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Procurement case law, remedies and
complex procurement procedures
including procurement innovationNathan Holden, Freeths
Mark Gudgeon, Freeths
Bethan Lloyd, Geldards
Jonathan Griffiths, Geldards
Clare Hardy, Geldards
4 December 2018
Complexities & pitfalls in procurement
Nathan Holden
Partner
28 November 2018
www.emlawshare.co.uk
Complexities & pitfalls in
procurement
• Background
– Challenges
– Awareness
– Aggressive litigation
– Confidentiality – is there any?
www.emlawshare.co.uk
Particular issues that arise
• Frameworks
• Dynamic Purchasing Systems
• The competitive procedure with negotiation
• Concessions
• Development Agreements
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Frameworks
• Regulations 33 / 72 PCR 2015
• 4 year duration and call-off terms:
• “Exceptional cases duly justified”
• Who can enter into contracts? (Inverclyde Case -
[2015] CSOH 169 – 1 December 2015)
• Pricing basis
• Eligibility of parties to take part
• Substantial variations?
www.emlawshare.co.uk
Dynamic Purchasing Systems
• r.34 PCR 2015:
– agree who qualifies as eligible
– 30 days
– Cannot charge a fee – some may try to!
– Electronic based
– Criteria for products
– Award must follow rules – mini-tender
www.emlawshare.co.uk
Competitive Procedure with
Negotiation• Weird hybrid?
• “Minimum requirements” and “evaluation criteria”
remain constant throughout!
• Ability to down select during negotiation phase
www.emlawshare.co.uk
What is a concession?
• 2016 Regulations
• Which services?
• Waltham Forest case – Bailiff Services [2016]
EWHC 771 (TTC) (6 April 2016)
• Use of land for advertising purposes? – Ocean
Outdoor v LBHF [2018] EWHC 2508
www.emlawshare.co.uk
Development agreement – is it
a procurement?
• Property transaction not a procurement (r.10(b)
PCR 2015)
• Faraday v West Berkshire [2016] EWHC 2166
(Admin) 26 August 2016 – no positive obligation?
• Faraday v West Berkshire [2018] EWCA Civ 2532
(the sequel!)
– “acting unlawfully in the future”
– Use of VTNs
– Civil Penalty (£1)
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Can we avoid a procurement
competition?• Land transaction?
• Joint venturing (bodies governed by public law) –
LLP (Peters v Haringey (2017) or LTD?
• When does the “exclusive rights” exemption (r.32
PCR) apply?
• S106 TCPA 1990 obligations (R (Midlands Co-op)
v Birmingham CC) [2012] EWHC 620
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What is a “Contract for
Pecuniary Interest”?
• Financing?
• Defraying of other charges?
• IBA v Azienda [C-606/17]
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Abnormally low pricing?
• A real issue?
• r.69 PCR 2015 – if a tender appears to be
“abnormally low”, a duty to investigate
• Ask questions
• May disqualify if no adequate response
• So what is an “ALT”? – Northern Ireland
Government formula – 15% differential = deemed
ALT unless a satisfactory explanation
• Relates to a breach of law or state aid?
www.emlawshare.co.uk
Avoiding Procurement
Challenges – Lessons from
Recent Caselaw
Bethan Lloyd, Partner, Geldards
www.emlawshare.co.uk
• A well planned procurement and carefully drafted
procurement documents reduce the scope for
challenge
• A well organized and disciplined evaluation
process also reduces the scope for challenge
Introduction
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Formulating technical
specifications• Regulation 42 PCR 2015
– Equal access of economic operators
– No unjustified obstacles to competition
– Methods:
• Performance or functional requirements
• Reference to technical specifications ‘or equivalent’
• A mixture
– Specific make or source only in exceptional circumstances,
and specify ‘or equivalent’ – strictly interpreted
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Formulating technical
specificationsRoche Lietuva case (C-413/17, October 2018)
• Hire of diagnostic medical equipment and related
services
• Argument technical specifications were so specific
they were adapted to the product characteristics
of particular manufacturers
• Question: what is the extent of the discretion to
describe either the technical characteristics of a
medical device or the way in which it functions?
www.emlawshare.co.uk
Formulating technical
specificationsRoche Lietuva case (cont.)
