Further evolution of the efficacy of judicial review as a remedy in below threshold procurements is seen in the Kenson case this month. The case sought to make a distinction between obligations of contracting authorities as they are mandated by law, and those parts of the procurement procedure which are no more than their exercise of commercial judgment. In the context of determining the balance of convenience, the CSC case showed that the combination of irrecoverable damages for loss of reputation and undue delay in starting interim proceedings can be a toxic cocktail. And in our third case - Transtec - we get a feel for the level of proof required to support a decision to exclude a bidder on the basis of misrepresentation. We also see the rest of the UK catch up with Scotland on the obligation for contracting authorities to accept electronic invoices, and look at the potential for change in the healthcare procurement arena.
"Prejudicial delay" in starting interim proceedings: In this case CSC issued proceedings alleging a failure by Health and Social Care Northern Ireland to consider a project example provided by CSC during the bidder selection phase of the procurement. Both sides agreed that there was a serious issue to be tried, and therefore the merits of the claim were not considered during the interim proceedings. Instead the judge concentrated on the issues to be thrown into the balance in an American Cyanamid appraisal of the need for interim relief. In determining whether damages would be an adequate remedy instead of an injunction, the court followed previous case law, in particular that if damages are difficult to assess, or involve the speculative ascertainment of the value of a loss of chance, that may not be sufficient to prevent an interim injunction. CSC argued that there was a risk of irrecoverable damages, due to unquantifiable damages for loss of reputation as it (one of the world's largest business transformation companies) had not even passed the first round of bidder shortlisting. The court agreed that calculation would be difficult - the procurement had moved on apace and was now close to preferred bidder stage - "A court will have to assess the chance of the plaintiff making the first sift, then the second sift and finally overcoming the remaining bidder in the final head-to-head. This is bound to involve a speculative assessment of a chance heaped upon a chance and another chance. … these circumstances would inevitably involve too much speculation and too little science. Such an award is likely to be unfair to one or other of the parties." The court also considered that the Department of Health could not be adequately compensated by damages, as it was impossible to quantify the loss which it would suffer if an injunction caused delay to its roll-out of personal electronic health and care records for patients in Northern Ireland. But even the grant of an injunction was not tenable. CSC waited three months before starting its injunction proceedings, by which time the Department was well into its very complex procurement process, with the consequence that if the injunction was granted the procurement would have to be re-run. Following Fisher v Brooker  1 WLR 1764, the court considered that it would be oppressive to grant an injunction because of prejudicial delay. CSC was therefore left to its remedy in damages - which it had already been determined would be unlikely to be recoverable.
Electronic invoicing and miscellaneous matters: The Public Procurement (Electronic Invoices etc) Regulations, 2019 inserts new regulations 113A and 113B into Part 4 of the Public Contracts Regulations 2015 (PCR'15), requiring contracting authorities to receive and process supplier invoices that comply with the technical e-invoicing standard. Part 4 of PCR'15 extends throughout the UK but its provisions do not generally apply in respect of contracting authorities whose functions are wholly or mainly devolved to Wales, Northern Ireland or Scotland. However, the ‘Extent and application’ provisions (PCR'15 regulation 1(7) to (9)) have been amended to make clear that the new provisions are an exception, and that they will apply to a contracting authority where its functions are wholly or mainly Northern Ireland or Welsh devolved functions. E-invoicing legislation is already in force in Scotland. Equivalent provisions will be inserted into the Utilities, Concessions and Defence procurement rules. PPN 03/19 provides model wording requiring contracting authorities to accept e-invoices. Where an express term is not inserted into contracts, a term to that effect will be implied. The new Regulations are now in force for central government contracting authorities, but for sub-central contracting authorities and utilities, they will not take effect until 18th April 2020.
