1 February 2010 | Catherine Wolfenden
Developments in public procurement law are shifting the balance of power towards bidders and away from contracting authorities.
The recently implemented Remedies Directive and a recent decision from the European Court of Justice in Uniplex (UK) v NHS Business Services Authority (click here to read a report on a preliminary decision in the case) are the two reasons for this change in the landscape of public procurement challenges.
There is, at last, certainty for tenderers on when challenges can be brought. The European Court of Justice decision has clarified that a tenderer has three months from the date it knew, or ought to have known, about an infringement of the procurement rules to issue a claim.
The changes to the law mean a challenge might potentially be started months after a decision has been made. Public bodies and utilities would be wise to seek fresh legal advice on how to manage, practically and contractually, the risk of challenge to a procurement process.
Before the Court of Justice's decision in Uniplex, any challenge to a procurement had to be commenced "promptly" and in any event within three months of the date of the alleged infringement of the procurement rules. This limitation period began to run even if a tenderer did not know that the infringement of the rules had taken place.
If a tenderer found out about a contracting authority's infringement more than three months after it had occurred (which is quite likely in any significant procurement exercise), any claim was by that stage out of time. In order for a claim to be allowed, the tenderer had to persuade the court to exercise its discretion to extend the limitation period. Understandably, many challenges were not made because potential claimants did not want to take the risk of failing to persuade a court to exercise its discretion and so being landed with a huge bill for the other side's costs.
The European court has held that the primary requirement in UK law that a claim be brought "promptly" does not comply with the requirements of clarity, precision and predictability.
With regards to the date from which time should begin to run, the court has held the law must be interpreted to mean that the three month period only starts to run from the date the claimant knew, or ought to have known, of the infringement of the public procurement rules.
Contracting authorities are already under a duty to disclose all relevant information which will enable a tenderer to assert its rights. This requirement will need to be carefully adhered to moving forward. Failing to provide all information at the relevant stage in the procurement process (usually in the standstill letter at contract award) could lead to challenges being brought later when a tenderer does have this "knowledge".
This latest judgement, together with the implementation of the Remedies Directive, is a double whammy for contracting authorities. There is now the potential for concluded contracts to be declared ineffective and challenges could potentially be brought long after a procurement has been concluded.
On the other hand, aggrieved tenderers now know that they have three months from the date they know, or ought to know, about an infringement of the rules to bring a claim. They also have a wider armoury of remedies, which are easier to deploy, at their disposal.
* Catherine Wolfenden is an associate at Osborne Clarke
