The High Court in Azam & Co v Legal Services Commission [2010] EWHC 960 (Ch) dismissed a claim by a firm of solicitors for relief under the Public Contracts Regulations 2006 ("the Regulations"). The decision provides insight into the extent to which those wishing to engage in a public tender process may have a legitimate expectation to be kept informed by the public authority of details of that process.

Key points

  • The way in which details of past tender processes have been communicated to potential bidders is capable, in appropriate circumstances, of creating a legitimate expectation as to the communication of details of future tender processes if that expectation is objectively reasonable.
  • Such a legitimate expectation can be discharged by suitable publicity and, if the circumstances require, direct communication, of the existence of and source of further information regarding a tender process.
  • The legal principles that the claimants in Azam sought to invoke (legitimate expectation, but also proportionality, equal treatment, non-discrimination and transparency) can only assist those that act with reasonable care and diligence about their own business affairs. A failure to take objectively reasonable steps to keep informed of procedural aspects of a tender process may serve to defeat a legal action brought on grounds such as breach of legitimate expectations.  

Facts

The claimant solicitors ("Azam") had held since February 2004 a contract to receive publicly-funded immigration law work from the defendant Legal Services Commission (the "LSC").

In July 2009 the LSC announced its intention to extend existing contracts for immigration work, including that with Azam, until October 2010, although it did not give express notice to contractors of this until 23 December 2009. In November 2009 the LSC formally published a press release on its website announcing its Invitation to Tender for Immigration and Asylum contracts and identifying the closing date for bids as 28 January 2010. The press release announced that the process would be carried out online and provided a link to the relevant part of its website containing the tender documentation. This information was also contained in an advertisement in the Law Society's Gazette, and was sent out by email to subscribers to its free electronic "LSC Update" service. The letter of 23 December 2009, in addition to extending the existing contract until October 2010, informed existing contractors that the Invitation to Tender had been published, that tenders were to be submitted by the applicable (though unspecified) deadline, and that full information on the tender process and how to tender could be found at a specified website address.

Despite this publicity Azam did not check when the deadline was. It was not until 4 February 2010 (shortly after the expiry of the deadline), when Mr Azam learned during casual conversation that it had expired. He sought to apply out of time on the same day but was informed by the LSC that it was too late, and that no extension could be granted.

The Claim

Azam applied to the Court for relief under Regulation 47 of the Regulations, which impose on the LSC obligations requiring equal treatment, non−discrimination and transparency during any public procurement process. These obligations were accepted by the LSC, which also did not dispute Azam's contention that as a public authority performing a function regulated by EC law, it must act in accordance with the principles of proportionality and good administration, and must not frustrate legitimate expectations.

Azam argued that the LSC's past conduct, including previous direct notification of deadlines in the context of tender processes in publicly funded immigration work (both civil and criminal), created a legitimate expectation that all existing suppliers of publicly funded immigration services would be notified by a direct communication from the LSC of the relevant tender deadline during the 2009/10 tender process.

Legitimate expectation

Mr Justice Briggs explained a number of key principles relating to legitimate expectation. He noted that the EU law principle of legitimate expectation had a significantly different origin from the domestic principle as established by English administrative law, but concluded that its practical application was not materially different for the purposes of this case. A legitimate expectation could be founded either upon written or oral statements, or upon a consistent practice on the part of the public body concerned. Where an alleged legitimate expectation is founded on a course of conduct, there must be sufficient repetition of the relevant conduct.

In either case, the statement or practice will give rise to an obligation only if it constitutes a sufficiently precise or specific assurance to the person in question, such that the alleged expectation, viewed objectively, is reasonable. Furthermore an expectation that a public authority will act in a particular way may be brought to an end by the giving of an appropriate warning to the persons concerned that it intends to change its position. Finally, other than in exceptional circumstances a legitimate expectation may generally be invoked only by a person who has both relied upon the expectation engendered by the relevant statement or conduct of the public authority and suffered a consequential detriment.

Azam provided evidence of the LSC's conduct allegedly giving rise to the legitimate expectation, including direct personal written warnings of significant deadlines in relation to existing contracts and certain communications in relation to the one other tender process conducted for civil immigration work in 2003. However, the judge accepted the LSC's defence that nothing in its previous conduct gave rise to any sufficiently precise or specific expectation so as to make the LSC's conduct of the 2009/10 tender process in breach of its obligation not to frustrate legitimate expectations.

One significant aspect of the judge's reasoning was that he considered it inappropriate to have regard to the way in which the LSC notified its existing suppliers of deadlines generally, for example in the ordinary conduct of its ongoing contractual relations with them. Also significant was the fact that the LSC operates different tender processes for different types of contracts, and that a legitimate expectation as to how a tender process would be conducted in one area could not be derived from the manner in which the LSC conducted its tender process in respect of a different type of contract. The judge also held, on the facts, that there was insufficient repetition of the relevant conduct (in this case a tender process for civil immigration work) in order for a legitimate expectation to arise.

The judge also held that even if a legitimate expectation to be informed of the deadline had arisen, it would have been discharged by the direct communication in December 2009 from the LSC to the existing contractors informing them that the Invitation to Tender had been published, that tenders were to be submitted by the applicable (though unspecified) deadline, and that full information on the tender process and how to tender could be found at a specified web address.

Conclusion

The key practical point to be taken from this case from the point of view of public authorities engaged in procurement processes by tender, is that the way in which the rules governing past tender processes have been communicated to relevant potential bidders is capable of creating legitimate expectations as to the communication of details of future tender processes if that expectation is objectively reasonable. However, that legitimate expectation can be discharged by suitable publicity and, if the circumstances require, direct communication, of the existence of and source of further information regarding a tender process.

The message for entities that tender for contracts from public authorities is that they must take a degree of responsibility for keeping abreast of industry news and public announcements by relevant public authorities. The legal principles that Azam sought to invoke (legitimate expectations, but also proportionality, equal treatment, non-discrimination and transparency) can only assist those that act with reasonable care and diligence about their own business affairs. A failure to take objectively reasonable steps to keep informed of procedural aspects of the tender process (such as a deadline) can in appropriate circumstances serve to defeat a legal action brought on grounds such as breach of legitimate expectations.