"Risks which threaten the financial interests of the Union": The Financial Regulation provides for bidders to be excluded from a procurement process where it has been "established by final judgement or a final administrative decision that the economic operator has committed a serious professional misconduct …" Transtec argued that in letting a framework agreement the EU Commission should have excluded the successful bidder, because there were concerns over its involvement in public contracts in the UK. These amounted to alleged falsified submissions and irregularly obtained documentation, which allegations had come into the public domain as a result of postings on the UK Department for International Development (DFID) blog, and two ministerial replies to questions from UK Members of Parliament which indicated that DFID and the Foreign and Commonwealth Office had not concluded new contracts with the bidder in question. In spite of those circumstances, in breach of misrepresentation provisions in the framework invitation to tender, the Commission had accepted a "declaration of honor" form completed by the successful bidder that indicated there were no grounds on which it should be excluded from the process. The parties in this case acknowledged that there was no "final judgement or a final administrative decision" on which to rely. However, where no final judgement exists, the Financial Regulation has a further requirement - that a contracting authority should refer the concern to a "rapid detection and exclusion system". Before doing so it must assess whether there is a risk which threatens the EU's financial interests, and the Financial Regulation requires that assessment to look "in particular" at substantive issues raised in audit investigations, disciplinary measures falling short of final judgement, EIB/European Investment Fund decisions or infringement of competition rules. In this case, the Court held that the information in the public domain was no more than allegations and did not provide sufficient detail. It could not therefore be argued that the successful bidder had mislead the Commission when submitting a clean "declaration of honor". By way of analogy, this case provides examples of information which might be taken into account when determining whether a bidder is guilty of "serious misrepresentation" and likely to be excluded pursuant to regulation 57(8)(h) of PCR'15.
Evaluating bids : exercise of commercial judgment or a public law duty?: In this judicial review (JR) case the court was asked to determine whether an injunction should be granted to suspend execution of a below threshold road improvement contract to improve access to Tottenham Hotspur's new stadium. In determining the balance of convenience in a JR context, the court held that (because damages are generally unavailable in a JR claim on a free-standing basis) adequacy of damages should not be thrown into the balance in the American Cyanamid balance of convenience test, but whether or not the JR claim was justiciable, should. The court set out four factors to consider when determining whether the necessary public element is present in a challenge to the efficacy of the award of a public contract. (1) the status of the public contracting party, (2) contract subject matter and funding, (3) whether the tender process was specifically mandated and (4) the nature of the challenge. Following Gamesa Energy v National Assembly for Wales  EWHC 2167 - that a claim must contain a sufficient element of public law to render it amenable to JR - the judge held that if the claim is only one of irrationality in applying a scoring methodology developed by a public body to take a commercial decision (and not a process mandated by statute) - that may well not be sufficient to bring a JR claim. That, combined with other public interest concerns (the urgency of carrying out the road improvement works (before the start of the next football season), and the public safety as well as environmental drainage benefits the works would bring), showed that the balance of convenience plainly favoured Haringey, and that it should be allowed to enter into the contract with its preferred bidder.
The NHS in England - an end to procurement …?: Earlier this year, the NHS published its Long Term Plan (the Plan), which sets out a ten-year plan to reform the NHS in England. Amongst other things, the Plan proposes to repeal the NHS (Procurement, Patient Choice and Competition) (No.2) Regulations 2013 and allow NHS Commissioners "to decide the circumstances in which they should use procurement, subject to a ‘best value’ test to secure the best outcomes for patients and the taxpayer". The Plan also proposes to exempt the NHS in England from wholesale inclusion in PCR'15 , and instead set out statutory guidance for the NHS to follow. What do these proposals mean for those involved in procurement in the English health sector? The Plan is couched in very general terms and it is likely that we will need to wait for some time before the NHS publishes more detail on its proposals. However, changes to the procurement regime in the NHS in England might lead in particular to the obligation on commissioners and providers to conduct full-scale procurement exercises - for both the provision of care-related services and support services to deliver such care - falling away. However, contracting authorities in the NHS would still be obliged to conduct procurements according to a ‘best value’ test to secure the best outcomes for patients and the taxpayer. This will inevitably require some degree of market engagement and testing and, in any event, there is no indication in the Plan that the fundamental structure of the NHS will change meaning that the commissioner/ provider split would remain intact and with this the distinction between different contracting authorities which would continue to be subject to PCR'15. Changes might also reflect the UK's procurement regime once/if the UK leaves the EU - which currently look set to mirror existing EU law procurement obligations.