European Union: EU Procurement: The 3-Month Rule

Last Updated: 18 June 2009
Article by Jeremy Glover

It is well known that claims brought for a breach of the 2006 Public Contracts Regulations must be made within a tight 3 month time limit. There have been two recent cases Brent London Borough Council v Risk Management Partners Ltd, [2009] EWCA Civ 490 and Amaryllis v HM Treasury, [2009] EWHC 962 (TCC) which have considered this principle.

Regulation 47(7) makes it clear that there is a two step process:

(7) Proceedings under this regulation must not be brought unless –

  1. the economic operator bringing the proceedings has informed the contracting authority ... of the breach or apprehended breach of the duty owed to it.....and of its intention to bring proceedings under this regulation in respect of it; and
  2. those proceedings are brought promptly and in any event within 3 months from the date when the grounds for the bringing of the proceedings first arose unless the court considers that there is good reason for extending the period within which the proceedings may be brought.

Brent London Borough Council v Risk Management Partners Ltd

The Brent case came before the Court of Appeal. Here RMP claimed that certain contracts of insurance had been awarded by Brent Authority to the London Mutual Ltd ("LAML") outside of a tender process in which they participated. It is important to note that RMP were only making a claim for damages. Amongst other issues, Brent said that the claims were started more than three months after the date on which the grounds for bringing the proceedings first arose. In particular, Brent submitted that grounds for bringing proceedings existed (and that time therefore started to run) in November 2006 when RMP were told that Brent was obtaining insurance elsewhere. Proceedings were not commenced until 6 June 2007. If Brent was right, RMP were well out of time.

Pill LJ noted that:

When considering when grounds for proceedings first arose it is necessary to bear in mind that the Regulations prescribe the procedure which a contracting authority must follow before entering into a contract with a supplier of goods or services... It follows that a failure by the contracting authority to comply with any step in the required procedure involves a breach of duty sufficient to support a claim under the Regulations. Moreover, because the procedure governs the whole process from the formation of the intention to procure goods or services to the award of the contract and is structured in a way that is intended to ensure equal treatment and transparency throughout, a failure to comply with the procedure at any stage inevitably undermines the integrity of all that follows.

In doing so, he expressly recognized the problem that whilst grounds for bringing proceedings may exist well before the procedure reaches the award of a contract, the Regulations do not expressly identify the point at which that will occur. The relevant chronology was as follows:

  1. On 9 October 2006, Brent resolved in principle to participate in LAML;
  2. On 7 November 2006, the RMP were told by Brent's brokers that Brent "had committed to going into the Mutual" but that there was uncertainty whether it would be ready by the next renewal date (1 April 2007) and there would be some insurance that would be sought outside it anyway. Accordingly there was to be a full tender exercise;
  3. At a meeting on 13 November 2006, Brent resolved to approve participation in LAML;
  4. In December 2006 Brent invited tenders for cover generally from 1 April 2007;
  5. On 18 January 2007, Brent began membership with LAML;
  6. Because incorrect documentation had been used, a replacement invitation to tender was issued on 1 February 2007. RMP tendered in time; LAML did not participate;
  7. On 7 March 2007 a representative of Brent told RMP, informally, that Brent's insurance would be dealt with through LAML. In response RMP looked at Brent's website and located the decision of 13 November 2006;
  8. RMP sought formal confirmation by letter of 19 March 2007, and received it by letter from Brent of 27 March;
  9. Brent made payments to LAML from 16 March onwards;
  10. By letter of 4 May 2007 RMP's solicitors raised with Brent the question of breach of the regulations;
  11. Proceedings were begun on 6 June 2007.

Brent submitted that grounds for the bringing of proceedings first arose in November 2006 when they resolved to approve participation in LAML or, alternatively, on 18 January 2007 when they became a member of LAML. Brent said that either time runs or it does not and a claimant cannot (if out of time from the date a breach has been apprehended) improve his position by waiting for the actual breach to occur.

The Judge at first instance Stanley Burnton LJ held that:

"In my judgment, therefore, for the purposes of the Regulations in the present case "grounds for the bringing of the proceedings" first arose when the breach which forms the subject of the claim occurred. It would have been different if the claim were for an injunction to restrain a breach of the Regulations; but it is not.

It is therefore necessary to determine when the breach of the Regulations first occurred. It seems to me it was when the appellant abandoned the tender process and awarded the contracts to LAML. That occurred in March 2007. Until then, it could have lawfully awarded the insurance contracts to a company participating in the tender processs."

The Court of Appeal agreed. The key here was the date when Brent abandoned the tendering process and made payments to LAML. Only then were Brent committed to taking policies from LAML. Before March 2007, RMP had not sustained the damage which was the basis of their claim. It may be that RMP could earlier have made an application for interim relief but that did not start time running on the claim actually made.

In any event, in the view of the Court of Appeal, there was good reason for extending the period within which the proceedings could have been brought, within the meaning of regulation 47(7)(b). As late as February 2007, Brent issued an invitation to tender and, late in the month, RMP submitted a tender in response within time. Accordingly, Brent should not be allowed to defeat, on the ground of delay, the claim brought by RMP at the time it was.

Amaryllis v HM Treasury

Here Amaryllis submitted a pre-qualification questionnaire in respect of a framework agreement for the supply and installation of furniture on a national basis. The agreement was to be divided into six lots. Amaryllis was informed by letter on 17 March 2008, that it had come though the first stage on four of the lots. On 9 April 2008 there was a meeting between the parties at which the question of Amaryllis' unsuccessful tender on Lot 1 was raised. Although there was a considerable dispute as to the way in which the topic was raised, it appeared to Mr Justice Coulson to be "beyond argument" that Amaryllis wanted to know why their bid on Lot 1 was unsuccessful and that HMT did not give them very much information in response. Amaryllis wrote to HMT on 15 April 2008 seeking an explanation. HMT responded on 21 April 2008 in a letter which the Judge again felt did not provide a clear or cogent explanation as to how and why Amaryllis had been unsuccessful.

