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26 June 2019 | Comment | Article by Emily Powell

Are contracting authorities still at risk of challenge if they abandon a procurement process?

The recent decision in Amey Highways Ltd v West Sussex County Council [2019] EWHC 1291 (TCC) should be considered by contracting authorities when deciding whether to proceed with a risky procurement route with the intention of abandoning or altering the course of a procurement if a challenge is received.

This case found that where a contracting authority’s (CA) breach of duty under the Public Contracts Regulations 2015 (PCR 2015) has created a loss or damage for a tenderer before the abandonment of procurement, the abandonment itself shall not extinguish the ability of a tenderer to pursue a claim.

A breach of the PCR 2015

Amey Highways Ltd (Amey) issued proceedings alleging that West Sussex County Council (West Sussex CC) had breached the PCR 2015 when evaluating tenders for its procurement. Had it not been for these breaches, Amey asserted that it would have been awarded the contract. Amey claimed loss of profits over the projected life of the contract, and/or the wasted costs of preparing its tender.

West Sussex CC applied for the claim to be struck out on the basis that the claims were time barred and also applied for summary judgement. When these applications were rejected by the court, West Sussex CC evaluated the anticipated level of public expenditure which would arise if the litigation was pursued, the time that this would take and the uncertainty of the outcome. In light of these considerations, it decided to abandon the procurement and start a new project. The abandonment itself was considered lawful by the court as it was a rational attempt to preserve public funds. West Sussex CC contended that Amey’s claim could not be pursued after the abandonment of the procurement procedure, arguing that tenderers could not pursue proceedings relating to a procurement process or to the award of a public contract which no longer existed.

The court found that Amey’s claim should not be affected by the abandonment of the procurement. A cause of action for that claim had been established and was pursuable before the abandonment by West Sussex CC. The court found that lawfully withdrawing a procurement might prevent claims from coming into existence thereafter. It would not, however, deprive an economic operator of an accrued cause of action where, before the procurement was abandoned, a breach of duty could be proved to have caused loss or damage.

Public bodies should also note from this case that the court found that Amey could still demonstrate financial loss even though the procurement had been abandoned. The court considered that West Sussex CC would not have abandoned the procurement procedure had it not received challenge. If Amey was able to evidence that but for the breaches of the PCR 2015 it would have been awarded the contract, the essential elements of an accrued cause of action would have been in place and Amey lost what would have been a profitable contract.

The loss of a profitable contract was capable of constituting loss and damage for the purposes of a cause of action for a breach of the PCR 2015. Amey also pleaded that it was deprived of a significant chance of winning the contract, which was capable of constituting loss and damage for the purposes of completing the cause. Amey pleaded the loss was to be suffered when the contract would have been concluded, had Amey’s chance come to realisation.

Contracting authorities should consider the impact of this decision when deciding how to proceed when considering adopting a risky approach to a procurement exercise and subsequently dealing with procurement challenges. Abandoning a procurement process will not always eliminate any claims as a tenderer may still have the right to claim damages after the procurement has been abandoned.

For more information or to get advice on this topic, please get in touch with the Procurement team.

Author bio

Emily is a partner in the Corporate and Commercial team. Emily specialises in commercial law, public procurement and subsidy control. Emily has advised housing associations on their procurement processes and can provide a complete legal service for all procurement and project requirements. Emily also hosts a forum for ‘heads of’ procurement working within the social housing sector.

Disclaimer: The information on the Hugh James website is for general information only and reflects the position at the date of publication. It does not constitute legal advice and should not be treated as such. If you would like to ensure the commentary reflects current legislation, case law or best practice, please contact the blog author.

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