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EUROPEAN PROCUREMENT + GOVERNMENT CONTRACTS DIGEST

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VOLUME I (2008 & 2009)

MoFo European Procurement & Government Contracts Digest

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European Procurement and Government Contracts Digest

Volume 1

(2008-2009)

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Index European Procurement & Government Contracts Digest

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Index – Volume 1

No. Keyword Case / Legislation Report Date Pages

1. Evaluation Criteria Letting International

Update

December 2008

September 2011

1-4

2. Amending an Existing Contract pressetext January 2009 5-9

3. Framework Agreements: Remedies McLaughlin and Harvey Limited

Henry Bros (Magherafelt)

Update

January 2009

September 2011

10-13

4. Framework Agreements: Evaluation and Claim Period

Henry Bros (Magherafelt)

Update

February 2009

September 2011

14-17

5. Freedom of Information: Disclosure under the UK Freedom of Information Act

Dep’t of Health

Update

Update

February 2009

July 2009

September 2010

18-22

23-26

27-28

6. UK Prepares for Implementation of the New Remedies Directive

Directive 2007/66/EC of 11 December 2007

May 2009 29-33

7. Evaluation and Discretion J B Leadbitter v Devon June 2009 34-36

8. Limitation Periods and Delays Amaryllis v HM Treasury June 2009 37-40

9. The “Teckal” Principle & In-house Arrangements

Brent v RMP

Case C-480/06 Commission v Federal Republic of Germany

June 2009

(plus Supreme Court update March 2011)

41-47

10. Disclosure in Proceedings Under the UK Public Procurement Rules

Amaryllis v. HM Treasury (No. 2) September 2009 48-53

11. New Threshold Values for 2010 & 2011 New Thresholds Directive December 2009 54-56

1. Evaluation Criteria European Procurement & Government Contracts Digest

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Evaluation Criteria and Weighting: Disclosure and transparency are mandatory, not discretionary

In the past, it has been common for authorities to disclose only top-level evaluation criteria and weightings during the early stages of regulated public sector procurements. That approach may have to change in the light of a 2008 case. A Court has upheld a bidder’s procurement challenge on the grounds that a contracting authority breached the procurement regulations because it did not disclose in the tender documents all of the contract award criteria and their respective weightings. The effect of this case will be to require authorities to decide on evaluation criteria (including, crucially, any sub-criteria) earlier in their procurement exercises, to disclose those criteria and sub-criteria, and to stick to them. Many authorities will regard this as a reduction in flexibility.

What is the case?

The case is Letting International Limited v London Borough of Newham [2008] EWHC 1583, a decision of the High Court in a claim brought by Letting International (“LI”), an aggrieved unsuccessful bidder in a series of procurements by London Borough of Newham (“LBN”). LI claimed that LBN had acted in breach of the Public Contracts Regulations 2006 (“Regulations”), and had failed to provide transparency in the operation of its procurement. The Court agreed with LI and upheld an injunction preventing the authority awarding any work under the improperly procured contracts. This case takes into account the latest approach of the European Court of Justice to the issue of transparency, as seen in cases such as ATI ETC Case C-331/04 and Lianakis Case C-532/06.

Why is this case important?

Prior to this case, it was common for contracting authorities to provide relatively little prior information to bidders about the applicable evaluation criteria and weightings, and to seek to develop the criteria and weightings during the subsequent stages of the public procurement process. This is particularly true in complex and large scale projects, especially under the competitive dialogue procedure.

This case makes it clear that, if a contracting authority fails to disclose any fact relating to the evaluation criteria which, had it been known at the time, could have affected the preparation of bidders’ tenders, the authority would be in breach of the public procurement regulations and would be creating grounds for a procurement challenge.

As a matter of overriding principle, a contracting authority must disclose all the elements that it takes into account in identifying the most economically advantageous tender. For this reason, it must disclose the evaluation criteria and weightings that it intends to use in their entirety to the bidders.

This will require a change in approach for many contracting authorities which have, in the past, only disclosed a handful of top-level evaluation criteria (e.g., quality, price, transition, security issues) and their high-level weightings (or even, in some cases, only an order of priority of the various criteria). In the future, authorities will be required to disclose much more information about sub-criteria, and to do so at an early stage.

The issue for an authority is where to stop: e.g., does the requirement extend right down to the questions used by individual evaluators to populate the scoring table? The main question unanswered by the Court judgement is: when does a factor or scoring question cease to be an “award criteria” (which would need to disclosed) and become merely a method of scoring (which would not be required to be disclosed)?


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Bidders will see this case as ensuring more transparency in procurement processes - and additional grounds for challenge if they lose. Authorities are likely to view the decision as diminishing their flexibility and requiring them to accelerate the process of setting (and freezing) all aspects of the evaluation model.

The case also shows that an aggrieved bidder does not have to suffer actual loss in order to bring claims against a contracting authority. All that an aggrieved bidder has to show is the loss of a significant chance of obtaining the contract. In this case, the procurement concerned the award of a series of frameworks, with no guarantee of work under the awarded framework. But the Court held that the fact that the bidder was merely tendering for a framework contract does not preclude an aggrieved bidder from bringing a claim.

What happened in this case?

In March 2007, the authority, LBN, published an OJEU notice for framework contracts for the procurement, management and maintenance of leased properties. As is commonplace, the framework contracts were to be awarded to the “most economically advantageous” tender.

LI, a property management company, was one of the bidders that submitted a tender in response to the OJEU notice. The Invitation to Tender provided to bidders stated, amongst other things, that the criteria to be used in evaluating tenders comprised three elements:

• “Compliance with Specification”, to be evaluated by assessing the quality of the solution proposed by the bidder to address five aspects of the specification, which in total had a 50% score allocation;

• “Pricing”, which had a 40% score allocation; and

• “Suitability of Premises, Staffing and Working Conditions”, which had a 10% score allocation.

No further details regarding the evaluation criteria were provided to the bidders, and LI duly submitted its tender to LBN. In November 2007, the authority informed LI that its tender was not successful.

Dissatisfied, LI sought explanation and information from LBN, and it transpired that:

• the weightings attached to each of the five specific aspects of the “Compliance with Specification” criterion were not equal and varied from 5% to 17% of the total score allocation;

• the overall criterion of “Compliance with Specification” in fact had 28 sub-criteria, each carrying its own proportion of the score; and

• in assessing each of such sub-criteria, LBN awarded 3 out of a maximum of 5 points to tenders which fully complied with its specification, and gave the maximum 5 points only to tenders which exceeded its specification.

LI subsequently brought a court action against LBN in November 2007 on the basis that, among other things, LBN failed to give sufficient information to bidders about the basis on which it would evaluate the tenders.


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The Court pointed out that under both the Regulations and EU law, potential bidders had to be made aware of all the features to be taken into account by the contracting authority in identifying the most economically advantageous tender, as well as the relative importance of such features.

The Court held that the five specific aspects of “Compliance with Specification” and the 28 sub-criteria, as well as the marking scheme were matters which ought to have been disclosed to the bidders in the ITT, not just because of the requirement for transparency but also because to hold otherwise would have the alarming consequence of allowing a contracting authority to adjust the evaluation criteria and weighting however it liked, thus leaving the bidders without any remedy.

Such a consequence was clearly not acceptable because the division of award criteria into sub-criteria, and the allocation of weightings to the sub-criteria, resulted in a variation of the award criteria disclosed in the OJEU notice and procurement documents. In effect, the authority had introduced new features which, had they been disclosed, could have affected the preparation of bidders’ tenders.

Having found that LBN failed to comply with the requirement for transparency, the Court then went on to consider whether or not the bidder had to show that it had suffered actual loss in order to make a claim. The Court had little difficulty in concluding that all that an aggrieved bidder had to show was that it suffered “the loss of a significant chance of obtaining the contract” as a result of the contracting authority’s failure to comply with the requirements of the Regulations.

Morrison & Foerster 3 December 2008

2011 Update: The Court of Appeal in Northern Ireland ruled on similar issues in the appeal on the McLaughlin and Harvey Limited case (see entry no. 3 below).

In that case, the issue was whether the authority had breached the principle of transparency and the PCR by failing to disclose 39 award sub-criteria and their weightings.

In the ATI case, the ECJ held that the application of weightings to sub-criteria is acceptable as long as the weightings:

• do not alter the ultimate criteria for the award of the contract;

• do not contain elements which could affect bidders’ tenders, if they were known at the time;

• are not applied in a discriminatory way.

Applying this case law in McLaughlin and Harvey Limited, the Court of Appeal posed the following questions:

• Were the 39 topics in the evaluation document sub-criteria or sub-headings to which the ATI tests apply? The Court of Appeal agreed that the 39 topics were sub-criteria and that they related to matters which should have been brought to the attention of bidders.

• If so, were they sufficiently brought to the attention of the tenderers so as to satisfy the requirements of transparency? The Court of Appeal concluded that there was sufficient disclosure of the sub-criteria to satisfy the requirements of transparency.

• If so, does the application of those sub-criteria contravene any of the three tests established by the ECJ in ATI? There was no evidence that the weightings attached to the sub-criteria altered the award criteria (indeed, they flowed directly from the quality criteria). Also, there was no


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evidence that the weighting was likely to give rise to discrimination against any of the bidders.

The Court of Appeal supported the High Court’s conclusion that the information disclosed by the authority was not adequate in the circumstances and that the failure to identify the sub-headings (and the weightings attached to such sub-criteria) could have affected the preparation of tenders.

2. Amending an Existing Contract European Procurement & Government Contracts Digest

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Contract Variations and Amendments: What scope is there to amend an existing contract before a new contract (and competition) becomes necessary?

Most contracting authorities are well aware that there is limited scope to amend a contract previously awarded under the EU public procurement regime. It is generally accepted that whatever scope does exist depends upon the degree of flexibility built into the original Official Journal (OJEU) notice and other initiating documents. By structuring their procurements carefully, many contracting authorities reserve rights to extend the duration of an awarded contract or extend its scope to cover other advertised services.

It is also well known that certain types of material change to the scope of an existing contract, such as the addition of new services or extensions to the awarded term, which were not previously described in the procurement scope, will normally have to be put to a new competitive tendering procedure.

However, it is not clear how other less immediately obvious changes (such as changes to the pricing or contract terms and conditions) to an existing contract should be treated. In a recent landmark case, the European Court of Justice for the first time has provided guidance on this key issue. Contracting authorities and suppliers alike ought to consider this as a welcome clarification. But the possible downside of the decision is that it limits authorities’ flexibility and makes contract re-negotiation more problematic, because some contract changes previously felt to be permissible may now be ruled off-limits.

What is the case?

The case of pressetext Nachrichtenagentur Gmbh v Republik Österreich (Bund) and others (Case C-454/06), a decision of the European Court of Justice (“ECJ”), arose from a claim brought by pressetext Nachrichtenagentur (“PN”), a news agency that unsuccessfully sought to offer its services to the Austrian government. PN alleged that the various amendments made to the contract between the Austrian government and its incumbent provider of news agency service provider, the Austria Presse Agentur (“APA”), constituted an unlawful award of contract contrary to the EU procurement rules.


The decision of the ECJ in this case provides helpful clarification of the extent to which changes can be made to an existing public sector contract without initiating a new competitive tendering process.

Neither the EU public procurement regulations nor the UK implementing regulations set out express rules on when a proposed amendment to an existing public contract, in fact, constitutes an award of a new contract to which the open advertising and tender rules ought to apply. But, as a matter of general principle, the ECJ has now stated clearly that where changes are proposed to an existing contract, and those proposed changes result in a contract that is materially different in character from the original contract such as to demonstrate the intention of the parties to re-negotiate the essential terms of that contract, the contracting authority should initiate a new tender process in compliance with the EU procurement rules.

The ECJ has also provided guidance on what constitutes a material amendment and when a proposed contract “variation” ought, in fact, to be dealt with by way of a new contract procurement exercise. The key part of the ECJ ruling is that a change to an existing contract would constitute a “material difference” where:


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• the change to be introduced into the contract conditions, had it been part of the initial tender, “would have allowed for the admission of tenderers other than those initially admitted or would have allowed for the acceptance of a tender other than the one initially accepted”; or

• the change would result in the scope of the original contract being extended “considerably to encompass services not initially covered”; or

• the change would result in a shift in “the economic balance of the contract in favour of the contractor in a manner which was not provided for in the terms of the initial contract”.

To some extent, one might say that these three grounds are sensible, and accord with principles of fairness and transparency. After all, if a change is sufficiently minor that it would not have made a difference to the original award decision, or would not give significant advantage to the incumbent supplier, it would be disproportionate to treat that change as giving rise to a requirement to initiate a new competitive tendering process.

