award of public contracts being:

– Transparent– Fair– Accountable (formal challenge process)

• Public appetite for transparency and accountability• Commercial appetite for fairness and ability to

challenge• What will happen to EU jurisprudence ?

Brexit conclusions

• Only time will tell

• Until then – business as usual

Contact us…

Lynne RathboneT: 01392 458739E: lynne.rathbone@brownejacobson.com

Peter WareT: 0115 976 6242E: peter.ware@brownejacobson.com

All information correct at time of production.

The information and opinions expressed within this document areno substitute for full legal advice. It is for guidance only andillustrates the law as at the published date. If in doubt, pleasetelephone us on 0370 270 6000.

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