•CJEU said contracting authorities have a wide margin of
discretion
•No hierarchy amongst methods for formulating technical
specifications
•However
– Consider principles of equal treatment, non-
discrimination and transparency
– The more detailed the specification, the greater the
risk of favouring products of a particular
manufacturer
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Formulating technical
specificationsRoche Lietuva case (cont.)
– Recital 74 – avoid mirroring characteristics of
supplies / services / works offered by a particular
economic operator; tenders should be able to
reflect diversity of technical specifications in the
market
– Level of detail in the specification must observe the
principle of proportionality – is that level of detail
necessary to achieve the desired objectives?
– In public health sector, a greater margin of
discretion as regards proportionality
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Time for demonstrating equivalence
VAR, Srl v Iveco Orecchia SpA (CJEU, July 2018)
• Spare parts for buses – originals from
manufacturer, or equivalents
• Contracting authority required certificate of
equivalence to be presented at time of first
delivery, rather than with tender
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Time for demonstrating equivalence
VAR, Srl v Iveco Orecchia SpA (cont.)
• Decided: contracting authority must require proof
of equivalence to be submitted with tender
• This is to ensure all bidders in a position of
equality when tenders evaluated
• Discretion as to means used to show equivalence
– but must be a meaningful assessment, which
goes no further than necessary
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Pass/fail requirements
MLS (Overseas) Ltd v Sec of State for Defence
(TCC, 2017 and 2018)
• Claimant scored best on quality and price, but lost
because it failed Q6.3 about safety culture
• Claim upheld – ITT did not make clear a fail on
Q6.3 would result in disqualification
– Q6.3 not included in evaluation criteria
– Worked examples did not illustrate effect of
failing Q6.3
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Pass/fail requirements
MLS (Overseas) Ltd v Sec of State for Defence
(cont.)
– Other areas which could result in
disqualification were highlighted in bold, but
Q6.3 was not
– No explanation in ITT of consequence of failing
Q6.3
– No statement a pass on Q6.3 was necessary
for tender to be technically compliant
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Pass/fail requirements
MLS (Overseas) Ltd v Sec of State for Defence (cont.)
• Tips:
– Clear and express statement of what a fail means
– Make it clear whether it leads to a mandatory or
discretionary exclusion
– Consider illustrating a fail in a worked example
– Consistent use of bold text and other markers
• Very claimant friendly judgment!
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Disqualification for failure to meet
technical threshold score
Montte SL v Musikene (Case 546/16, CJEU)
• Open procedure to buy musical equipment
• Two stages:
– First stage – technical evaluation and minimum
score of 70% to go on to second stage
– Second stage – overall evaluation based on
combined price and technical scores, with a
50/50 split
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Disqualification for failure to meet
technical threshold score
Montte SL v Musikene (cont.)
• Decided:
– Can exclude for failure to meet minimum score
on technical, even if this means that bidder’s
price is not evaluated at all
– Multi-stage approach permitted even if it results
in a dramatic reduction in number of bidders at
second stage – if there are concerns about lack
of competition, contracting authority can
abandon the procedure and start again
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Disqualification for failure to meet
technical threshold score
Montte SL v Musikene (cont.)
• Comments:
– Criterion for elimination of bidders should be an
absolute criterion (e.g. failure to achieve 70%)
rather than a criterion which involves comparing
bidders (e.g. top 5 scorers on technical go through)
– Elimination of lowest price bidder at stage one may
affect the result at stage two if the price scoring is
by reference to lowest compliant bid
– Make it clear the scoring on price only takes
account of the pricing of compliant bids
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Disqualification for failure to meet
technical threshold scoreMontte SL v Musikene (cont.)
• Comments:
– Minimum technical score can enable more keen competition
on price by giving price a higher weighting, without running
the risk that the winning bid will be very cheap but poor
quality
– Does not work so well in reverse: weight technical highly,
with:
• a cap on price – this is OK
• exclusion for any bid with a price which exceeds more
than twice the lowest bid – not OK, not sufficiently
transparent as bidders do not know what the winning bid
will be
www.emlawshare.co.uk
Neutralising incumbent advantage
Amplexor Luxembourg Sarl v European Commission (Case T-
211/17)
• Contract to publish procurement notices in Official Journal
• Incumbent was one of three winners, but would only get a 0.3%
payment on top of contract price, the other two winners would get
3%
• The 3% was intended to finance implementation costs during
transition phase and was intended to restore equal treatment of
bidders
• Contract had specific legal and technical requirements, meaning
that an investment of resources would be required
www.emlawshare.co.uk
Neutralising incumbent advantage
Amplexor Luxembourg Sarl v European Commission (cont.)
