Public Contracts (Amendment) Regulations 2009: When do they apply?
The Public Contracts (Amendment) Regulations 2009 (SI 2009/2992), implementing the
Remedies Directive (Council Directive 2007/ 66/EC), came into force on 20 December
2009.
These Regulations raise a number of interesting points including when the Regulations
apply.
The Regulations provide that “these Regulations come into force on 20 December 2009,”
however like the Directive do not clarify whether the Regulations apply to those
procurements commenced before this date.
As neither the Regulations, or the Directive clearly state when these Regulations
apply the OGC issued guidance which provided that the new requirements only apply
to procurements that are commenced after 20.12.09.
However given that both the Regulations and Directive are silent on this matter
it is worth taking into account recent case law before relying on guidance as there
is an increasing trend for EC principles to be upheld irrespective of the detail of national legislation as the cases below highlight.
In the Scottish case of Sidey Ltd v Clackmannanashire Council and Anor 2009
the Court set aside a purportedly concluded contract between the Council and Anor.
In this case the provisions of Reg 47(9) of Public Contracts (Scotland) Regulations
2006, which prevents a contract from being set aside, were held not be applicable
as the contract was awarded and concluded during the standstill period and as such
was only a purported contract. It was held that the Court was required to interpret
Regulation 47(9) so as to be consistent with EC principles and jurisprudence, and
to apply a purposive interpretation.
Here it was held that the proper interpretation of Regulation 47(9) is that it prevents
the Court from ordering any remedy other than an award of damages if the contract
in relation to which the breach occurred has been properly entered into after the
expiry of the standstill period. It does not prevent the Court from ordering other
remedies when a contracting authority purports to enter into a contract before the
expiry of the standstill period. As such the purported contract could be set aside.
In the case of Uniplex (UK) Ltd v NHS Business Services Authority 2010,
the Court extends the period that disappointed bidders can challenge procurement
decisions.
The ECJ
considered when time is deemed to run from and whether a requirement for
“promptness” in bringing proceedings was consistent with the Directive. It was held
that despite the Regulations requirements that any challenge be brought “promptly
and in any event within three months from the date when the grounds for bringing
proceedings first arose,” this was not in accordance with the Directive.
Instead it was clarified that time would only start to run from the date “on which
the claimant knew or ought to have known of the alleged infringement”.
Furthermore it was stated that while the requirement for “promptness” was
in accordance with the Directive requirements for tenderers to challenge promptly,
the assessment of “promptness” afforded the national court too much discretion,
giving rise to lack of certainty, contrary to the provisions of the Directive. It
was therefore held that such a provision should be precluded.
This case has now been applied in the High Court challenge of Sita UK Ltd v Greater
Manchester Waste Authority where it was held that Sita was out of time. However it should be noted that this decision is being appealed.
In February 2009 in the Scottish case of Plumbing and Heating v Aberdeen City Council
2009 we see a similar conclusion to that in Sidey. The Court gave
an interim order
setting aside a contract that was already concluded, as the contract
was entered prior to the 10 day standstill period. The only remedy at the time in
such circumstances is ordinarily damages in accordance with Regulation 47 (9). (However
it should be noted that since 20 December 2009 and the implementation of the Public
Contracts (Amendment) Regulations 2009 concluded contracts can be set aside as ineffective
in the event of a substantial breach.)
A similar issues arose in the High Court case of Northern Ireland (Federal Security
Services) v Chief Constable for the Police Service and resource Group Limited 2009.
In this case the Federal Security Services had previously been awarded a Part B
contract for the provision of security, guarding and driving services to the police.
The police were alleged to have breached the procurement rules, in awarding and
entering a new contract for the services to another company, without a standstill
period.
The Court held that although there is no requirement for a standstill period in respect
of Part B Service Contracts, the general principles of EC law should have
applied. An interim order was therefore awarded preventing the police from implementing
the contract, pending full trial.
The Court in this case expounded the view that the general rule that damages is
the only available remedy following contract signature, only applies to contracts
complying with the general principles of EC law, including equality of treatment.
In all the above cases we see the Courts interpreting or disregarding national law
where they do not believe it to be consistent with EC law or principles. As such,
given that the Directive makes no exemption to procurements commenced before 20.12.09
but not concluded, it is possible that an unsuccessful bidder will bring a claim
for breach of the new Regulations against such a procuring authority and the ECJ
will be sympathetic in order to ensure that EC law and principles are upheld and
given due regard.
Given the increasing cost of bidding for public contracts, the pending public sector spending cuts and efficiency drives that will lead to increased competition to win
contracts, together with the increased remedies available to unsuccessful bidders,
we are likely to see a continuing upward trend in the number of challenges bought
against procuring authorities. This means that procuring authorities need to be
more careful than ever to ensure that they are fully aware of the procedure and
processes and that they comply with them to avoid the time, cost and reputational
impact that a challenge could cause.
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For More Information Contact:
Tarmina Dent
TPP Law Limited
53 Great Suffolk Street
London SE1 ODB
t 020 7620 0888
f 020 7620 0778
e info@tpplaw.co.uk
Email: Tarmina
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