Merseyside Waste Disposal Authority has been trying to let a contract for the generation of energy from waste since 2007.  Shortly after announcing its decision to award the contract to a SITA consortium, the remaining unsuccessful bidder, Covanta, has convinced a court to stop it while it resolves what is set to be very long winded and expensive legal proceedings. The contract could now easily be delayed for a further two years or more.

The judge prevented Merseyside entering the contract mainly by reference to a balance between the impact a further delay would have on Merseyside and the environment and the impact the, allegedly unfair, loss of the contract would have on Covanta.

The judge considered on one side the difficulty in calculating what loss Covanta might have suffered if the contract is unfairly entered, the fact that damages would have to be paid by taxpayers (Merseyside did not have the money to pay such a claim) and consequently the overall contract price might be doubled, the delay in the procurement process to date and the need for authorities to be required to comply with procurement law. Against that he noted that Merseyside’s losses from delay could be compensated by damages but that a further delay might harm the environment. On this basis he decided in favour of the bidder.

The case is important, and comparatively rare, because an injunction was granted by the court (although this case was brought under former procurement rules the principles of whether an injunction would be allowed remain substantially the same). This has only happened previously in very few cases (and no major GB case) as the courts have shown a willingness to ensure that public authorities can actually proceed with their procurement and the wheels of government are not gummed up by ‘bad losers’.

The issues justifying the injunction in this case do not appear to have been particularly abnormal, other than, perhaps, the limited funds of the authority. So, is this an indication that the Courts are going to be more willing to support dissatisfied bidders in future? There is certainly a higher risk than there has been for some time. Alternatively it might simply reflect the trial judge’s initial impression that the authority had actually made major mistakes in this particular procurement and should not get away with it.