• Reasoning:
– No obligation to neutralise all incumbent advantages –
potentially contrary to interests of contracting authority (cost
and effort)
– A balance to be struck between interests involved
– Incumbent advantage must be neutralised only to the extent:
• It is technically easy to effect
• It is economically acceptable
• It does not infringe rights of incumbent or other bidders
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Neutralising incumbent advantage
Amplexor Luxembourg Sarl v European Commission (cont.)
• Case suggests that contracting authority may need to allow
bidders other than the incumbent a transition phase with extra
payment if they need to invest resources to adapt to the
particular requirements of the contract
• Important that the extra remuneration is not arbitrary or excessive
(court compared it to other contracts)
• Important to ensure higher remuneration will not allow a new
supplier to subsidise the operational phase of the contract
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Neutralising incumbent advantage
Amplexor Luxembourg Sarl v European Commission (cont.)
• Here the ‘particular requirements’ were legal and technical
requirements specific to Official Journal publications
• Comment: may be more difficult in other cases to tell the
difference between ‘particular requirements’ which can be treated
as an incumbent advantage which justifies a paid for transition
phase and merely something which requires the supplier to have
particular resources or know-how
• If it is just resources and know-how, these are something the
bidder should ‘bring to the table’, and should be tested at the
selection stage
www.emlawshare.co.uk
Neutralising incumbent advantage
Amplexor Luxembourg Sarl v European Commission (cont.)
• Comment:
– An extra payment will always be ‘technically easy’
– What does ‘economically acceptable’ mean? Presumably,
that it is not arbitrary or excessive, and that it will not be used
to subsidise the operational phase
www.emlawshare.co.uk
Inherent de facto advantage
Proof IT SIA v European Institute for Gender Equality (Case T-
10/17, General Court)
• Reaffirms the inherent de facto advantage
• Unless the incumbent is excluded from the procurement
altogether, it is inevitable incumbent will have an advantage
• Court noted that the advantage was not the consequence of any
conduct on the part of the contracting authority
• Allegation award criteria interpreted in a way which meant
incumbent could benefit from its knowledge of performing current
contract not proven on the facts
www.emlawshare.co.uk
Standstill Feedback:
Reasons for Rejection and
Requests for Further Information
– Recent Developments
Jonathan Griffiths, Partner, Geldards28th November 2018
www.emlawshare.co.uk
• An area where advice is regularly requested and
a popular ground for challenge
• Two recent cases give useful guidance
Introduction
www.emlawshare.co.uk
Regulation 86 Decision Notice
• award criteria
• identity of the successful tenderer
• reasons for the decision including the:
• characteristics and relative advantages of the
successful tenderer
• score of the winning bidder and recipient
• when standstill will end / contract awarded
Background
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• Strabag Benelux v Council [2003] - approved an
explanation that bidder ranked highly on quality but
was unsuccessful because of its price
• Brinks Security Luxembourg v Commission
[2009] – where a formal scoring system exists, an
unsuccessful tenderer should be provided with a
breakdown of its scores as compared with the
successful tenderer. Where the reasons for the
scores are still not clear, a narrative explaining the
scores may still be needed
Background: Earlier cases of note
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• Evropaiki Dynamiki v Court of Justice [2008] -
scores and brief narratives should be sufficient.
However, there should be sufficient information for
the unsuccessful bidder to determine whether a
decision is well founded, to assert its rights before
the court and for the court to exercise its
supervisory jurisdiction.
Background: Earlier cases of note
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• Healthcare at Home Ltd v the Common
Services Agency [2014] – an emphasis on
providing reasons and reasoning
• Crown Commercial Services – “contracting
authorities should release the full breakdown of
scores against each criterion and sub-criterion,
and support this with a narrative explanation of
why the winner scored more heavily in the
relevant areas.”