On 23 May 2008, Amaryllis said it would not be submitting a tender for Lots 2-5 because it had no confidence that any tender submissions would be given a fair and valid assessment. On 4 June 2008, Amaryllis indicated its intentions to bring proceedings, but again requested reasons as to why the Lot 1 bid was rejected. Amaryllis were of the view that they had to commence proceedings by 16 June 2008, 3 months after they received notice of their rejection on Lot 1. They duly did so even though HMT had not provided any response to the June letter. Amaryllis made a number of claims. First, it appeared that no marks were allocated to section F which dealt with previous experience when the tender information stated that all sections would be marked. Amaryllis also complained that HMT had evaluated the responses without having informed any tenderer as to the relative importance ascribed to each question - in particular the importance and weighting to be given to the environmental management issues. The Judge described this as being a bit like being required to do an exam without knowing what marks were available to any given question. Finally, Amaryllis complained that it was given a zero under a business heading on the basis that it brought in furniture rather than manufacture it itself.

HMT said that Amaryllis were not entitled to bring a claim because it had not provided notice of its intentions and had not brought its claim in time. As stated above, under Regulation 47(7)(a) of the Public Contracts Regulations 2006, a party is required to provide written notice of the breach and its intentions to bring proceedings. Here, Mr Justice Coulson thought that adequate notice was provided. The regulations were clearly identified in the June 2008 letter and both Amaryllis' intentions and the actual breach complained of were clearly identified. Finally, the Judge said that the adequacy of the notice had to be considered against the backdrop of the (lack of) information provided by HMT.

Further, HMT said that Amaryllis did not act promptly. The Judge said that the starting point is when the specific breach of the regulations actually occurred. That will often be when the actual decision is made to exclude a tenderer. However, here the grounds for bringing the proceedings first arose when the irrevocable decision was taken by HMT to exclude Amaryllis on Lot 1. Therefore, the relevant date was the date on which HMT wrote to inform Amaryllis that its bid had been unsuccessful, 17 March 2008. Note too that the three month period is intended to be a maximum period. Even if the proceedings have been commenced within that period, it is still necessary for the court to consider whether or not they have been commenced "promptly". Therefore, here, even though proceedings were brought within the three month period, the Judge had to review what had actually happened.

Between 17 March and 22 April 2008, there was no culpable delay on the part of Amaryllis. It received a letter at the start of Easter week and a meeting was arranged in the first full working week after Easter. Amaryllis then wrote on 15 April 2008, receiving an inadequate answer on 22 April 2008. HMT focussed on the fact that between 22 April 2008 and 4 June 2008, little, if anything, outwardly happened to progress this matter. However, the Judge disagreed that nothing relevant happened during this period. The evidence was clear that Amaryllis was involved in making enquiries with other potential tenderers to try and piece together the possible reasons for their exclusion. Amaryllis knew that it had been excluded. It was entitled to gather what information it could about the reasons for its exclusion and then balance the results of those researches against the risk of commencing proceedings against a party with whom it had an ongoing commercial relationship. Finally no criticism of Amaryllis could be made of the period 4 June and 16 June 2008, the period where it was awaiting a response to a letter from HMT.

In addition, the Judge thought it fair to compare Amaryllis' speed of reaction with HMT's conduct during the relevant period. HMT was anything but prompt. Indeed, had it been necessary to consider whether Amaryllis needed any extension of time, Mr Justice Coulson felt that HMT's conduct during the relevant period was likely to have been the main cause of any delay and that no prejudice would have been suffered by HMT as a consequence of that delay. Therefore Amaryllis would have had a real prospect of demonstrating good reason for any delay, had it been necessary. Accordingly, the Judge concluded that Amaryllis was duly entitled to pursue its claim against HMT.

Conclusion

Both these cases demonstrate the importance if you intend to make a challenge to a publically procured project, of acting promptly. Whilst it is true that both these cases also suggest that the courts will take a fair and reasonable approach in deciding whether the 3 month time limit has been complied with or not, you must bear in mind that they will only do so, if it is appropriate in all the circumstances.

To read further articles by Jeremy Glover, please visit www.fenwickelliott.co.uk.

To see further articles on matters relating to construction, engineering and energy projects, please visit www.fenwickelliott.co.uk.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Authors
Jeremy Glover
 
In association with
Related Video
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
 
Email Address
Company Name
Password
Confirm Password
Position
Mondaq Topics -- Select your Interests
 Accounting
 Anti-trust
 Commercial
 Compliance
 Consumer
 Criminal
 Employment
 Energy
 Environment
 Family
 Finance
 Government
 Healthcare
 Immigration
 Insolvency
 Insurance
 International
 IP
 Law Performance
 Law Practice
 Litigation
 Media & IT
 Privacy
 Real Estate
 Strategy
 Tax
 Technology
 Transport
 Wealth Mgt
Regions
Africa
Asia
Asia Pacific
Australasia
Canada
Caribbean
Europe
European Union
Latin America
Middle East
U.K.
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement

Mondaq.com (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of www.mondaq.com

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about Mondaq.com’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.

Disclaimer

Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.

Registration

Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to unsubscribe@mondaq.com with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.

Cookies

A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.

Links

This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.

Mail-A-Friend

If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.

Security

This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to webmaster@mondaq.com.

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to EditorialAdvisor@mondaq.com.

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at enquiries@mondaq.com.

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at problems@mondaq.com and we will use commercially reasonable efforts to determine and correct the problem promptly.