New Guidance On The Time Limits For Public Procurement Challenges - Government Contracts, Procurement & PPP

Earlier this month the courts gave new guidance on the critical time periods that govern challenges for breaches of the Public Contracts Regulations 2006 ("the Regulations"). The case concerned the interpretation of the requirement that an action be brought "promptly and in any event within three months from the date when grounds for the bringing of the proceedings first arose".

The case arose from yet another challenged framework agreement (for the supply and installation of furniture for use by UK public sector bodies). The framework was divided into lots. Amaryllis brought court proceedings for over £11m on the ground that it had been wrongly excluded from two lots comprising the largest and most valuable part of the framework at pre-qualification stage.

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A breach of the Regulations is actionable by any aggrieved tenderer who suffers or risks suffering loss and damage as a consequence, provided that:

the contracting authority is given written notice of the breach and the intention to bring proceedings under the Regulations; and
the proceedings are brought promptly and in any event within three months from the date when grounds for the bringing of the proceedings first arose, unless the court considers that there is good reason to extend the deadline.

Amaryllis submitted its response to a pre-qualification questionnaire (PQQ) in January 2008. On 12 March the authority produced a report with recommendations on who would be invited to the tender stage of the process. Amaryllis was not recommended for two lots under the framework. It was informed by letter dated 17 March 2008 that it had indeed not pre-qualified for those two lots. On 15 April it wrote to the contracting authority asking for information on the scoring system and the reasons for its exclusion. The authority replied on 21 April but did not provide the information requested. On 16 June Amaryllis commenced court proceedings.

The contracting authority sought unsuccessfully to defeat the proceedings at an early stage based on breaches of the requirements above:

i. The court held that Amaryllis had given the necessary notice stating its intention to commence court proceedings, referring to the Regulations and identifying the actual breaches complained of.

This confirmed that a claim under the Regulations would be barred if the pre-action notice (a) did not refer to the Regulations either expressly or impliedly or (b) only generally referred to an alleged breach of the Regulations (e.g. a bare assertion that a tender process was unlawful without giving details as to how and why it was said to be unlawful).

Claimants should expect the courts to compare their pleaded case with that set out in their pre-action notice – as it did with Amaryllis' notice.

The court went on to hold that the adequacy of the pre-action notice had to be considered in the light of the information available to the claimant at the time. The lack of specificity in Amaryllis' notice was due to the defendant's failure to provide the required information in response to an earlier request for reasons on 15 April.

ii. The court then went on to examine when the grounds for proceedings first arose. The contracting authority relied on previous case law (Jobsin v Department of Heath [2001] EuLR 685). In Jobsin it was held that the right of action arose when the tender document, equivalent to the PQQ, was first issued. In that case the court held that, because the alleged breaches resulted from that document, the claimant had knowledge of all the facts needed to start proceedings when that document was issued.

In this case the court, however, distinguished Jobsin and rejected the argument that the grounds for bringing proceedings arose when the PQQ was made available to interested bidders. The relevant issue was when the specific breach of the Regulations (of which complaint is made) actually occurred.

Amaryllis' claim arose both from deficiencies in the PQQ and how the information provided by Amaryllis in response to the PQQ was dealt with. The court concluded that the grounds for bringing the proceedings first arose when an irrevocable decision to exclude Amaryllis from the list of successful tenderers was taken.

In fact the court went further suggesting that the claimant must know the facts justifying it bringing proceedings before time starts running. Thus not only must the authority make its decision to exclude the claimant but also, it seems, time starts running at the point at which the claimant receives notice from the authority that it has been excluded.

Amaryllis' proceedings were in time, having been commenced just less than three months after the authority notified it that its bid had failed. The requirement to commence proceedings promptly was also met since Amaryllis had arranged a meeting with the authority as soon as possible which was followed up promptly with the 15 April letter. The court rejected any suggestions that the claimant delayed in bringing proceedings. On the other hand the contracting authority had not acted promptly in responding to Amaryllis' request and had failed to provide the requisite information.

Previous case law suggests that tenderers should not be allowed to defer action until they see how they fare in the competition. That was not the case with Amaryllis, which had used the three months to gather information from other tenderers, having already been told its bid had failed. However, the court's approach (insofar as it favours time not starting until the authority notifies its decision) may, in practice, allow tenderers to see how they fare before challenging the process.

The court further concluded that if it was wrong about the time for bringing proceedings, then Amaryllis would in any event have a good case for arguing for an extension to the time limit. Relevant factors are: the length of and reasons for the delay; the claimant's and authority's culpability for the delay; and the prejudice to the authority of the delay and any extension. Amaryllis would have had a real prospect of showing that any delay was the result of the authority's conduct and that there was good reason for the delay.

The court did not refer to the controversially low criteria applied in an October 2008 decision of the High Court of Northern Ireland which included: the importance of the project; the public interest in hearing promptly any challenge to the project and procedures (if they are used for other tenders); and how unsatisfactory it is to resolve a case that has been fully argued based on a limitation defence.

When the new Remedies Directive is implemented by December, subtle changes are expected to deadlines in respect of certain court applications (for more details click here).

This case reemphasises the importance when challenging publicly procured projects of both the pre-action notice and of acting promptly as well as within three months. The courts do not like rejecting cases because they are time-barred, but claimants should not rely upon delay being excused just because they have a strong case.

Reference: Amaryllis Ltd v HM Treasury sued as OGC Buying Solutions

This article was written for Law-Now, CMS Cameron McKenna's free online information service. To register for Law-Now, please go to www.law-now.com/law-now/mondaq

Law-Now information is for general purposes and guidance only. The information and opinions expressed in all Law-Now articles are not necessarily comprehensive and do not purport to give professional or legal advice. All Law-Now information relates to circumstances prevailing at the date of its original publication and may not have been updated to reflect subsequent developments.

The original publication date for this article was 29/05/2009.

UK: New Guidance On The Time Limits For Public Procurement Challenges

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