The first two elements of this test are largely unremarkable because most sensible contracting authorities have used these sorts of tests for many years to determine the legitimate scope for extension of existing contracts.

But the third test – relating to the shift in economic balance – potentially covers new ground and raises the possibility that contract changes previously regarded as being entirely within the ordinary course of dealings in the contract management phase might now be prohibited. Authorities must now be on their guard to ensure that significant contract changes are not made to existing contracts without first checking whether the proposed change is so material that it is impermissible, and in fact would require a new procurement process.


In 1994, prior to the accession of Austria to the EU, the Austrian government entered into an agreement with APA, a cooperative that historically provided various news agency services to the Austrian government and to which almost all of Austria’s media outlets belonged.

The agreement allowed the federal authorities of Austria to issue press releases via APA, access and use current information provided by APA, and access APA’s database of historical information and past press releases. Among other things, the agreement had the following features:

• the agreement was concluded for an indefinite period, with a waiver by both parties of their right to terminate the agreement until 31 December 1999;

• the services charges under the agreement included:

o an annual charge, which related to the use of editorial articles and media archives; and

o a usage charge based on per-minute unit price, which related to the use of online inquiries and which was described as “a price corresponding to the lowest graduated consumer price of the official tariff… less 15%”;


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• the charges were subject to indexation based on the consumer price index (“CPI”) for 1986, or the relevant replacement index.

In 2000, APA established a wholly-owned subsidiary, APA-OTS (which took the form of a limited liability company), and entered into a contract with APA-OTS, whereby APA-OTS was bound to pass its annual profits back to APA and to follow the instructions given by APA in managing its business, whilst APA was contractually bound to make good any annual losses incurred by APA-OTS.

APA subsequently transferred to APA-OTS the operation of some of the services previously provided directly by APA under the 1994 agreement. The Austrian government was duly notified, and assurances were given that there would be no change in the overall service performed, and that APA was jointly and severally liable with APA-OTS. The Austrian government agreed to the transfer, and thereafter directed its payments to APA-OTS.

Following the introduction of APA-OTS, APA and the Austrian government entered into a supplemental agreement in 2001, amending the original agreement as follows:

• the annual charge was adjusted to reflect the conversion of Austrian Schilling into Euro, and the converted figure was rounded up to give a discount of 0.3%;

• the per-minute unit price used in calculating the usage charge was adjusted to reflect the conversion of Austrian Schilling into Euro;

• the basis of indexation was changed from the CPI for 1986 to the CPI for 1996; and

• the indexation mechanism was to be disregarded for 2002 - 2004, resulting in an effective price discount for that service equal to 2.94% for 2002 and 1.47% for 2003.

Subsequently, an additional supplemental agreement was signed in 2005, which further amended the original agreement as follows:

• the waiver of the right to terminate the agreement was renewed until December 2008; and

• the 15% rebate originally given in respect of the usage charge based on per-minute unit price for online inquiries was increased to 25%.

In 2004, PN, a relatively new entrant to the Austrian news agency market, unsuccessfully sought to offer its own news agency services to the Austrian government. Having failed to secure a contract with the Austrian government, PN subsequently brought legal proceedings against the Austrian government, APA, and APA-OTS, contending, among other things, that the changes made to the original agreement, including the introduction of APA-OTS as well as the two supplemental agreements signed in 2001 and 2005, constituted unlawful de facto award of contracts.

Directive 92/50/EEC on Public Services Contracts (now replaced by Directive 2004/18/EC – the prevailing EU procurement directive upon which the UK Public Sector Contracts Regulations 2006 is based) provided, among other things, that “In awarding public service contracts or in organizing design contests, contracting authorities shall apply procedures adapted to the provisions of this Directive” (Article 3(1)). The Austrian Court asked the ECJ for a ruling on whether or not the changes made to the original agreement amounted to a new “award” of contract for the purposes of Directive 92/50/EEC.


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Having reviewed its previous judgments, the ECJ noted that as a general principle, amendments to an existing contract constitute an award of new public contract for the purposes of Directive 92/50/EEC when the amended contract is “materially different in character from the original contract and, therefore, such as to demonstrate the intention of the parties to re-negotiate the essential terms of that contract”.

As noted above, the ECJ proceeded to set out three tests for when a change to an existing contract might constitute a “material difference”, i.e., where the change:

• if included from the start would have allowed other bidders to bid, or might have changed the eventual award decision; or

• would result in the scope of the original contract being extended considerably to encompass services not initially covered; or

• would result in a shift in the economic balance of the contract in favour of the contractor.

The ECJ then considered the facts of the case, and concluded as follows:

(A) The introduction of APA-OTS into the arrangement between the Austrian government and APA was essentially the result of an internal reorganisation of APA that did not modify the original agreement in any fundamental way, particularly in light of the fact that APA retained significant control over APA-OTS, as well as the fact that APA was jointly and severally liable with APA-OTS, so long as the control of APA-OTS remained with the APA.

Here, it should be noted that the ECJ specifically held that the fact that there was no guarantee that APA’s control over APA-OTS would not in the future be transferred to a third party, was irrelevant to the question of whether or not there was a new award of contract, although the ECJ did point out that different considerations may apply at the point in time when the transfer of control to a third party did occur in this type of situation. This raises the spectre that, in future, a “change in control” of a supplier under an awarded public contract might constitute an event that triggers a re-procurement.

(B) Those changes to contract price that were made purely as a result of the conversion of the stipulated currency into Euros did not materially change the original agreement, because that change was only an adjustment resulting from an external change in circumstances.

(C) While other changes to prices (such as changes resulting from rounding-off of the converted prices or the disapplication of indexation mechanism) could give rise to a new award of contract, this was not the case here, as the changes to the CPI were in keeping with the stipulation in the original contract to keep the indexation provision up-to-date, while the effect of rounding-off or price-fixing in this particular case was minimal. In any event, the changes were all to the detriment of the supplier, APA, which effectively consented to a reduction in prices.

(D) While an indefinite contract term could potentially be incompatible with the principles of EU law by impeding competition and hindering the application of the public procurement rules, there was nothing in EU law that specifically prohibited the conclusion of public service contracts for an indefinite period. Likewise, there was nothing that automatically outlawed an undertaking not to terminate for a given period where the contract was concluded for an indefinite period.


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Even if the Austrian government had intended to terminate the agreement and put it out for a tender, the period of waiver (three years) envisaged in the second supplemental agreement had not been excessively long so as to prevent the Austrian government from making the necessary arrangements to terminate the contract and go to the market. Therefore, the second waiver that applied from 2005 to 2008 could not have been construed as a material change to the original agreement.

Conclusion

This case offers helpful guidance on what variations may – or may not – be permissible to existing contracts. Authorities will have to pay closer attention to changes made as part of contract management.

Obviously, much depends upon the circumstances of each case but, based upon the facts of this case, it is also possible to identify various types of changes that are less likely to constitute a material change and thus necessitate a new tender process:

• transfer of a contract from the incumbent supplier to a new supplier due to a corporate re-structuring or reorganisation of the incumbent supplier;

• changes to the financial terms of an existing contract that result from stipulations in the original agreement, such as the updating of consumer prices index to be used in the indexation of service charges;

• changes to the financial terms of an existing contract that are necessary as a result of external circumstances, such as the need to change the stipulated currencies into Euros;

• changes to the financial terms of an existing contract that are to the detriment of the incumbent supplier, such as changes that result in the contracting authority receiving a discount; or

• waiver of the right to terminate an existing contract, where the existing contract was initially entered into for an indefinite period.

Morrison & Foerster 8 January 2009

3. Framework Agreements: Remedies European Procurement & Government Contracts Digest

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Court Gives Guidance on Legal Remedies Available in respect of Improperly Awarded Framework Agreements

Two recent decisions made by the High Court in Northern Ireland demonstrates that, under certain circumstances, the remedy that a Court can grant to an aggrieved bidder may go beyond the award of mere damages and could include the setting aside of an already-awarded framework agreement.

2011 Update: The Court of Appeal in Northern Ireland has upheld the High Court decisions in these 2 cases. See below

What are the cases?

The cases are:

• McLaughlin and Harvey Limited v Department of Finance and Personnel (No. 3) [2008] NIQB 122, one of the series of decisions made by the Northern Irish High Court in respect of a claim brought by McLaughlin & Harvey Limited (“M&H”), a construction company that unsuccessfully tendered for a framework agreement relating to a series of construction projects that the Northern Irish Department of Finance and Personnel (“DFP”) sought to implement over a four-year period at a cost of £500-800 million.

• Henry Bros (Magherafelt) Ltd and others v Department of Education for Northern Ireland (No. 3 Remedies) [2008] NIQB 153, one of the series of decisions made by the Northern Irish High Court in respect of a claim brought by a consortium of building contractors, who unsuccessfully tendered for a framework agreement relating to a series of construction projects which the Department of Education for Northern Ireland sought to implement over a two-year period at a cost of £550-600 million.

Why are these cases important?

Until now, most contracting authorities have assumed that the potential remedies to which they are exposed if they breach procurement law are either:

• damages and/or an injunction preventing the contract award going ahead – if the complaint is made before the contract has been signed; or

• damages only – if the complaint is made after the contract has been signed.

Once past the point of contract signature, authorities tend to breathe a sigh of relief and assume that they are immune from the risk of a Court order overturning the contract award, shielded by the language of the procurement regulations which, on the face of it, prevent the setting aside of contracts that have already been signed.

However, the Courts in these cases took the position that, if there has been a breach of procurement law, a Court is, in fact, within its rights to set aside a framework agreement that a contracting authority improperly enters into with one or more suppliers. In one of the cases, the Court did so despite the fact that specific contracts had been entered into under the framework agreement.


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This means that there is now an even greater incentive for contracting authorities to ensure that as much transparency as possible is built into the procurement process, to avoid the costly and time-consuming consequence of having to re-run a tendering process. It also creates a ray of hope for bidders on framework procurements that, if they perceive that they have been disadvantaged by a procedural error, there may be an effective remedy available to them after all.

However, an aggrieved bidder that successfully challenges a contracting authority’s decision should not expect to be automatically awarded a place on the framework that it failed to win in the first place. The Court in both of these two cases concluded that the right remedy was to cancel the entire framework arrangement, thus forcing the authority to re-run the entire process. In the Henry Bros (Magherafelt) Ltd case, this was despite the fact that a number of specific contracts had already been entered into pursuant to the framework agreement. At a practical level, what an aggrieved bidder in this situation really wants is more likely that it should be added to the list of contactors on the framework list. Even if an unlawful award is successfully challenged, an aggrieved bidder may not derive much from its victory, particularly where the gap between it and the successful bidder(s) was more than marginal.

For authorities, one consequence of this case is that if there has been a genuine procedural error, and therefore a meaningful risk that the entire framework procurement could be overturned by a Court, it may be easier just to accede to a bidder’s complaints and let all affected bidders through on to the framework list, rather than run the risk of having the entire framework cancelled.

What happened in these cases?

McLaughlin and Harvey Limited v Department of Finance and Personnel (No. 3)

In the McLaughlin and Harvey Limited case, DFP published an OJEU notice in March 2007, advertising its intention to award framework agreements in respect of a series of construction projects. M&H duly submitted its tender in October 2007, but it was unsuccessful and was notified accordingly by DFP in December 2007. M&H issued proceedings against DFP alleging, among other things, that DFP acted in breach of the procurement rules by failing to disclose the marking methodology, which constituted secret evaluation criteria, and the weightings associated with such secret evaluation criteria.

As noted in our previous Legal Update (see our December 2008 update Evaluation Criteria), in conducting public procurement process, a contracting authority is required to disclose the evaluation criteria and sub-criteria that it intends to use as fully as possible in advance to the bidders. Having reviewed the relevant case laws (including the judgments of the European Court of Justice in ATI ETC Case C-331/04 and Lianakis Case C-532/06), the Court held that DFP acted in breach of the procurement rules by failing to disclose 39 sub-criteria and their associated weightings in advance to the bidders.1

The Court then went on to consider the two remedies requested by M&H: namely, a declaration ordering DFP to add M&H to the list of preferred contractors under the framework agreement, and/or the setting aside of DFP’s decision to award the framework agreement to five of M&H’s competitors.

