On 15 June 2015, the Irish High Court provided another potentially significant procurement decision in the case of Forum Connemara Ltd. v Galway County Local Community Development Committee.
The Court heard a preliminary application to strike out the legal proceedings on the grounds that they were commenced under in incorrect provision of the Rules of the Superior Courts and after a delay of several months. The Court’s approach to the issue of delay is particularly noteworthy.
Galway County Local Community Development Committee (the ‘Committee’), a statutory body, made a decision on 30 September 2014 to treat all of County Galway as a single lot for the purposes of a tender to distribute more than €1m of Government funds. From that date, Forum Connemara objected to both the decision itself and the manner in which it was made by a sub-group of the Committee. It argued that it made little sense for funds to be centrally distributed in Galway and that local distribution mechanisms were necessary in the west of the County, but its objections to the Committee were in vain.
Forum Connemara subsequently tendered for the contract to distribute the funds following the issue of an invitation to tender on 20 October 2014. It was notified that it was unsuccessful in March 2015, which prompted it to commence legal action in the High Court, challenging the decision of 30 September 2014 to award the contract by way of a single lot.
The Committee sought to strike out the action on the ground that the statutory limitation period for challenging procurement decisions (generally 30 days) had long expired. Under Irish procurement law, procurement challenges must be brought within 30 days of the challenger being notified of a decision or within 30 days of the date the challenger knew or ought to have known of the infringement, although the Court has a discretion to extend this limitation period where it considers that there is ‘good reason’ to do so.
The Court accepted that this was a case in which the claim was brought well out of time, however, it considered that there were good reasons to allow the litigation to proceed.
The Court clearly had sympathy for Forum Connemara’s predicament and did not criticise it for failing to bring proceedings within 30 days of the decision on 30 September 2014. It took into account that Forum Connemara was a community-based organisation, which had a ‘genuine fear’ of incurring significant legal costs in the High Court.
In taking a such an approach, the Court was aware that it could be accused of opening “a Pandora’s Box in which all manner of miseries will now be visited on contracting authorities in the form of challenges to their decisions”. However, it sought to distinguish the case on its facts, judging that it was unique and presenting characteristics which were unlikely to arise together in many (if any) other procurement cases. The Court pointed to the following in particular:
- There were governance issues arising in relation to the making of the decision on 30 September which the Court considered were unlikely to present in other procurement cases.
- It was alleged that Forum Connemara received assurances from central Government that the funds would be distributed on a different basis from that decided upon on 30 September, which gave rise to arguments as to legitimate expectation.
- The Court found that the case gave rise to ‘genuine public and political’ concern in Galway, to an extent which was not common in procurement cases.
- The contract concerned the disbursement of limited funds to vulnerable persons and the need for the affected public to ‘buy into’ the grant or refusal of funds was an important consideration.
- When considered together, all of these factors convinced the Court that there was good reason to allow Forum Connemara’s challenge to the decision of 30 September to proceed despite that challenge having been initiated months later and only after Forum Connemara had been unsuccessful in the competition.
There is undoubtedly a balancing exercise to be conducted between the ‘need for speed’ in procurement cases and the need to protect fair procedures. In this particular case, the latter appears to have taken precedence. The Court was at pains to explain that the circumstances of this case were ‘entirely unique’, however it does seem inevitable that the decision will be relied upon in the future by unsuccessful bidders who do not commence their procurement litigation within the standard 30 day limitation period. This will result in significant uncertainty for awarding authorities who may have previously considered they were relatively safe once the 30 day period expired.
Another interesting aspect of the case was that the Court considered that the decision made on 30 September regarding the nature of the contract to be procured was a decision taken by the authority in the course of a contract award procedure. The Court found that this was so, even though the decision was made before the competition actually commenced. The practical implication of this was that Forum Connemara ought to have commenced its challenge under Order 84A rather than Order 84 of the Supreme Court Rules, but the Court refused to strike out the case for having been initiated under the wrong procedure.
It is also noteworthy that the Court was willing to consider that the limitation period may have started running either from 30 September (when the decision was made) or from 20 October (when the invitation to tender issued), although it was not necessary for it to determine which of these dates was the correct starting point, as in both instances the legal action was commenced well beyond the 30 day limitation period. It is not particularly clear why the Court considered that time may have started running from 20 October when the decision under challenge (and therefore the alleged infringement) was made known to Forum Connemara on 30 September.
This is an important decision in the Irish procurement context. Despite the endeavours of the Court to distinguish it on its own facts, this case is bound to lead to considerable uncertainty among awarding authorities as to when potential claims can be safely judged ‘out of time’.
Pandora’s Box may well have been opened and it will be interesting to observe the extent to which disappointed bidders seek to exploit the uncertainty going forward.