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• A breakdown of scores on a question by question
basis
• A rationale for the scores awarded on a question by
question basis
• Copies of the individual evaluators’ notes
• Minutes of all evaluation and/or moderation meetings
• Copy of the evaluation report
• Copy of the winning bidder’s tender
Aggressive requests for disclosure
during the standstill period
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• “the contracting authority cannot be required to
communicate to an unsuccessful tenderer, first, in
addition to the reasons for rejecting its tender, a
detailed summary of how each detail of its tender
was taken into account when the tender was
evaluated and secondly, ….. a detailed
comparative analysis of the successful tender and
of the unsuccessful tender.”
EUIPO v European Dynamics
Luxembourg SA
www.emlawshare.co.uk
• No requirement to :
• Disclose a full copy of the evaluation report
• Weight sub-criteria or attach specific weighting
to every positive or negative comment (i.e. can
evaluate in the round)
• However if sub-criteria are weighted, sub-scores
should be awarded and disclosed
• Reasons should be provided even when the
unsuccessful tenderer scores highest on
quality
EUIPO v European Dynamics
Luxembourg SA
www.emlawshare.co.uk
Lancashire NHS Foundation
Trust v Lancashire CCShortcomings in the evaluation and
moderation process
• An inconsistent approach to moderation
• Poor record of discussion
• The meeting notes contained conflicting points
with no attribution to individuals or
reconciliation
• The panel compared competing tenders
where scores were different
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• It is not enough to simply list factors (e.g. negative
and positive points)
• Must give a full and transparent account of the
reasons for particular scores
• Where a panel of markers reach consensus
scores, the stated reasons should explain the
reasons for panel consensus.
Lancashire NHS Foundation Trust
v Lancashire CC
www.emlawshare.co.uk
Lancarshire NHS Foundation
Trust v Lancashire CC• no obligation to disclose the notes of a moderation
meeting but …..
• It is not necessary to keep a complete record of what
is said during a moderation meeting, or a
comprehensive note of every point that was made
but…
• “a procurement in which the contracting authority
cannot explain why it awarded the scores which
it did fails the most basic standard of
transparency”.
www.emlawshare.co.uk
• Importance of the 3 Ps
• The evaluation meeting is key to providing
adequate feedback and preventing disputes
• Structured approach to evaluating and consensus
scoring
• All scoring must be undertaken by reference to
the criteria and methodology in the ITT.
• Ensure that the reasons given to bidders provide
a clear rationale for the scores given
Summary & Conclusions
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Summary & Conclusions
• Transparency requires that the scores awarded are
disclosed
• Where the reasons provided are adequate, there is no
reason to disclose minutes of the moderation meeting
but do keep an accurate (but not verbatim) record just
in case
• If adequate reasons are given and Regulation 86 has
been complied with, consider sticking to your guns in
the face of demands for further justification
Public procurement challenges –
disclosure, confidentiality and
Interested Parties
Mark Gudgeon, Senior Associate
Freeths LLP
28 November 2018
www.emlawshare.co.uk
What we will discuss
• Disclosure (pre-action)
• Confidentiality
• Interested Parties/Interveners
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Pre-action Disclosure
• Common questions:
– “Do we have to give disclosure of documents before Court proceedings?”
– “We haven’t got time to give disclosure of documents”
– “What happens if we refuse to disclose documents before Court
proceedings?”
www.emlawshare.co.uk
Pre-action Disclosure
Practice Direction - Pre-Action Conduct and Protocols
• Para 3 – “the Court will have expected parties to have exchanged sufficient
information to…..(a) understand each other’s position (b) make decisions about
how to proceed (c) try to settle the issues without proceedings……(f) reduce the
costs of resolving the dispute”
• Para 6(c) – the parties should disclose “key documents relevant to the issues in
dispute”
• Court will “expect the parties to have complied with a relevant pre-action protocol
or this Practice Direction”
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Technology and Construction Court Guidance Note on Procedures for Public
Procurement Cases (the “Annex to the TCC Guide”)
• “The authority is strongly encouraged to disclose the key decision materials at an
early stage where relevant to the complaint made”
• “The parties are encouraged to use a pre-action process” which obliges the
authority to “provide any information to which the claimant may be entitled as
soon as possible”.