DFP contested M&H’s requests primarily on the basis that the law did not empower the Court to grant any remedy other than damages, by relying on the Public Contracts Regulations 2006 (“PCR”), which implements in the UK the relevant EU Directives (including both Directive 2004/18/EC, the “Services

1 Readers interested in this aspect of the case are directed to the judgment in McLaughlin and Harvey Limited v

Department of Finance and Personnel (No. 2) [2008] NIQB 91, where the Northern Irish High Court took an approach very similar to the approach taken by the English High Court in Letting International Limited v London Borough of Newham [2008] EWHC 1583, which is discussed in our previous Legal Update (see our December 2008 update Evaluation Criteria).

http://www.mofo.com/international/EU_en/news/14974.html



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Directive”, and Directive 89/665/EEC, the “Remedies Directive”), and provides that “the Court does not have power to order any remedy other than an award of damages … if the contract in relation to which the breach occurred has been entered into.” (Regulation 47(9) of PCR)

Having reviewed the Directive and PCR, the Court decided that:

• under the Remedies Directive, all EU member states were required to make provisions in their national law a means to set aside unlawfully taken decisions and/or award damages, and the PCR specifically enabled a Court to “order the setting aside of [unlawfully made decision, or unlawfully taken action,] or order the contracting authority to amend any document” and/or “award damages”; and

• both the Services Directive and the PCR defined a framework agreement as something that established the terms on which one or more contracting authorities would award multiple contracts to one or more suppliers, and specifically differentiated the treatment of “framework agreement” from that of “public contracts”.

The Court acknowledged that Regulation 47(9) of PCR qualified the extent to which the Court was entitled to set aside DFP’s decision, but held that Regulation 47(9) did not prevent the setting aside of an already concluded framework agreement because the phrase “the contract in relation to which the breach occurred has been entered into” used in Regulation 47(9) referred to “public contract”, as defined in PCR and including any specific contract entered into pursuant to a framework agreement, but not to “framework agreement” itself, because of the way in which PCR distinguished the two.

In so concluding, the Court said that: “For the court to set aside a contract which may be partly or wholly performed would be contrary to principle and inappropriate. But the position is completely different with regard to a Framework Agreement. That consists of the pre-selection of certain economic operators who will be allowed to bid, without competition from parties outside the Framework Agreement, for specific contracts during the life time of the Framework Agreement.”

However, the Court also noted that:

• acceding to M&H’s request to add M&H to the list of successful bidders who were included in the framework agreement “would have the effect of diluting the work for all five of the current parties under the Framework Agreement”, thereby introducing “some element of unfairness to the best of the tenderers”; and

• damages was “manifestly an inferior remedy” because:

o it would take too long for the Court to make a reasonable estimate of the loss suffered by M&H (which needed to reflect the profits the successful bidders would have enjoyed under the framework agreement); and

o it was clearly not in the public’s interest, as paying the successful bidder(s) for the work it actually undertakes and then paying a percentage of profits such bidder(s) makes was “in the most literal sense of the word a waste of money”, particularly in light of the overall value of the construction projects (some £800 million).

Therefore, on the particular facts of this case, the Court held that M&H’s second preferred remedy, i.e., the setting aside of DFP’s decision to award the framework contract to five of M&H’s competitors, which


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would lead to a re-run of the competition for the framework agreement (which in turn would be performed in a fairer and more transparent way, as indicated by the Court) was the fairer, more desirable and the appropriate remedy to be granted to M&H.

Henry Bros (Magherafelt) Ltd and others v Department of Education for Northern Ireland (No. 3 Remedies)

In the Henry Bros (Magherafelt) Ltd case, the Court was concerned with a slightly different set of substantive issues, which will be the subject of a separate Morrison & Foerster Legal Update. But in respect of remedies, the Court followed exactly the same approach it took in the McLaughlin and Harvey Limited case in deciding to set aside the flawed award of the framework agreement.

One notable aspect of the Henry Bros (Magherafelt) Ltd case is the fact that a number of specific contracts had already been awarded under the framework agreement. For those specific contracts, the Court acknowledged that the claimant consortium could only claim damages, but otherwise the Court had no hesitation in holding that a re-run of the competition for the framework agreement was the appropriate remedy to be granted to the consortium of building contractors, commenting that “in the case of framework agreements stricto sensu the restriction imposed by Article 47(9) has the potential to be much more damaging particularly to the public in whose interest the community principles of transparency, equality, non-discrimination and open competition are to be observed.”

Morrison & Foerster 16 January 2009

2011 Update: In September 2011, the Court of Appeal in Northern Ireland upheld the High Court decisions in these 2 cases.

In each case, the Court of Appeal agreed that the High Court was correct to find that a "framework agreement" was not a "contract" for the purposes of Regulation 47(9) of the PCR. Therefore, the High Court had been correct to set aside the wrongly-awarded, concluded framework agreements.

4. Framework Agreements: Evaluation & Claim European Procurement & Government Contracts Digest

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Court rules on evaluation criteria and limitation periods in respect of framework agreement procurements.

A recent decision by the High Court in Northern Ireland highlights two interesting issues relevant to framework agreements. Firstly, in setting the evaluation criteria for a framework agreement procurement, a contracting authority may not rely solely on non-economic evaluation criteria. Secondly, in the event of a procurement challenge, the limitation period for bringing a claim does not always start at the point when the relevant flaw in a contracting authority’s decision is first disclosed to the bidders.

2011 Update: The Court of Appeal in Northern Ireland has upheld the High Court decision in this case. See below

What is the case?

The case is Henry Bros (Magherafelt) Ltd and others v Department of Education for Northern Ireland (No. 2) [2008] NIQB 105, a decision made by the Northern Irish High Court in respect of a claim brought by a consortium of building contractors, who unsuccessfully tendered for a framework agreement relating to a series of construction projects that the Department of Education for Northern Ireland (“DoE”) sought to implement as part of the Northern Ireland Schools Modernisation Programme (“NISMP”) over a two-year period at a cost of £550 – 600 million.


This case clarifies the degree of completeness required of the evaluation criteria adopted when an authority seeks to award a framework agreement. Specifically, the Court’s decision makes it clear that a contracting authority which seeks to award a framework agreement to the bidder submitting the most economically advantageous tender has to ensure that its evaluation criteria include some assessment of the price or cost of the work to be undertaken, or services to be performed. Thus, while price is not a mandatory element of the “most economically advantageous tender” criterion, and while it is open to a contracting authority to adopt a series of predominantly non-economic evaluation criteria, price or cost must be a part of the evaluation in some form.

A contracting authority that does not require framework bidders to provide any price/cost information and instead relies solely on non-economical evaluation criteria such as fee percentage or qualitative assessment will run the risk of rendering its procurement process unlawful.

This case also indicates that, for the purposes of the time limit for bringing proceedings against contracting authorities, where the flawed decision (e.g., a decision to adopt incorrect evaluation criteria) was capable of being remedied by the contracting authority prior to the submission of the final tender, the clock does not start until the contracting authority actually implements its decisions (e.g., the flawed evaluation criteria are actually applied in selecting the successful bidders).

The contracting authority in this case had argued that more than three months had elapsed since the claimant’s cause of action arose and, thus, under the procurement regulations its claim was time-barred and the Court ought not to extend the time limit for complaint. The Court quickly identified public policy reasons in exercising its discretion to extend the time limit, particularly in respect of large-scale public procurement projects that have a significant implication for the public in general.


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In March 2007, DoE published an OJEU notice, advertising its intention to award framework agreements in respect of a series of construction projects relating to NISMP. The OJEU notice, among other things, stated that the framework agreement would last for two years, and be awarded to up to eight participants, and that the estimated total value of various construction projects to be awarded under the framework agreement was £550 – 650 million.

The ITT documents were issued in June 2007 and the deadline for the submission of tenders was in early August 2007. DoE provided information in response to requests for clarification made by the bidders at various stages of the procurement process. The selection of successful bidders was to be made on the basis of the most economically advantageous tenders, and the evaluation criteria adopted by DoE consisted of 80% qualitative criteria, and 20% commercial criteria. Crucially, the assessment of commercial criteria was to be based on various fee percentages and did not require the bidders to submit any specific costing information.

Henry Bros (Magherafelt) Limited, which had formed a consortium (the “Consortium”) together with three other building contractors, duly prepared and submitted a tender. However, the Consortium’s tender was rejected by DoE in October 2007. A month later, the Consortium issued proceedings against DoE alleging, among other things, that DoE acted in breach of the procurement rules by failing to require the bidders to submit a price, or to produce representative costing examples or historic examples of pricing.

Before the Court, the Consortium argued that the assessment of the economic advantages of the different tenders was not possible without an analysis of the comparative price or cost of each tender, due to the very meaning of the words “economically advantageous”. On the other hand, DoE argued, among other things, that:

• as the contracting authority, it had a wide discretion to choose the criteria to be applied and that there was no need for each of the assessment criteria it adopted to be economic in nature;

• in assessing which tender was the most economically advantageous, it was not necessary for a contracting authority to include any evaluation criteria relating to price because, in the construction industry, the basic cost of doing the work should not vary greatly from one contractor to another, due to the fact that different contractors would be sourcing their labour and materials from the same market, i.e., Contractor A will pay the same for a cubic metre of concrete or a quantity of bricks as Contractor B; and

• the Consortium’s claim was time-barred. Specifically, DoE argued that any alleged breach of procurement rules by DoE would have occurred, at the latest, in June 2007 which was the time when the relevant information regarding the evaluation criteria was disclosed to the bidders in the ITT documents. Therefore, DoE argued that the Consortium’s claim, which was formally asserted in November 2007, was not made “within 3 months from the date when grounds for the bringing of the proceedings first arose…” (Regulation 47(7)(b) of Public Contracts Regulations “PCR”)

The Court disagreed with DoE on these points, and concluded as follows:

Financial Evaluation Criteria

While nothing in the PCR restricts the type of evaluation criteria that a contracting authority can choose, and a contracting authority does indeed have a wide discretion in choosing the evaluation criteria, it is still


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not open to a contracting authority completely to omit criteria relating to price/cost for the purposes of assessing the most economically advantageous tender for framework agreements. This is because “unless the cost or price of the relevant goods or service [is] fixed or not in dispute, it would be very difficult to reach any objective determination of what was or was not economically advantageous without some reasonably reliable indication of price or cost in relation to which other non-price advantages might be taken into account”.

In the opinion of the Court, a fee percentage could be part of valid evaluation criteria, but it could not be used on its own to determine the actual of cost of any individual project without the addition of further information such as rates and costs of materials because, depending on the circumstances, different contractors might be in a position to provide discounts and more advantageous prices, and also because not all contractors were equally efficient – in other words, capital costs would be a relevant element determining the most economically advantageous tender.

Accordingly, where the bidders were only required to submit such additional information at the secondary competition (i.e., competition among the successful bidders for specific contract(s) to be awarded under the framework agreement), the omission of requirements for such additional information at the primary competition stage rendered the primary competition (i.e., competition among bidders for inclusion in the framework agreement) unlawful.

Time Limit for Claims

In the particular circumstances of this case, while there was a flaw in the evaluation criteria that DoE adopted and disclosed to the bidders, the actual breach of the PCR by DoE did not take place until DoE actually applied the flawed evaluation criteria to the submitted tenders, because, until that point, “It was open to the Department to amend or otherwise modify the criteria and the manner in which they were to be applied at any stage prior to the impugned decision, a right that was specifically reserved [in the information previously disclosed to the bidders, as well as the instructions given to the bidders who submitted their tender.]”.

In the opinion of the Court, this case differed from a situation where a crucial part of the aggrieved bidder’s claim was based on the contracting authority’s failure to disclose the evaluation criteria before the tenders were submitted (e.g., in the ITT documentation). In such case, it could legitimately be argued that a claim ought to be time-barred, but this was not so in this particular case.

The Court also took the view that, even if the Consortium’s claim was time-barred, the Court was still entitled to exercise its discretion to extend the time limit under Regulation 47(7)(b) of PCR, because there was good reason for doing so. In so concluding, the Court noted that:

• due to its very nature and scale of the NISMP, it was “a matter of considerable importance and public interest” that any concerns about the legality of the tendering process for the NISMP was dealt with at the earliest opportunity;

• because the tendering procedures adopted by DoE in this case may well have been, or was about to be, used by the government in respect of other public projects, it was important that “any potential defects are timeously remedies”; and

• the merits of the parties’ arguments were fully, exhaustively, and competently argued over a number of days by the parties, and “it would be somewhat regrettable if the matter were to be ultimately resolved at this stage on the basis of a limitation issue”.


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Having decided the substantive issues in the Consortium’s favour, the Court went on to consider the remedies and held that the framework agreement had to be set aside. Readers interested in this aspect of the case are directed to the judgment in Henry Bros (Magherafelt) Ltd and others v Department of Education for Northern Ireland (No. 3 Remedies) [2008] NIQB 153, which is discussed in a previous section (see above).

Morrison & Foerster 2 February 2009

2011 Update: In September 2011, the Court of Appeal in Northern Ireland upheld the High Court decision in this case.

With respect to liability, the Court of Appeal criticized the authority’s professional advisers who had suggested that it could use fee percentages as a financial criterion on the basis that, since costs were the same or broadly the same between contractors, the fee percentage would be a clear indicator of the most economically advantageous offer. This was wrong and constituted a manifest error in the procurement process.

