Introduction

This case in the High Court of Northern Ireland involved a challenge by a bidder, Fox Building and Engineering Ltd (Fox), for framework agreements for civil engineering works.  Fox alleged that there was abnormally low bidding and that the process lacked fairness and transparency.

On 17 June 2015 in Fox (No 1) the Court ordered early discovery of information (not necessarily full documents) as to the nature and degree of nominal or abnormally low bidding.

The Court gave a judgment one month later in Fox (No 2) on lifting the automatic suspension which, from the initiation of proceedings by Fox, automatically precluded the Department from awarding the framework agreements unless the Court lifted that suspension.  The Court applied the American Cyanamid test as being appropriate and compatible with EU law.  Weatherup J, determining that there was a serious issue to be tried, held nevertheless that monetary damages would be an adequate remedy and thus granted an order lifting the automatic suspension.  The Court was also influenced as to the balance of convenience by what is described as a public interest in public contracts being awarded.

Facts

The Northern Ireland High Court (Weatherup J) in judgments in Fox (No 1) on 17 June 2015 and Fox (No 2) on 17 July 2015 considered issues arising from Fox challenging the evaluation of its tenders for framework agreements in lots in respect of civil engineering works in the Northern and Southern areas of Northern Ireland, respectively. Fox was placed 7th in the evaluation in respect of each of the lots and issued proceedings challenging that outcome.

Fox sought early discovery of documents in the procurement process for awarding the contracts.  On 17 June 2015, the High Court, although acknowledging that in general such applications ought to be granted sparingly, nevertheless gave judgment ordering some discovery as to information on the nature and extent of “nominal” (or abnormally low) bidding in the process.  Fox complained that the Department had not made clear in the tender documentation that responses containing “nominal” prices would be capable of acceptance and accordingly that the process failed to exhibit the necessary level of fairness and transparency.

Judgment 

Abnormally Low Bids

In the Fox (No 1) judgment the Court concluded that there was nothing in either the Directive or the national Regulations to support a submission that a general duty was owed by a contracting authority to investigate so called suspect tenders which appeared abnormally low or any general duty to investigate so called suspect tender in circumstances where the authority had no intention of rejecting those tenders.  The decisions of the European Court of Justice in Lombardini and Mantovani[1] and of the English Courts in NATS (Services) Limited v Gatwick Airport Limited[2] and J Varney & Sons Waste Management Limited v Hertfordshire County Council[3] were cited in support.

The Court was satisfied that it was reasonably arguable that adopting nominal bidding to an extent that created unsustainable contracts would be a breach of the obligations arising under the procurement scheme and a method of defeating the competitive tendering process which the Directive and Regulations were designed to protect.  However, the Court considered that the case advanced by Fox did not concern precise levels of pricing but rather “ambiguity and uncertainty” especially as to the “possibility of a tenderer failing to price sustainably a significant amount of the price and schedule”.

Early Discovery

In Fox (No 1) the Court ruled that information about the assessment of tenders fell uniquely within the province of the defendant.  Weatherup J noted concerns of notice parties as to confidentiality of their tenders being breached.  Citing Roche Diagnostics Ltd v Mid Yokshire Hospitals NHS Trust[4], the Court directed disclosure of relevant information (but not necessarily documents in their entirety) regarding the nature and degree of nominal bidding.

Application to Lift Automatic Suspension

In Fox (No 2) the Court affirmed the general principle in American Cyanamid[5] that the test was:

  1. whether there was a serious issue to be tried (a relatively modest test);
  2. whether monetary damages were adequate; and
  3. whether the balance of convenience favoured the granting or not of an injunction (in this case the lifting of the automatic suspension).

Deeming the American Cyanamid test appropriate on such an interlocutory (pending full trial some time later) application, and to be compatible with EU Law, the Court held that the two notice parties (the winner of each lot) were treated equally and evaluated in the same manner.  That was the heart of the complaint by Fox.

Weatherup J noted that, at the request of the contracting authority, the respective Managing Directors of the winning bidder on each lot had signed a declaration confirming that the company would deliver all orders for the tendered rates and accepting that should it fail to deliver accordingly this would be treated as a matter of poor performance and that the company would not be eligible to tender for government contracts in the immediate future.

The Court further noted the public interest in the awarding of public contracts and the capacity of the Courts to assess monetary damages even in apparently difficult circumstances should that be required.

The Court was not satisfied as to a contention on the part of Fox that it would effectively be precluded from future work in the foreseeable future and that its staff would be disadvantaged by failure to win these contracts.

The Court saw no legal basis for extending the contract of an incumbent once it had already expired.  Moreover, negotiating directly with a previous incumbent was “likely … to attract objection from others who would have wished to be treated as the interim contractor pending resolution of this dispute”. Furthermore, the cost and impracticality of numerous individual procurements weighed against such an option.

Accordingly, the Court held that the balance of convenience lay in favour of lifting the automatic suspension.

Comment

This case may also demonstrate that, in certain instances at least, there may be wisdom in a plaintiff seeking to adduce evidence of the harm which it would suffer if the automatic suspension were lifted.