Pre-action Disclosure
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• “The parties should also act reasonably and proportionately in providing one
another with information, taking into account any genuine concerns with regard to
confidentiality, whether their own, or those of third parties.”
• “The parties should consider the use of confidentiality rings and undertakings to
support resolution of the dispute prior to the issue of proceedings”
• “the aim should be to avoid the need to issue proceedings simply to obtain early
specific disclosure”
• Compliance – note reference throughout the Annex to the TCC Guide being a
protocol - suggests not compulsory but clear expectation of compliance
Pre-action Disclosure
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• Don’t have to give pre-action disclosure – no order to do so
• But there is a clear expectation that it will take place
• Costs risks if you do not do so
Pre-action Disclosure
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Tactically – should you provide pre-action disclosure?
• Benefits/risks
• When a good idea?
• When a bad idea?
• Conduct/costs risks
• How far do we need to go/what level of disclosure do we need to give?
Pre-action Disclosure
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• De-brief/feedback meetings
• But would they really commence Court proceedings?
Pre-action Disclosure
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Contracting authority’s position on pre-action disclosure:
• There’s no court order for disclosure, but a strong expectation of pre-action
disclosure taking place
• You cannot use confidentiality as a reason not to disclose documents, pre-action
or otherwise
• Benefits/risks
• Adverse costs orders
• Tactical issues/risk of court proceedings
Pre-action Disclosure
www.emlawshare.co.uk
Confidentiality
• Usually applies to winning tenderer’s tender and associated evaluation and scoring materials
• Those documents invariably contain commercially sensitive information
• Historically difficult hurdle to obtain disclosure of winning tenderer’s tender
• Now - position is that confidentiality should not be a bar to disclosure and that open justice
usually requires disclosure
• Bombardier Transportation Limited v Merseytravel [2017] EWHC 575 (TCC) - Coulson J:
“Merely because the case in question is a procurement dispute is no reason for the case to be
labelled as "private", with all of the documents on the court file being kept secret and not made
available to non-parties.”
www.emlawshare.co.uk
• However, the courts seek to protect confidentiality where genuinely necessary –
principally through the use of, marking documents, confidentiality rings and
redactions
• Confidentiality rings “comprise of persons to whom documents containing
confidential information may be disclosed on the basis of their undertakings to
preserve confidentiality” (para 34 of the Annex to the TCC Guide)
• The parties should consider the use of confidentiality rings prior to the issue of
proceedings
• “A party’s external legal advisors (solicitors and counsel) will need to be admitted
to any ring that is established” (para 37 of the Annex to the TCC Guide)
Confidentiality
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• Historically, rings may have been confined to lawyers only (IPCom GmbH & Co
KG v HTC Europe Co Ltd [2013]) EWHC 52 (Pat))
• However, in 2015 expert witnesses were permitted as personnel to confidentiality
rings (Geodesign Barriers Limited v The Environment Agency [2015] EWHC 1121
(TCC)). Coulson J:
“It would be wrong to hobble the claimant’s preparation of its case by refusing to
allow documents disclosed into the confidentiality ring to anyone other than lawyers.”
Confidentiality
www.emlawshare.co.uk
• More recently (2018) - Appropriate employees (including directors) should be
permitted to confidentiality rings in public procurement challenges (SRCL Limited
v The National Health Service Commissioning Board (also known as NHS
England))
• Fraser J - solicitors acting as witnesses of fact is “highly unsatisfactory” and
“could have been avoided if the same evidence had been called from a director
(say) of SRCL, or someone else involved at the time.”
• Membership of the rings should be extended to those able to give evidence of
fact on matters involving confidential information
Confidentiality
www.emlawshare.co.uk
Our very recent experience:
Two rings, each with specific undertakings:
• Lawyers-only ring – terms and undertakings
• Employee ring – terms and undertakings
• Full and non-redacted disclosure into lawyers-only ring
Confidentiality
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• A mixture into the employee-ring to protect genuinely sensitive commercial
information
• Some parts held back entirely
• Some redacted
• Some not redacted
• Different, less senior, employee
Confidentiality
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• Court unwilling to get into detailed arguments about which parts of the documents
are relevant/have been referred to in pleadings
• Court favoured open justice principle and need for disclosure to enable the
claimant to get into the “full detail”
• Court content that robust terms of confidentiality rings and undertakings would
protect confidentiality
• Interested Party’s conduct/cost risks – adverse costs order
Confidentiality
www.emlawshare.co.uk
Contracting authority’s position on confidential information:
• You cannot use confidentiality alone as a reason not to disclose documents
• However, it confidential information belongs to a third party, then reasonable to
seek that parties consent and they should be allowed to make representations to
the Court
• Safe position - take a neutral stance on disclosure of confidential material
• Be careful about supporting unreasonable positions taken by third parties
• However, free to make justified observations on the relevance of the
documents and/or merits.