On the key issue of when the breach had occurred, the Court of Appeal noted that there have been a number of important decisions on the issue of limitation since the High Court's judgment (e.g., see our 2010 Update Limitation Period for Challenges - when does the clock start to tick?) The Court of Appeal noted the following propositions:

• the cause of action only arises where an actual breach of the PCR occurs; anticipation of a breach is not enough;

• the breach can consist of any infringement of the PCR which gives rise to the risk of loss or damage;

• time runs from the date on which the claimant has the requisite knowledge that a breach of sufficient magnitude to justify proceedings has occurred.

In all the circumstances of this case, the Court of Appeal concluded that the claim was not time barred.

http://www.mofo.com/files/Uploads/Images/100416UKProcurement.pdf

http://www.mofo.com/files/Uploads/Images/100416UKProcurement.pdf

5. Freedom of Information European Procurement & Government Contracts Digest

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Freedom of Information: Public Sector Contracts are generally not exempt from disclosure under the UK Freedom of Information Act.

The UK’s Freedom of Information Act 2000 was enacted in order to increase the accountability of public sector organisations. The consequence for companies contracting with government bodies may be that their pricing and other sensitive information is open to scrutiny by the public—and, by extension, their competitors.

Under FOIA, public bodies must disclose copies of any information held by them that is requested by members of the public, subject to a number of exemptions. When FOIA was first put in place, it was thought that a range of exemptions would protect commercial and confidential documents (such as contracts) from disclosure. Those exemptions have been narrowed over the years by the Information Commissioner’s Office (ICO) and the Information Tribunal.

A recent decision of the Information Tribunal—based on a set of facts increasingly common to most public bodies—has clarified just how narrow the exemptions are in relation to contracts. In the future, most information within a public sector contract will likely have to be disclosed if an appropriate request is made. This has implications both for public bodies and for companies entering into public sector contracts which they believe contain sensitive commercial information, especially as to pricing.

What is the case?

The case is Department of Health -v- Information Commissioner [2008] EA/2008/0018. This is a decision of the Information Tribunal, which is the body with the jurisdiction to hear cases regarding the scope and content of FOIA. In this case, an individual made a request under the FOIA to the UK Department of Health (DoH) requesting a copy of a contract signed in 2003 between DoH and Methods Consulting Limited (Methods). The contract related to the provision of an electronic recruitment service for the NHS. As is typical, the contract included a broad confidentiality clause in fairly standard terms.

The DoH denied the request, withholding the information requested and refusing to disclose a copy of the contract. In doing so, the DoH relied on a number of exemptions in the FOIA, including in particular Section 41 (confidential information obtained from a third party), Section 43(1) (trade secrets) and Section 43(2) (prejudicial to commercial interests).

The Tribunal disagreed with DoH and held that the contract was very largely disclosable, although there were certain limited sections to which appropriate exemptions applied. This decision is consistent with the position adopted by the ICO in its dealings with other government departments which have received similar requests.


The case is a culmination of a number of cases, including in particular Derry City Council -v- Information Commissioner in 2006, which have narrowed significantly the scope of public bodies(and the private sector companies which contract with them) to keep confidential the contracts which they enter into.

The case supports the ICO’s position that contracts cannot be looked at as a single entity and that FOIA overrides the provisions of the standard form of confidentiality clause included in most, if not all, public sector contracts. The general rule now is that public sector contracts should be assumed to be potentially always disclosable in response to a request under the FOIA regardless of whether that request comes from a member of the public, a journalist, or a potential competitor.


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Impact on Authorities

Authorities are required to apply the individual exemptions under the FOIA to specific components of contracts; this requires an examination not just of individual schedules or clauses but of specific sentences and words within schedules. It is no longer justifiable to say: “The contract is confidential, so we can’t disclose it.”

Authorities must assess, in relation to each component part of the contract, whether a relevant exemption applies. This can mean withholding entire clauses or entire schedules but, in all likelihood, it means going through the contract to redact or delete specific words, phrases, or sentences which contain information covered by one of the applicable exemptions. It can be a laborious task and one which requires experienced judgement and a careful systematic approach. Unfortunately, the cost of considering and applying exemptions is not one that can be taken into account in deciding whether the cost of responding to a FOIA request exceeds the permitted threshold.

Authorities have the obligation under FOIA to take responsibility for this task, but most authorities choose to do so in consultation with the private sector contracting party. Authorities will typically allow the contractor to make suggestions for exemptions but, ultimately, the decision as to whether an exemption should be applied and words can be removed is for the authority to take. Well-advised authorities need to take care to avoid bidders or contractors unjustifiably claiming wide confidentiality or proprietary information protection over information which, when judged against the FOIA standards, is properly disclosable.

Impact on Government Contractors

For companies which regularly contract with UK government departments and other public bodies, the developing trend of cases under FOIA means that the companies need to take much greater care over the information included in contracts. Companies will need no reminding that a FOIA requestor is as likely to be a possible competitor as a private individual or journalist.

In most cases, there is relatively little choice as to whether sensitive information—such as pricing—is included in a contract. What is more controllable, however, is the audit trail which demonstrates how information comes to be included in a contract and careful record-keeping as to the nature of that information, i.e., do you know where the sensitive bits are and can you quickly prove why they are sensitive?

Valid FOIA exemptions apply where data: is a trade secret; has been provided by a non-government party in confidence (e.g., during a bid); or could prejudice commercial interests where disclosed. Companies entering into public sector contracts ought to have a clear record of the information that they have provided to the public body to be incorporated within the contract and also of the information which they believe constitutes a trade secret or which may be commercially sensitive.

The mere fact that a contract may have been negotiated and may contain a confidentiality clause does not make it exempt under FOIA. Bidders on government contracts should badge their data accordingly and make sure that they can quickly and rapidly identity for their government clients where the most sensitive data in a contract resides and why relevant exemptions apply.


The contract between DoH and Methods was agreed in 2003 and the service to which it related commenced in January 2005. In that same month, a private individual made a request under FOIA to


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DoH asking for a copy of the contract. After delaying for quite some time, DoH eventually refused to provide a copy of the contract on the basis that (it claimed) the contract fell primarily under the exemptions in Sections 41 and 43 of FOIA.

There are a couple of dozen FOIA exemptions but, in fact, sections 41 and 43 of FOIA are the most common exemptions typically applied to requests for disclosure of contracts, although a number of other potential exemptions might apply depending upon the nature of the services to be provided. For example, entities in the policing and security services often rely upon law enforcement grounds (Section 31). Also, certain data in a contract may relate to individuals in their work capacity, and authorities often take the view that the Section 40(2) (Data Protection) exemption applies to giving specific data about named individuals.

So, the fact that it focused on the scope of the Sections 41 and 43 exemptions made this DoH case typical of many cases in this area.

Section 41 (Information obtained in confidence)

The exemption in Section 41 of FOIA is in three parts:

• is “information obtained by a public authority from another person”—which really means, in this context, the other contracting party?

• would disclosure amount to a breach of confidence?

• since this exemption is a qualified one, does the public interest favour disclosure?

It is now well-established that a contract itself is not “information obtained by a public authority from another person”: it is a negotiated document. Equally, most authorities—although, perhaps not surprisingly, fewer contractors; recognise that not all information provided during a bidding process has the necessary characteristics of confidence to fall within this exemption. Many bidders continue to claim confidentiality protection over the most generic types of information.

In this case, DoH argued that much of the sensitive information in the contract had been obtained from Methods, either because it had been compiled by Methods following the contractual negotiations or because it was based upon the technical specifications and details of methodologies being provided by Method. DoH relied on the Derry City Council case in which the Tribunal clarified that where contracts contained technical information, then, depending upon the circumstance, material of that nature could still be characterised as confidential information “obtained” by the public authority from the other party, and therefore could be redacted in any disclosed version.

Unfortunately, on the facts of the DoH case, the Tribunal held that the contract schedules had not been “obtained” from Method. The fact that the document was jointly negotiated was highly relevant. Even though some of the data may have been initially provided by Methods in its bid, the DoH had undertaken a detailed review of the all the proposals and made suggestions and changes to the specifications, and modifications taken from the invitation to tender and subsequent discussion. This was found to invalidate DoH’s suggestion that the information was obtained from Methods.

Interestingly, the Tribunal commented that, as a point of general principle, it considers that, for the ICO or the Tribunal itself to wade through all the evidence of a negotiation, working out who had an original idea and at what point it was tinkered with sufficiently that it became someone else’s idea, would be an


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impossible task. The Tribunal it feels that, even in a case such as this where there are minutes of meetings, it was still impractical to designate ownership to each clause. Worryingly, this could be taken as a sign that the Tribunal is trying to rule out Section 41 exemptions completely in cases involving negotiated contracts. This presents practical problems for the parties to a contract unless they made a very clear note, at the time of entering into a contract, of where data has been clearly provided by the contractor and has found its way into the eventual contract.

Section 43 (trade secrets and commercially sensitive information)

Section 43(1) of FOIA provides that information is exempt if it constitutes a trade secret. A trade secret implies the information is more restricted than information that is merely “commercially sensitive”. The implication is that something needs to be technical, unique and achieved with a degree of difficulty and investment—the recipe for Coca-Cola being the classic example. In this case, the Tribunal did not feel the need to try to decipher whether any information fell within the trade secret category, primarily because of the approach taken to the alternative category of “commercially sensitive information”.

Section 43(2) of FOIA relates to commercially sensitive information. Information is exempt if its disclosure under the Act would prejudice the commercial interest of any person. Ultimately, after a long analysis, the Tribunal accepted that there is merit in the argument that disclosure of certain information, particularly around Methods’ pricing, would reduce Methods’ commercial advantage and might diminish the number and quality of companies willing to tender for public sector work.

Unfortunately for the parties, most of the contract ultimately was not found to be potentially prejudicial to Methods commercial interests and therefore had to be disclosed. It is clear that the Tribunal applied a narrow definition to “prejudicial to commercial interests”.

The exemption under Section 43(2) is one of the hardest exemptions for authorities to judge. Often, information such as details of how pricing has been formulated, a winning bidder’s solution, and service levels on offer may prejudice the contractor’s commercial interest if publicly disclosed. In each case, the authority has to balance the public interest in favour of and against disclosure. Many contractors take a very wide view of what might be commercially sensitive and against their interests if disclosed. Authorities have to tread a fine line between balancing their contractor’s interests and the interests of compliance with their statutory duty under the FOIA.

In the DoH case, the only sections that the Tribunal sanctioned to be withheld under this exemption were:

• certain sections of the service requirement that had been provided by Methods and which demonstrated a truly novel approach;

• sections stating what level of marketing expertise Methods was prepared to commit to the project;

• detailed pricing information, although not the general structure of the pricing mechanism itself;

• key working assumptions applied by Methods in the calculation of its solution; and

• list of security standards that might be useful to those wishing to sabotage or hack the system.

This section of the case illustrates the difficult job that authorities face in trying to make a decision as to what aspects of a contract are genuinely commercially sensitive to a bidder. The prevailing principle at


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the moment is that the assumption ought to be that very few things are genuinely commercially sensitive, unless a special argument can be made in all the circumstances of the case.

Morrison & Foerster 24 February 2009

5a. Freedom of Information European Procurement & Government Contracts Digest

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UPDATE: Freedom of Information Requests about Contracts – The Information Commissioner’s Office Approach.

MoFo has recently had first-hand experience of the ICO’s approach to requests for disclosure of public sector contracts.

The case in which we were involved related to an interesting decision involving the National Police Improvement Agency (“NPIA”) where an ICO Decision Notice was issued under the Freedom of Information Act 2002 in relation to one of NPIA’s key third party contracts. The Decision Notice outlined a number of guidelines that other public bodies will need to take into account, and gave an indication of the approach that the ICO takes when considering exemptions to FOIA requests.

Summary

The decision related to a FOIA request by a journalist for a full copy of NPIA’s contract with Northrop Grumann in relation to NPIA’s “IDENT1” automated fingerprint recognition system, together with a list of all the project bidders and their bid submissions. In its response, NPIA took the position that some of the requested information would not be disclosed and cited a number of exemptions.

The journalist then submitted a complaint to the ICO, which issued a Decision Notice (after a delay of almost 3 years) setting out a consideration of the relevant tests/guidelines for each exemption. This decision is important as it gives an indication as to how the various FOIA exemptions that authorities might consider relevant to contract disclosures should, in fact, be applied in relation to such requests.

Personal Information – Section 40 FOIA

NPIA originally withheld the names and contact details of four key personnel whose details and (reasonably sensitive) roles were set out in one contract schedule, citing the exemption that applied for personal data where disclosure would contravene the Data Protection Act (“DPA”).

