Before the end of the standstill period, an unsuccessful bidder puts us on notice that it has issued court proceedings. Can we award the contract anyway?
No. For procurements commenced on or after 20 December 2009, if a claim form has been issued in relation to legal proceedings on the decision to award a contract, the contracting authority is not permitted to enter into the contract. For procurements commenced before 20 December 2009, contracting authorities can enter into the contract until an injunction is obtained by the relevant supplier preventing the contracting authority from concluding the contract. However, in general it would not be advisable to enter into the contract if any relevant formal court proceedings have been issued, and urgent legal advice should be sought.
What are the time limits for an unsuccessful bidder to bring a claim?
Following Uniplex (UK) Limited v NHS Business Services Authority (Case C-406/08), the Public Contracts (Miscellaneous Amendments) Regulations 2011 (in force from 1 October 2011) have introduced a new time limit for damages claims, as follows:
- a limit of 30 days from the day on which the economic operator first knew or ought to have known that grounds for starting the proceedings had arisen (called “the date of knowledge” ); and
- discretion for the Court to extend this where there is a good reason for doing so, but only up to a maximum of 3 months from the date of knowledge.
These new limits will apply to all cases where the date of knowledge occurs on or after 1st October 2011. For cases where it occurred earlier, the limit will continue to be the old limit as interpreted in the way required by the ECJ, i.e. 3 months from the date of knowledge, with unlimited discretion for the Court to extend. The last day of the 30 day period must be a working day. More information is available in the Cabinet Office’s policy note on the amendment regulations.
As stated above, this regime applies only to damages claims. Any claim for a declaration of ineffectiveness (as opposed to damages) would need to be brought within the earlier of 30 days from either the issue of an award letter to the unsuccessful bidder or publication of an award notice, or 6 months from the date of contract award.
Is it right that, once a contract has been awarded, a bidder's only remedy is damages?
This was the position for procurements commenced before 20 December 2009. For procurements commenced on or after that date, there is a new remedy of ineffectiveness, which can be awarded after the contract has been entered into. There are additional time limits relating to bringing an ineffectiveness claim.
We made a mistake in the procurement process, but the outcome was the right one. Does this matter?
Potentially, yes. Cases have suggested that in certain circumstances a bidder may have a claim even where they are unable to establish that, other than for a breach of the Regulations, they would have been likely to be successful.
What remedies are available to suppliers if we are found to have breached the Regulations?
If a court finds that the Regulations have been breached, it may (in certain circumstances for procurements commenced on or after 20 December 2009) render the contract ineffective, shorten the contract, and fine the contracting authority. In addition, a bidder may claim damages for its losses resulting from the breach.
When might a contract be declared ineffective?
Ineffectiveness is only available for procurements commenced on or after 20 December 2009. In such procurements, there are three main circumstances when this remedy may be available to suppliers. Firstly, where the contracting authority has directly awarded a contract without placing an OJEU advertisement in circumstances where an OJEU advertisement is required by the legislation. Secondly, where there has been a breach of the rules relating to the standstill period and that breach has denied the supplier an opportunity to challenge the contract award. Thirdly, where a call-off contract under a framework agreement for goods or services with a value over the EC procurement threshold has been entered into without following the relevant call-off procedures under that framework.
When could we be fined?
A court is required to impose a fine (described in the legislation as a "civil financial penalty") in any circumstances where the court declares a contract ineffective.
What will the level of fine be?
There is no prescribed "tariff" for fines under the Public Contracts (Amendment) Regulations 2009. However, the Regulations do state that fines must be "effective, proportionate and dissuasive".