Confidentiality
www.emlawshare.co.uk
• Handle documents carefully
• Don’t inadvertently send confidential information to other parties
• Mark documents
• Password protection
Confidentiality
www.emlawshare.co.uk
Interested Parties/Interveners
• Interested Parties fairly common in commercial judicial review proceedings, but
arguably not so in public procurement matters
• JR – CPR Part 54.1 “Interested Party” means any person (other than the
claimant and defendant) who is directly affected by the claim”
• However, the Annex to the TCC Guide makes it clear that the term “Interested
Party” is “given a wider meaning than in CPR Part 54”
• sector regulators
• competition authorities
• sub-contractors
www.emlawshare.co.uk
• However - Interested Party to a public procurement challenge is normally the
winning tenderer
• The interest is in the outcome i.e. the decision to award the contract being set
aside. But also issues around confidentiality, as discussed in previous slides
• Whether to become a formal Interested Party:
o Annex to TCC Guide - Interested Parties do not necessarily need to apply to
become formal parties to proceedings:
“…its interests can usually be considered and addressed by the Court without that
being necessary”
Interested Parties/Interveners
www.emlawshare.co.uk
Our experience –
• Without formal application – Interested Party not get all of the information and
documents its wants
• If formally apply, greater risk of being seen as active
• However, even if not formal party, adverse cost order can still be made
• Do get opportunity to make representations at hearings
• Difficulty in agreeing terms of the order for Interested Party by consent
Interested Parties/Interveners
www.emlawshare.co.uk
What can an Interested Party expect to get/receive?
• notice of hearings
• pleadings
• copied into all correspondence
• relevant documents
• evidence
• the right to make representations on matters which concern it (note risk of being
considered active)
Interested Parties/Interveners
www.emlawshare.co.uk
Costs:
• Orders can be made in favour of Interested Party
• Can also be made against e.g. unreasonable position on confidentiality
• Adverse costs order - need not be formal Interested Party
• Considerations for an adverse costs order:
• Did the Interested Party cause the other parties to incur unnecessary costs?
• Did the course of action add any value to the case?
• Were the costs incurred by the other parties wasteful?
Interested Parties/Interveners
www.emlawshare.co.uk
Contracting authority’s position on Interested Parties:
• May be helpful to have them:
• Interests probably aligned = maintaining award decision
• Interested Party can add helpful points and be asked to provide comments on
claimant’s pleadings
• Easier to deflect/re-direct issues to Interested Party
• Adds pressure on claimant = tactical benefit
Interested Parties/Interveners
www.emlawshare.co.uk
Can be problematic:
• Loose cannon
• Burden of having to supply information and documentation
• Make unhelpful statements
• Be unreasonably difficult
• Accidentally give credibility to claimant
• May be risk to expedition
Interested Parties/Interveners
www.emlawshare.co.uk
Safe position:
• take an outwardly neutral stance to addition as Interested Party
• arguably better to have formal order for Interested Party
• However, be cautious about terms of order – not too wide
• Be careful about supporting unreasonable positions taken by Interested Parties
Interested Parties/Interveners
www.emlawshare.co.uk
About me
• Mark Gudgeon is a Senior Associate in the Commercial Dispute Resolution team
and is based in the Sheffield Office
• Mark advises and acts for public sector and commercial bodies on a wide range
of commercial disputes
• Particular interests are public procurement, IT/outsourcing and reputational
management
• Mark has in excess of 15 years' experience in advising and acting on the
avoidance and resolution of commercial disputes
Mark GudgeonSenior Associate0845 166 [email protected]
www.emlawshare.co.uk
Check out the website
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