The ICO referred to a number of issues that will be considered when assessing whether disclosure of this sort of information would be fair, including:

• an individual’s reasonable expectation of what would happen to their personal data

• the seniority of any staff.

• whether the individuals specifically refused to consent to the disclosure of their personal data

• whether disclosure would cause any unnecessary or unjustified distress and damage to the individuals

• the legitimate interests in the public knowing the requested information weighed against the effects of disclosure on the individuals

• whether the information relates to the public or private lives of the individuals.


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In this case, the ICO determined that with regard to the names of the staff in the redacted documents, they were relatively senior and, therefore, they should have had an expectation that their involvement in a significant contract would be disclosed. The ICO undertook no specific enquiries to determine the seniority of staff – the implication was drawn from the face of the documents themselves.

The implication of this decision is that information about authorities’ own personnel that might find its way into contracts is less likely to be exempt from disclosure.

Law Enforcement – Section 31FOIA

NPIA also cited the law enforcement exemption in Section 31(1) which provides an exemption if disclosure would, or would be likely to, prejudice (a) the prevention or detection of crime, (b) the apprehension or prosecution of offenders or (c) the administration of justice.

Interestingly, the Commissioner applied a narrow construction to the term “likely to prejudice” and relied on the case of John Connor Press Associates Ltd v. Information Commissioner [EA/2005/0005] which confirmed that “the chance of prejudice being suffered should be more than a hypothetical possibility; there must be a real and significant risk.”

The practical significance of such a narrow construction is that the exemption will have an application only in limited circumstances where the associated risks are significant and may be readily identified. Authorities wishing to use the law enforcement exemption do not need to establish that the risk is more likely than not – but they do need to establish that it is more than merely remote.

Prejudice to Commercial Interests – Section 43(2) FOIA

The ICO also considered whether the information contained within the IDENT1 contract was prejudicial to the commercial interests of the public body itself and the contractor, and so was exempt under Section 43(2) of FOIA.

As discussed above in relation to the law enforcement exemption, the ICO first stated the case of John Connor Press Associates Ltd v. Information Commission and applied a narrow construction to the meaning of “prejudice.” The ICO then provided further commentary and stated that it views the meaning of prejudice as requiring that “the risk of prejudice need not be more likely than not, but must be substantially more than remote.”

NPIA argue that many of the schedules contained sensitive information which disclosed elements of Northrop Grumman’s solution and proprietary approach to some of the issues presented in the contract. The concern was that disclosure of these elements of the schedules would damage the commercial interests of Northrop Grumman in future bids for work of this type including similar types of systems throughout the world as well as bids that related to biometric business in the UK and Europe. NPIA was also concerned that disclosure of this information would have a detrimental effect on its own commercial interests by damaging an existing commercial relationship with a key public sector supplier and by deterring other private sector contractors from entering into future contracts.

The ICO rejected these arguments. Partly this was based upon the passage of time (i.e., 4 years since the contract was originally entered into) but neither NPIA nor NG was able to provide evidence of any competing tenders that the contractor had submitted or contracts that it was negotiating at the time of the request. But the ICO took the position that, even if that evidence had been presented, the subject-matter of this particular contract was of a unique nature which would make it significantly different from other contracts and which either party might seek to enter into. As a result, it would have been difficult to draw


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meaningful comparisons between this contract and others that the contractor might be seeking to enter into. Equally, the ICO stated that it was not convinced (although it did not produce evidence to support its position) that disclosure of the contract would have allowed Northrop Grumman’s competitors to draw conclusions about its positions in future bids. It believed that it would be difficult to see how information in this contract would be transferable to other procurements due to the large number of variables and deliverables and the unique set-up of the fingerprint services under this particular contract.

The ICO observed that both parties were aware of their duties under the Act at the tendering stage of the contract and that there should have been a reasonable expectation that the public would want to be shown that it was receiving a value for money service. The ICO concluded that the exemption was not engaged and the information should have been disclosed. The implication of this is that public bodies will, in almost all cases, be subject to such disclosure and any exemption will be considered narrowly.

Why should you be interested in this decision?

This decision gives guidance as to the type of information that may be subject to disclosure when dealing with public bodies. The guidelines indicate that broader disclosure may be required as the exemptions have been applied very narrowly.

Finally, the ICO reinforced some of its previous guidance that there are (at least) 12 particular areas within the contract which should normally be disclosed by a public authority. These are:

• Service level agreements

• Product/product verification procedures

• Performance measurement procedures

• Contract performance information

• Incentive mechanisms

• Criteria for recovering sums

• Pricing mechanisms and invoicing arrangements

• Payment mechanisms

• Dispute resolution procedures

• Contract management arrangements

• Project management information


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• Exit strategies and break options

Morrison & Foerster 27 July 2009

2010 Update: The First-tier Tribunal (Information Rights) has published a ruling (20 September 2010) in which it orders the Department for Work and Pensions to publish details of its contract with Atos Origin relating to the Government Gateway. The Tribunal accepted that publication of details of the contract (especially as to limits of liability and performance requirements) would be likely to prejudice the commercial interests of DWP, but the public interest test applied to the s 43(2) qualified exemption meant that the public interest in disclosure outweighed the DWP interest in non-disclosure. However, the Tribunal accepted that Atos Origin’s financial model, which formed part of the contract, was validly withheld from disclosure under s. 43(1) because it constituted a trade secret of Atos and there is a strong public interest in such models being protected throughout the life of a contract.

5b. Freedom of Information European Procurement & Government Contracts Digest

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UPDATE: Transparency Requirements Affecting Public Sector Contracts

In one of the first Acts of the new coalition Government in 2010, it was announced that the Government intends to publish details of all public sector contracts. This is consistent with a pre-election manifesto promise made by the Conservatives. If followed through, this will obviously provide direct access to information whereas previously an application would have been required for this information under the Freedom of Information Act. The drawback may be, however, that the same exemptions apply to this new publication policy as under the FOIA.

On 10 September 2010, the Office of Government Commerce (OGC) published guidance on the policy commitment to ensure greater transparency in the publication of tender documentation and the publication of information and communication technology (ICT) contracts by central Government.

There are effectively three commitments:

• all new central government tender documents for contracts valued at over £10,000 will be published on a single website from September 2010;

• all new central government ICT contracts will be published online after July 2010; and

• all new central government contracts will be published in full from July 2010.

This commitment to transparency applies to all central government bodies including departments, agencies, non-departmental public bodies and National Health Service bodies. However, there are some limitations: the commitment does not apply to Parliamentary bodies, devolved administrations in Scotland, Wales and Northern Ireland, or to local government.

Additionally, OGC has explained that what will be published is the tender documents issued by the public bodies, not to bids received from suppliers. Departments are required to use their judgement on a case-by-case basis as to what would be published but, as a minimum, the advertisement, requirements, the pre-qualification questionnaire and the ITT (including requirements and terms and conditions) should be published. Departments are required to take advice to ensure that commercial confidential information is not disclosed.

In terms of contracts, departments are expected to publish contracts in full, including specification, terms and conditions and associated schedules. Obviously this may include information derived from the winning tender that is used to populate individual schedules. OGC has clarified that publication should include overall price but there may be confidentiality restrictions which prevent a detailed breakdown of price and structure being disclosed.

Disclosure also applies to significant variations to contracts.

However, OGC unfortunately strays into confusing territory by saying that all information should be published unless an exemption under the Freedom of Information Act can be justified. Thus, the transparency requirement becomes circular and appears, at one level, to be no wider than that which existed under the Freedom of Information Act anyway, the main difference being that, under the new policy, publication is proactive rather than reactive (i.e., it does not depend upon a request having been made under the Freedom of Information Act). OGC advises that, where departments propose to rely on a Freedom of Information Act exemption, they should undertake an assessment, on the same principles that

5b. Freedom of Information European Procurement & Government Contracts Digest

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apply to the FOIA, including the application of public interest test, to determine whether an exemption is justified.

Morrison & Foerster 12 September 2010

6. UK Implementation of New Remedies Directive European Procurement & Government Contracts Digest

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UK Prepares for Implementation of the New Remedies Directive

Central and local government bodies need to be ready for the increased scrutiny to which their internal processes and procedures will be subjected under the new procurement remedies regime, which is due to be implemented in the UK by 20 December 2009. The Office of Government Commerce has published details of the proposed changes to the remedies regime.

1. What is the development?

In December 2007, the EU issued a new directive designed to improve the effectiveness of review procedures concerning the award of public contracts (the “New Remedies Directive”). 1 The New Remedies Directive, which amends the existing public procurement remedies regime, needs to be implemented in EU member states by 20 December 2009.

In the UK, the New Remedies Directive will be implemented by way of amendments to Public Contracts Regulations 2006 (“PCR”) and Utilities Contracts Regulations 2006 (“UCR”), the two regulations that implement the controlling EU directives in the UK.

On 30 April 2009, the UK’s Office of Government Commerce (“OGC”) which oversees, among other things, the procurement activities by public bodies in the UK and the implementation of public procurement law, published details of the draft amendments that it proposes to make to PCR and UCR; it also invited comments from interested parties.

2. Why is this development important?

The implementation of the New Remedies Directive will result in a comprehensive overhaul of the existing remedies regime set out in the PCR (and also the regime for utilities set out in the UCR, but there is little difference between the two regimes). Some of these changes will have a profound consequence for the bidders and the contracting authorities alike. Contracting authorities in particular need to ensure that their internal processes and procedures are ready for the increased scrutiny to which they will be subjected under the new regime.

Most importantly, once the proposed regulations are implemented in the UK:

a. a public body will no longer be able to assume that the courts in the UK are limited to awarding damages in respect of an improperly concluded contract;

b. set-aside of contracts will be mandatory in certain prescribed instances of impropriety;

c. public bodies will face the prospect of being fined for breach of the procurement rules, or having the terms of an improperly awarded contract shortened; and

d. a contracting authority will be compelled to suspend its procurement process where an aggrieved bidder challenges the contracting authority’s decision.

1 Directive 2007/66/EC of 11 December 2007.


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These are welcome changes; but, despite the extensive powers granted to the courts under the new remedies regime, bidders will still likely be required to act efficiently and expeditiously within a tight time limit, if they wish to apply for the more draconian remedies to be granted to the courts.

3. What are the changes introduced by this development?

Among other things, the New Remedies Directive amends the existing European directive which currently governs remedies in public procurement. The New Remedies Directive changes the way in which aggrieved bidders may challenge a contracting authority’s decision, and the ultimate redress that aggrieved bidders may seek from the courts, in a number of important ways.

3.1 Current remedies regime

Under Regulation 32 of PCR, once a contracting authority has decided to whom it intends to award a contract or framework agreement, it must notify all of the bidders (including the unsuccessful ones) of its decision using “the most rapid means of communication practicable”, and then allow at least 10 days to elapse before it actually concludes the contract or framework agreement.

The purpose of this 10-day standstill period is to allow the aggrieved bidder(s) to challenge the contracting authority’s decision to not award the contract or framework agreement to him or her. However, the 10-day standstill period does not apply to all contract awards, and notably, it does not apply to award of specific contracts under a framework agreement, nor does it apply to award of contracts that relate to procurement of services that are not fully covered by the Public Contracts Directives (e.g., the so-called “Part B” services under PCR).

Once it is informed of the contracting authority’s decision, an aggrieved bidder is entitled to request in writing an explanation for the decision from the contracting authority, and the contracting authority must respond to such request within 15 days of the receipt of request, unless such request was received by midnight at the end of the second working day of the 10-day standstill period, in which case the contracting authority must respond at least three working days before the end of the 10-day standstill period; and if it cannot do so, the 10-day standstill period must be extended to allow for the delay.

After it has received the explanation from the contracting authority, if it is dissatisfied with the explanation, an aggrieved bidder may challenge the contracting authority’s decision in the High Court under Regulation 47 of PCR, on the ground that the contracting authority breached its statutory duty to comply with the provisions of PCR. However, in most cases, such challenge will need to be launched within three months from the date when the grounds for challenge first arose, and crucially, “the Court does not have power to order any remedy other than an award of damages… if the contract in relation to which the breach occurred has been entered into.”

Under certain circumstances, particularly in respect of framework agreements, a court may still take the view that it is entitled to grant to an aggrieved bidder a remedy that goes beyond the award of mere damages, including the setting aside of an already-awarded framework agreement, 2 but generally speaking, under the existing remedies regime, an aggrieved bidder has very little time within which to prepare and mount a legal challenge, and if it does not act promptly, it cannot expect to receive any meaningful remedy.

2 For further discussion on this point, see our January 2009 update Framework Agreement.

http://www.mofo.com/news/updates/bulletins/15141.html


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3.2 The remedies regime under the New Remedies Directive – mandatory changes

The changes to be introduced by the New Remedies Directive consist of two types of changes; namely, the compulsory changes that must be implemented by all EU member states, and the discretionary changes that may or may not be implemented by EU member states. The key mandatory changes that will affect the existing remedies regime in the UK are as follows:

3.2.1 Under the new regime, where a legal challenge is brought by an aggrieved bidder (whether an application for an interim injunction or a full review of the contracting authority’s decision), a contracting authority can no longer conclude a contract with the successful bidder until the relevant court proceedings are concluded.

3.2.2 The standstill period, which is an EU-wide mandatory obligation under the new regime, is already a part of the current remedies regime in the UK. However, under the new regime:

(a) a contracting authority will be required to give “a precise statement of the exact standstill period applicable” when it notifies the bidders of its decision; and

(b) the minimum standstill period3 could be either 10 days or 15 days, depending on the method of communication the contracting authority uses to notify the bidders of its final decision (10 days if fax or email is used, and 15 days if other means of communication, e.g. postal mail, is used). This means that a contracting authority in the UK will have the option to use a less expeditious method of communication at the expense of having a longer standstill period.

3.2.3 The new regime extends courts’ powers to set aside a flawed decision made by a contracting authority. Crucially, under the new regime, the courts must set a contract aside where:

(a) the contract was awarded without the contracting authority publishing a contract notice, in spite of a requirement to do so; and

(b) the contracting authority: (i) commits a breach of the procedural rules set out in the Public Contracts Directive, which breach deprives the aggrieved bidder of its chances of success; and (ii) the contracting authority fails to comply with procedural requirements of the new regime (e.g., standstill period, prohibition on conclusion of contract before the determination of outcome of a legal challenge), which failure deprives the aggrieved bidder of the chance to pursue pre-contractual remedies.

3.3 The remedies regime under the New Remedies Directive – discretionary changes

In light of the responses it received to the first round of public consultation, the OGC decided not to implement a number of the optional changes set out in the New Remedies Directive. For example, the OGC decided not to implement the option to require aggrieved bidders to ask the contracting authority to review its decision before initiating a formal legal challenge. Therefore, not all of the potential changes set out in the New Remedies Directive will be implemented in the UK.

3 In implementing the mandatory standstill period, the OGC had the option to extend the minimum standstill period

prescribed by the New Remedies Directive, but the OGC concluded that the minimum standstill period did not have to be extended because such extension “could detrimentally affect large numbers of straightforward procurements”.


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The optional changes that the OGC has decided to implement and that will affect existing remedies regime in the UK are as follows:

3.3.1 The option to derogate from the mandatory standstill period where: (i) no prior publication of contract notice is required under the Public Contracts Directive Public Contracts Directives (e.g., the “Part B” services under PCR); (ii) the bidder who wins the contract was the only bidder; and (iii) specific contracts that exceed the prescribed threshold value are called off under a framework agreement or a dynamic purchasing system. The OGC’s decision to implement this optional derogation means that the aforementioned mandatory set-aside by the courts of flawed decisions (see paragraph 3.2.3 above) will also apply to the call-off of specific contracts under a framework agreement or a dynamic purchasing system.

3.3.2 In situations where the courts are empowered to set aside a contract, two options were available: either a retrospective cancellation (i.e., annulment of all contractual obligations), or a prospective cancellation (i.e., annulment of future, unperformed contractual obligations only). The OGC decided against retrospective cancellation,4 and has instead opted to implement the option for prospective cancellation only, which will have to be accompanied by the alternative penalties described at paragraph 3.3.4 below.

3.3.3 The option to grant the courts discretion not to set aside an illegally awarded contract, even in circumstances where the courts would otherwise be obliged to set it aside (see paragraph 3.2.3 above), if “overriding reasons relating to a general interest require that the effects of the contract should be maintained”. Any courts that exercise this discretion must also apply the alternative penalties described at paragraph 3.3.4 below.

3.3.4 In addition to the power to set aside a contract, the new regime will provide for the option to enable courts to impose alternative penalties, namely “the imposition of fines on the contracting authority” and “the shortening of the duration of the contract”, where the contracting authority fails to comply with procedural requirements of the new regime (e.g., standstill period, prohibition on conclusion of contract before the determination of outcome of a legal challenge). OGC decided that mere breaches of procedural rules do not warrant the draconian penalty of contract cancellation and only the alternative penalties of fines and/or contract shortening may be considered in such situations.5 Here, it is to be noted that:

(a) these alternative penalties must be imposed where the Courts exercise the discretion to not set aside a contract even where it could be set aside (see paragraph 3.3.3 above);

(b) a fine to be imposed as an alternative penalty will have to be imposed in addition to any damages the courts may award to an aggrieved bidder, and cannot be substituted with an award of damages; and

(c) a fine has to be imposed as an alternative penalty in addition to prospective cancellation of contracts (see paragraph 3.3.2 above).

4 It is to be noted that none of the respondents to the OGC’s first round of public consultation supported the option for

retrospective cancellation. Whether or not any of the other EU member states opts for this rather draconian option remains to be seen.

5 Interestingly, this decision by the OGC is made in spite of the majority of the respondents to the OGC’s first round of public consultation that preferred to give the courts discretion to decide the appropriate penalty to be imposed in cases of breaches of procedural rules under the new regime.


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3.3.5 The option to impose a time limit on the making of the relevant application, where an aggrieved bidder seeks the mandatory set-aside of contract (see paragraph 3.2.3 above).6 OGC decided to impose the minimum time limit prescribed by the New Remedies Directive, which is:

(a) 30 days following the publication of contract award notice;

(b) 30 days after the contracting authority notified the bidders of its final decision; or

(c) six months following the conclusion of the contract in question, where the authority failed to publicise the award of contract or otherwise failed to notify the relevant bidders.

Morrison & Foerster 7 May 2009

6 Where an aggrieved bidder does not seek the mandatory set-aside of contract, the member states are free to impose a

time limit on the making of the application as they sees fit, provided that it is at least 10 or 15 days long (see 3.2.2(b) above). The OGC has not specifically dealt with this aspect of the New Remedies Directive, and therefore, the current position in the UK whereby an aggrieved bidder is required to make an application to the courts “promptly and in any event within 3 months” is basically going to remain the same, although it is worth noting that the draft regulations proposed by the OGC makes it clear that applications in such circumstances (i.e., where the bidder does not seek the set-aside of contract) need not be made within the 10- or 15-day period.

7. Evaluation and Discretion European Procurement & Government Contracts Digest

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Court Rules on the Flexibility that Public Authorities are Required to give to Bidders who Do Not Comply with the Rules

Under UK and EU procurement rules, if a bidder a submits a tender that doesn’t fully comply with the awarding authority’s bid instructions, does the awarding authority have any discretion to admit that flawed tender? A recent decision by the High Court in England indicates that an authority does have such discretion, although it is not a discretion that the contracting authority is required to exercise, particularly where the cause of the non-compliance lies with the bidder. Authorities are within their rights to use even minor instances of technical non-compliance by bidders to reject otherwise valid tenders.

What is the case?

J B Leadbitter & Co Ltd v Devon County Council [2009] EWHC 930 is a decision of the English High Court on a claim brought by a building contractor whose tender was rejected by the contracting authority on the basis that it was not properly submitted in accordance with the authority’s express instructions. The court held that the authority was within its rights to reject the incorrect tender.


The basic rules of the EU and UK public procurement regime require that a contracting authority must act in accordance with the principles of transparency, equal treatment, and non-discrimination. This means that a contracting authority has to apply its criteria for decision making strictly and equally to all bidders and, if it makes any exception, the contracting authority would be expected to grant the same exception equally to all bidders.

This case shows that these well-recognised rules are further augmented by the requirement that the contracting authority must act proportionately in making its procurement decisions. The proportionality principle manifests itself in a discretion to overlook some types of breach by bidders of the rules of individual procurements. So, a contracting authority may, in some circumstances, exercise its discretion to allow bids to stand even if they are technically non-compliant, e.g., by accepting a tender that is submitted after the prescribed deadline.

However, a bidder should not expect that a contracting authority is always obliged to exercise its discretion in respect of a non-compliant tender, particularly where a bidder has only itself to blame for the non-compliance. Authorities can stick tightly to the rules – and bidders must beware of any failure on their part to adhere strictly to those rules.

This case clearly shows that a contracting authority is not required to exercise any discretion it may have in such circumstances, as the requirement to act proportionally cannot override the requirement to treat all bidders equally in a non-discriminatory fashion and to act transparently. Authorities can, if they choose, continue to use apparently minor, technical non-compliance by bidders to reject tenders.


In July 2008, Devon County Council (“Devon”) published a contract notice in the Official Journal of the European Union, inviting expressions of interest to tender for a four-year framework agreement under which construction projects could be procured by various public bodies in the South West of England. The framework was envisaged to have 12 participating contractors.


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J B Leadbitter & Co Ltd (“Leadbitter”) was one of the 25 contractors who expressed an interest in participating, and was duly invited to tender. The Invitation to Tender (“ITT”), which was issued in November 2008, included a number of express instructions:

• tenders had to include a minimum of four completed case studies;

• each tender, complete with any attachments, had to be submitted electronically by uploading them to the specified online portal;

• bidders had only one opportunity to complete the submission of their tenders, and the onus was on each bidder to ensure that all documents were correctly uploaded (the ITT, as well as the covering letter that accompanied it, made it clear that an incomplete set of documents would render a tender invalid);

• the deadline for the submission of the tender was noon on 16 January 2009 (which was subsequently extended to 3 p.m. for all bidders);

• if a material and genuine error was discovered during the evaluation, the relevant bidder was to be given the opportunity to confirm or correct the error in its tender; and

• if absolutely necessary, limited supplementary information (excluding any main element of the tender, such as the case studies) could be submitted in a prescribed manner prior to the deadline.

On 16 January 2009, Leadbitter submitted its tender around noon but, shortly before the revised 3 p.m. deadline, it realised that it had forgotten (due to an error on its part) to include the case studies in its tender. Unable to submit the missing case studies electronically, Leadbitter e-mailed the case studies to Devon, acknowledging that it was not in compliance with the ITT instructions, but nevertheless asking Devon to allow the case studies to be taken into account.

Devon refused to agree, noting that if it didn’t enforce the requirements set out in the ITT, it would lay itself open to claims that it was not being fair and transparent. Leadbitter subsequently sued Devon alleging, amongst other things, that there was a duty on Devon to act proportionately in making its procurement decision and that Devon acted disproportionately by refusing to waive the strict requirement for compliance with the ITT instructions and refusing to accept its case studies.

Devon sought to argue that there was no such duty because, whilst the EU Directive which underpins the UK procurement regime imposes an express duty of equal treatment, non-discrimination, and transparency on contracting authorities, the same Directive did not impose an express obligation on contracting authorities to act proportionately.

The court referred to a series of cases on this issue, and noted that any decision that a contracting authority makes in its procurement process is indeed subject to the principle of proportionality, as noted in a recital to the Directive, despite the absence of express reference to it in the operative terms of the Directive and the regulations implementing it in the UK.

The court concluded that, since the strict requirements relating to the submission of tenders applied equally to all bidders and that the requirements were clearly and well understood by Leadbitter itself, Devon was within its right to reject Leadbitter’s tender because “Fairness to all tenderers, as well as equal treatment and transparency, required that these key features should be observed”. Thus, if an


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authority is minded to exercise some discretion to act proportionately and overlook a bidder’s technical non-compliance, it must do so equally, fairly, and transparently to all bidders.

The court accepted that “There may be circumstances where proportionality will, exceptionally, require the acceptance of the late submission of the whole or significant portions of a tender”, but took the view that even if such a discretion existed, “there is no requirement to do so, particularly where, as here, it results from a fault on the part of the tenderer”.

Morrison & Foerster 3 June 2009

2011 Update: See also Countryliner v Surrey County Council (March 2011). The authority had issued a public invitation to tender for the supply of bus services and required tenderers to supply evidence of their capabilities to implement the services, including relevant planning permissions. The bidder did not do so and was eliminated from the process. The judge held that the requirement was clearly expressed and that the authority's invitation documents were clear on their terms: there had to be documentary evidence demonstrating the relevant permissions. The bidder did not comply, so the authority was within its discretion to eliminate that bidder.

There are various examples of solicitors failing to adhere to tender requirements. For example, in April 2011, the High Court dismissed an application for judicial review of a decision by the Legal Services Commission to refuse to allow a bidder to provide missing information. The claimant had omitted a mandatory form when electronically submitting its tender documents. The High Court held that the error was solely that of the claimant and that there is no requirement of proportionality which would require the authority to allow the missing form to be submitted after the prescribed deadline. Further, the authority is not obliged to point out the error because to do so would be unfair to other bidders and would breach the principles of equal treatment and transparency All About Rights Law Practice v Legal Services Commission (April 2011).

8. Limitation Periods and Delays European Procurement & Government Contracts Digest

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Court Rules on the Time Limit for the Bringing of Procurement Challenges

Under UK and European procurement rules, if a bidder wishes to challenge a government body’s contract award decision, it has to notify the awarding authority of its intention to do so, and must do so “promptly and in any event within 3 months”. A recent decision by the High Court in England shows that if it does not properly respond to a request for clarifications raised by a bidder, a contracting authority could deprive itself of the argument that a challenge brought by that bidder is time-barred.

What is the case?

The case is Amaryllis Limited v HM Treasury (sued as OGCbuyingsolutions) [2009] EWHC 962 (TCC), a decision made by the English High Court in respect of a claim brought by a furniture supplier, alleging that it was unlawfully excluded from participating in a framework arrangement for the supply of office furniture. The contracting authority made an application to strike out the claim, but this was denied by the court.

Important 2010 Update: In light of the recent ECJ judgment in Case C-406/08 Uniplex (UK) Ltd v NHS Business Services Authority (see above), the decision of the High Court in this case in respect of the requirement that the bidder must act “promptly” must be treated with caution.


This case reinforces and clarifies a number of important principles relating to the 3-month limitation period that applies to claims against contracting authorities brought under the Public Contracts Regulations 2006 (“PCR”).

For contracting authorities, this case highlights the importance of:

• responding as promptly and fully as possible to any request for clarification or information raised by bidders in respect of contract award decisions, because the culpability of a contracting authority in delaying any legal challenge that a bidder may subsequently mount against the contracting authority is a relevant factor which courts will take into account in determining whether or not a bidder brought proceedings within the 3-month limitation period (and possibly in determining whether an extension to this 3-month limitation period should be granted); and

• ensuring that the process and procedure adopted in the procurement process is as compliant with the procurement rules as possible in the first place, e.g., by ensuring that the tender documentation leaves no doubt as to what the evaluation criteria and associated weightings are, and how bidders will be marked. This is particularly important because evaluation criteria/weighting are commonly scrutinised and challenged aspects of a procurement process.1 This is particularly important in light of the increased scrutiny to which the internal processes and procedures of contracting authorities will be subjected under the new public procurement remedies regime, which is due to be implemented in the UK by 20 December 2009.2

1 As highlighted by the facts of this particular case; also see previous examples discussed in our December 2008

update Evaluation Criteria and our February 2009 update Framework Agreements: Evaluation and Claim Period.

2 For further details on the new remedies regime, see our May 2009 update New Remedies Directive.






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For any bidder on a public contract, this case highlights the importance of:

• always remaining vigilant of any actual or potential breach by the contracting authority of the duties imposed by the procurement rules, as breaches of a duty coupled with a specific irrevocable act on the part of a contracting authority (e.g., the final decision to exclude a bidder, or the final decision to award a contract to a particular bidder) is what starts the clock for the purposes of the 3-month limitation period;

• acting promptly as soon as the bidder becomes aware of a flaw in the procurement process, without waiting to see the conclusion of the procurement process. This is particularly important where the grounds for mounting a legal challenge arises early in the procurement process e.g., during the PQQ stage in a procurement process conducted under a restricted procedure; and

• being as specific as possible in describing the flaws in the procurement process alleged to contravene the procurement rules, and leaving no doubt as to the intention to bring legal proceedings, when notifying the contracting authority of the bidder’s intention formally to challenge the contracting authority’s decisions.


In November 2007, OGCbuyingsolutions (“OGCbs”)3 published a contract notice in the Official Journal of the European Union, inviting expressions of interest to tender for a framework agreement for the supply, delivery and installation of furniture and associated services. The framework agreement was divided into six lots (with Lot 1 being the most valuable), and interested parties were required to submit a completed pre-qualification questionnaire (“PQQ”).

Amaryllis Limited (“Amaryllis”), a furniture supplier with track record of supplying furniture to the UK public sector, including major government departments, duly completed and submitted its PQQ in January 2008 before the stipulated deadline. In a letter dated 17 March 2008, OGCbs notified Amaryllis that it was successful on Lots 2 to 5, but unsuccessful on Lots 1 and 6. The letter gave no detailed information as to why Amaryllis was unsuccessful and merely gave the scores attained by Amaryllis and the scoring range of other suppliers.

At a meeting held on 9 April 2008, Amaryllis mentioned to OGCbs that Amaryllis was interested to know why it was unsuccessful on Lot 1, but no clarification was given by OGCbs. Amaryllis subsequently wrote to OGCbs on 15 April 2008, requesting a clarification as to why Amaryllis had been unsuccessful on Lot 1. OGCbs wrote back on 21 April 2008, but as noted by the court, this reply “did not provide a clear or cogent explanation as to how and why the claimant had been unsuccessful on Lot 1”, and amounted to “a significant omission on the part of the defendant”.

On 23 May 2008, Amaryllis wrote again to OGCbs, stating that Amaryllis believed that its response to the PQQ was not assessed fairly by OGCbs and that it would no longer be pursuing Lots 2 to 5. This was followed by a further letter dated 4 June 2008, in which Amaryllis made clear that it was intending to bring legal proceedings against OGCbs, explaining the rationale for its intention, and asking OGCbs to disclose, among other things, the basis on which OGCbs carried out the assessment of the PQQ, including the weighted scoring system and evaluation criteria used in the assessment of the PQQ.

3 OGCbs (now renamed Buying Solutions) is an executive agency of the Office of Government Commerce in Her

Majesty’s Treasury, which procures goods and services on behalf of a large pool of public sector bodies in the UK, with the aim to maximise the value for money obtained by public sector bodies in the UK.


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According to the court, OGCbs’ response to Amaryllis’ request of 4 June 2008 was “to say the least, unsatisfactory”, and not until 8 July 2008 (after Amaryllis had commenced the proceedings on 16 June 2008) did OGCbs finally provide the clarifications sought by Amaryllis.

Amaryllis’ complaint was that OGCbs breached the core legal principles of transparency and equal treatment by, among other things, failing to indicate how the PQQ would be marked, and by failing to inform the bidders of the relative importance of the questions/topics in the PQQ. Faced with a claim in excess of £11 million, OGCbs sought to have Amaryllis’ claim struck out by arguing that Amaryllis had failed to comply with two requirements of the PCR, which were prerequisite to the bring of legal challenges under the PCR.

Under Regulation 47 of the PCR, a contracting authority’s obligation to comply with the provisions of the PCR is a duty owed to bidders, and a breach of this duty is actionable by bidders who, as a result of such breach, “suffers, or risks suffering, loss or damage”. Regulation 47(7) provides that an action under Regulation 47 must not be brought unless

• the aggrieved bidder has informed the contracting authority “of the breach or apprehended breach of the duty owed… by that contracting authority… and of its intention to bring proceedings under this regulation in respect of it” (Regulation 47(7)(a)); and

• the aggrieved bidder brings the proceedings “promptly and in any event within 3 months from the date when grounds for the bringing of the proceedings first arose unless the Court considers that there is a good reason for extending the period within which proceedings may be brought” (Regulation 47(7)(b)).

OGCbs argued that Amaryllis failed to satisfy both of these requirements. The court reviewed the relevant case law relating to the interpretation of Regulation 47, and summarised the legal position as follows:

• Any notice served by an aggrieved bidder on the contracting authority under Regulation 47(7)(a) must identify the particular breach complained of. A notice which merely alleges a breach without giving any indication of what the alleged breach might be is insufficient. However, a notice was sufficient as long as there was “a clear statement of the alleged breach by reference to the Regulations, and a stated intention to commence proceedings”.

• The test in Regulation 47(7)(b) comprised three questions, namely:

o The question of whether or not proceedings were brought within the 3-month limitation period. Here, in determining when the grounds for the bringing of the proceedings first arose, what matters is when the specific breach complained of actually occurred. This will be the point at which a specific irrevocable act takes places (e.g., the point at which the decision to exclude a bidder from the procurement process or to reject a bidder’s tender is made),4 and the bidder becomes aware of all the facts relating to such act that are necessary in order to start proceedings.

4 For the purposes of the time limit for bringing proceedings against contracting authorities, where the flawed decision (e.g.,

a decision to adopt incorrect evaluation criteria) was capable of being remedied by the contracting authority prior to the submission of the final tender, the clock does not start until the contracting authority actually implements its decisions (e.g., the flawed evaluation criteria are actually applied in selecting the successful bidders). See Henry Bros (Magherafelt) Ltd and others v Department of Education for Northern Ireland (No. 2) [2008] NIQB 105, which is discussed in our February 2009 update Framework Agreements: Evaluation & Claim Period.



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o The question of whether or not proceedings were brought promptly. In considering this question, one must look at the entire period, beginning with the date on which the grounds for the bringing of the proceedings first arose, and consider whether or not there was any culpable delay on the part of the bidder. Important 2010 Update: In light of the recent ECJ judgment in Case C-406/08 Uniplex (UK) Ltd v NHS Business Services Authority (see February 2010 update, above), this aspect of the court’s decision must be treated with caution.

o The question of whether or not the court should exercise its discretion to extend the 3-month limitation period (in cases where proceedings were brought out of time). Factors that are relevant in considering this question include, among others, the length and reason for any delay, the culpability of each party in respect of the delay, and any prejudice to the contracting authority flowing from such delay or by the grant of an extension.

In respect of the sufficiency of the notice, the court had little difficulty in finding that Amaryllis’ letter of 4 June 2008 constituted sufficient notice of the breach alleged and of Amaryllis’ intention to bring proceedings.

In respect of the 3-month limitation period, the court rejected OGCbs’ argument that the clock started running when the PQQ was made available to the bidder, stressing that what mattered was when the irrevocable decision to exclude Amaryllis was made and when Amaryllis became aware of this. The fact that the PQQ contained an inherent defect was irrelevant, partly because Amaryllis’ complaint was not related to the content of the PQQ, but rather, to the manner in which its response to the PQQ was evaluated.

On this basis, the court concluded that the limitation period started to run on 17 March 2008, when OGCbs wrote to Amaryllis informing Amaryllis of OGCbs’ decision, and therefore Amaryllis was within the 3-month limitation period, having commenced the proceedings on 16 June 2008. The court also found that Amaryllis did act promptly in bringing the proceedings (even if it had done so very close to the end of the 3-month limitation period), commenting that “This is not a case in which the claimant waited to see the outcome of a tender process it always knew to be flawed before deciding whether or not to bring proceedings” and noting that, but for OGCbs’ failure to promptly provide the information sought by Amaryllis, the proceedings would have been commenced sooner. In the court’s opinion, even if the court was wrong in respect of the first two questions, it was still likely that the case warranted the granting of extension under Regulation 47(7)(b).

Morrison & Foerster 17 June 2009

9. “Teckal” Principle & In-house Arrangements European Procurement & Government Contracts Digest

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Courts Give Guidance on the Scope of the Procurement Exclusion Applicable to “In-house” Arrangements

It is a well-established principle of EU procurement law that the open advertising and tendering rules for public contracts do not apply where a public body obtains services from “in-house” sources. This is the so-called Teckal principle. Two recent decisions, one made by the Court of Appeal in England and another made by the European Court of Justice, clarify how the Teckal principle operates, and remove any doubt as to whether the exemption applies to procurements in the UK.

What are the cases?

The cases are:

• Brent London Borough Council v Risk Management Partners Limited and London Authorities Mutual Limited and Harrow London Borough Council [2009] EWCA Civ 490 (“Brent v RMP”), a decision made by the English Court of Appeal in respect of a claim brought by an insurance provider against a local authority, which abandoned a procurement process after having decided to satisfy its insurance requirements through a mutual insurance company that it had established together with a number of other local authorities.

• Case C-480/06 Commission v Federal Republic of Germany (“Commission v Germany”), a decision made by the European Court of Justice (“ECJ”) in respect of a claim brought by the European Commission that Germany had breached the public procurement rules by allowing a group of local authorities to enter into an arrangement for waste disposal directly with another local authority without undergoing a tender process.

Why are these cases important?

It is basic law that any public body in the EU wishing to obtain services from the private sector has to comply with public procurement rules, which require open and non-discriminatory advertising, tendering, and contract award. As a generally-accepted rule, a public body does not have to comply with public procurement rules where it is only utilising its own internal resources to satisfy its requirements.

But what if a public body wishes to obtain services from another public body? Do the rules of public procurement still apply in such cases? This question was addressed by the ECJ in Case C-107/98 Teckal Srl v Comune di Viano, Azienda Gas-Acqua Consorziale di Reggio Emilia (“Teckal”), which concerned a complaint made against an Italian local authority which entered into a contract with a consortium set up by a number of municipalities without going out to tender.

In Teckal, the ECJ for the first time held that a public body could bypass the EU procurement rules and directly enter into a contract with a service provider so long as:

• the public body controls the service provider in question as if it was that public body’s own department; and

• the service provider in question carries out the essential part of its activities with the contracting authority which controls that entity.


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This decision created what is now known as the Teckal exemption. The Teckal exemption allows contracting authorities a greater scope of cooperation amongst themselves without having to rely on a much narrower, existing exemption which applies only where services were provided by a contracting authority based on certain exclusive rights held by that contracting authority.1

Brent v RMP clarifies that the Teckal exemption does apply to public procurement in the UK, i.e., that the rules of public procurement may be bypassed if a contracting authority directly enters into a contract with another entity in circumstances where the conditions for the Teckal exemption are satisfied. This case also sets out a number of important guidelines on how the Teckal exemption operates:

• the question of ownership is not alone decisive in determining whether the requisite level of control is exercised over the proposed service provider by a contracting authority. Any private sector part-ownership (no matter how minor the stake is) of the proposed service provider is likely to defeat the application of the Teckal exemption;

• the Teckal exemption could still apply even where multiple contracting authorities share the control over the proposed service provider; and

• the controlling contracting authority must possess “a power of decisive influence over both strategic objectives and significant decisions” over the proposed service provider for the Teckal exemption to apply (i.e., the more independently the entity in question is able to act, the less likely it is for the Teckal exemption to apply).

Commission v Germany effectively extends the scope of the Teckal exemption, with the result that the public procurement rules may not apply if a contracting authority directly enters into an arrangement for mutual cooperation with other contracting authorities as long as:

• the arrangement in question is “governed solely by considerations and requirements relating to the pursuit of objectives in the public interest”; and

• no private sector entity is disadvantaged vis-à-vis its competitors.

The developments seen in both of these cases are welcome news for contracting authorities who wish to exploit the concept of shared services or other forms of cooperation within the public sector as an alternative to procurement of services from the private sector.

However, contracting authorities that contemplate such “public sector alternatives” (as well as bidders who wish to challenge a contracting authority’s decision to opt for a public sector alternative) should bear in mind that the mere fact that the service provider to which a contracting authority intends to award the contract also happens to be a public body or a quasi-public body does not, without more, automatically lead to the conclusion that the proposed arrangement is exempt from the rules of public procurement.

As demonstrated by these cases, the nature of the relationship between the contracting authority and that service provider (as well as the manner in which the service provider in question is set up and organised, and provides the services) needs to be carefully examined before the public procurement rules could be legitimately bypassed. In any event, it should be noted that an arrangement between a contracting

1 See Article 18 of Directive 2004/18/EC as well as Regulation 6(2)(l) of the Public Contracts Regulations 2006.


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authority and a public body which offers services “on the market” could still be caught by the public procurement rules.2

It is worth noting in passing that UK-based central government bodies have a further possible available argument where they wish to procure services from another department or agency. Constitutionally, the principle of the “indivisibility of the Crown” still means that central government departments are not legally distinct entities in terms of the ability to enter into contracts. Although somewhat eroded, that principle could still be used to support the proposition that the public procurement rules do not apply to agreements or arrangements between different central government departments.

What happened in these cases?

Brent v RMP

A number of London local authorities, including Brent London Borough Council (“Brent”), became dissatisfied with the lack of competition and the premiums charged by commercial insurance providers as well as the way in which claims were handled. The local authorities jointly set up the London Authorities Mutual Limited (“LAML”), a mutual insurance company, which was to be controlled by, and run for the benefit of, participating London local authorities.

Brent had a series of insurance policies which were due to expire in March 2007 but Brent could not be certain that LAML would be able to provide cover from the expiration of Brent’s then-current insurance policies. Accordingly, Brent initiated a procurement process in accordance with the Public Contracts Regulations 2006 (“PCR”), inviting tenders for various insurance coverage divided into seven lots.

In February 2007, Risk Management Partners Limited (“RMP”), an insurance agent with a track record of providing insurance to the UK public sector, duly completed and submitted its tender. However, in March 2007, Brent decided to abandon the procurement process in respect of six out of the original seven lots, as Brent had decided to award the insurances for these six lots to LAML.

RMP subsequently sued Brent in June 2007, alleging that Brent did not have the legal authority to participate in LAML, and that Brent acted in breach of the public procurement rules by awarding the contract to LAML (which had not participated in the procurement process). The High Court initially agreed with RMP and gave judgment in favour of RMP. Brent went on to appeal to the Court of Appeal against the decision of the High Court. Both before the High Court and the Court of Appeal, in arguing that it had not acted in breach of the public procurement rules, Brent relied on the Teckal exemption.

Where the Teckal exemption applies, a contracting authority does not have to go through the tender process prescribed by the law. Two basic conditions must be satisfied for the Teckal exemption to apply, and they are as follows:

• the contracting authority must control the entity to which it intends to award the contract as if that entity was its own department (the first condition – the “control test”); and

2 This is due to the way in which key terms such as “service provider” and “economic operator” are defined in Directive

2004/18/EC of 31 March 2004 (see note 6 below). It should be noted that Public Contracts Regulations 2006, which implemented this Directive in the UK, is less explicit as to whether or not a public body can be a “service provider” or an “economic operator”, but any conflict between the Regulations and the Directive is likely to be interpreted so as to give effect to the principles set out in the Directive.


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• the entity in question must carry out the essential part of its activities with the contracting authority which controls that entity (the second condition – the “function test”).

The Court of Appeal reviewed the relevant case law on the application of the Teckal exemption and noted, among other things, as follows:

• it is for the contracting authority which seeks to rely on the Teckal exemption to prove that the two conditions of the Teckal exemption have been met;

• where there is a private sector participation in a contracting authority’s project (e.g., the entity to which the contracting authority intends to award the contract is partly controlled by private sector shareholders), the Teckal exemption cannot be applied;3

• control, which is the requisite element of the first condition of the Teckal exemption, may be exercised by the contracting authority alone, or jointly in conjunction with other contracting authorities;

• in order to satisfy the first condition of the Teckal exemption, the controlling contracting authority (or contracting authorities) must possess “a power of decisive influence over both strategic objectives and significant decisions of the other legal entity” (i.e., the more independently the entity in question is able to act, the less likely it is for the Teckal exemption to apply); and

• ownership of the entity in question tends to determine (without being decisive) the key issue of “control” which is the requisite element of the first condition of the Teckal exemption.

RMP essentially argued that the Teckal exemption did not form part of English law (because of the way in which the PCR, which implemented the relevant European Directive in the UK, was drafted), and that even if it was incorporated into English law, the Teckal exemption did not apply to the arrangement between Brent and LAML. Like the High Court, the Court of Appeal held that the Teckal exemption did form part of English law and could be applied to contracts which would otherwise be covered by the PCR, but on the facts of the case, concluded that the first condition of the Teckal exemption was not satisfied (but see 2011 Supreme Court update below).

In reaching this conclusion, the Court of Appeal noted that LAML’s board had an extensive authority to conduct its own business, including the power to “terminate the membership of a Participating Member” as well as the power to “establish, collect, manage and redistribute both capital contributions and premiums of local authorities”, whilst the participating local authorities’ control over LAML existed primarily in the form of “the power of a majority of participating members to call a general meeting” and “the power to direct the Board by special resolution by a 75% majority”, which was, in the views of the Court of Appeal, insufficient to satisfy the first condition of the Teckal exemption (but see 2011 Supreme Court update below).

Brent also separately argued that RMP’s complaint was brought out of time, but like the High Court, the Court of Appeal disagreed with Brent, holding that RMP’s complaint was brought within the 3-month limitation period prescribed by the PCR because the grounds for bringing the proceedings did not arise

3 This point should be borne in mind by authorities and bidders which seek to create special purpose vehicles (SPVs) for

the onward sale or commercial exploitation of solutions developed pursuant to a public services contract. Such SPVs are likely to fall outside the benefit of the Teckal exemption and, therefore, any other public bodies which might in the future want to buy services from such SPV will be unable to do so without going through the procurement regime.


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until Brent made the irrevocable decision to abandon the procurement process and RMP became aware of it.4

2011 Update: On 9 February 2011, the Supreme Court overturned the Court of Appeal’s judgment on the application of the Teckal exemption for "in-house" procurement. The Supreme Court has confirmed that the Teckal exemption applies in English law to the Public Contracts Regulations 2006. However, the Supreme Court disagreed with the Court of Appeal and found that the conditions of the application of the Teckal exemption did apply to the award of contracts by LAML, and the LAML arrangements could have been entered into without an open market procurement.

The Supreme Court confirmed that it is enough that the local authorities collectively had the necessary control over LAML. Therefore, the direct award of contracts to LAML did not breach the public procurement rules. The Court of Appeal was wrong to give primacy to the scope for exercise of discretion by the LAML board: on the facts, the local authorities did exercise a controlling interest.

The eventual decision establishes clearly that contracting authorities can work together to obtain shared services directly from a jointly-controlled service provider, without holding a competitive tender, as long as the service provider has no private sector participants and exists only to service its public sector shareholders.

Commission v Germany

In December 1995, four district councils (“Landkreise”) in lower Saxony, directly and without going through a tender process, entered into a contract with Stadtreinigung Hamburg (“Hamburg”) in connection with the disposal of their waste at a waste incineration facility operated on behalf of Hamburg. The preamble to the contract described the arrangement between the four Landkreise and Hamburg as a “regional cooperation agreement for waste disposal”. Under the contract, in return for Hamburg providing waste incineration capacity for them, the four Landkreise were obliged to make available to Hamburg the spare landfill capacities that the four Landkreise were not utilising.

The European Commission took the view that, among other things, horizontal cooperation between contracting authorities, such as the arrangement seen in this case, was not excluded from the scope of the procurement rules, and that the Landkreise could not benefit from the Teckal exemption due to the fact that none of the four Landkreise exercised any effective control over Hamburg. In November 2006, the European Commission brought infringement proceedings against Germany, seeking a declaration that Germany had failed to fulfil its obligations under the controlling Directive then in force.5

Germany sought to defend its position by arguing, among other things, that the arrangement was the culmination or extension of the internal administrative arrangements made by the administrative authorities concerned and went beyond an ordinary arrangement under a conventional service contract, because the four Landkreise were obliged to make unused landfill capacities available to Hamburg in return for the waste treatment by Hamburg. Germany also argued that this reciprocity in the arrangement was sufficient to satisfy the first condition of the Teckal exemption.

4 This aspect of the Court of Appeal’s decision reinforces the current position that, for the purposes of the time limit for

bringing proceedings against contracting authorities, where the flawed decision (e.g., a decision to adopt incorrect evaluation criteria) was capable of being remedied by the contracting authority prior to the submission of the final tender, the clock does not start until the contracting authority actually implements its decisions (e.g., the flawed evaluation criteria are actually applied in selecting the successful bidders); see Henry Bros (Magherafelt) Ltd and others v Department of Education for Northern Ireland (No. 2) [2008] NIQB 105, which is discussed in our February 2009 update Framework Agreements. Also see Amaryllis Ltd v HM Treasury [2009] EWHC 962 (TCC), which is discussed in our June 2009 update Limitation Periods and Delays.

5 Directive 92/50/EEC of 18 June 1992, which is succeeded by Directive 2004/18/EC of 31 March 2004.




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The ECJ noted that the controlling Directive then in force made it clear that a “service provider” to whom a contracting authority awards a contract could be “any natural or legal person, including a public body, which offers services”6 and, therefore, the mere fact that the service provider in a given arrangement was a public body which was distinct from the beneficiary of the services did not preclude the application of the controlling Directive to that arrangement.7

It was not disputed that none of the four Landkreise exercised a degree of control over Hamburg which was necessary to satisfy the first condition of the Teckal condition. However, the ECJ also noted that at the heart of the arrangement between the Landkreise and Hamburg was the establishment of a framework for cooperation with the aim of ensuring the performance of a public task which all parties concerned were obliged to perform (i.e., waste disposal), and that there was no financial gain in the arrangement, because the charges payable for the waste incineration service under the contract amounted to no more than the reimbursement of the charges born by the Landkreise and paid by Hamburg to the operator of the waste incineration facility.

The ECJ went on to find that:

• “a public authority has the possibility of performing the public interest tasks conferred on it by using its own resources, without being obliged to call on outside entities not forming part of its own departments, and that it may do so in cooperation with other public authorities”; and

• “Community law does not require public authorities to use any particular legal form in order to carry out jointly their public service tasks” (i.e. it was not necessary for there to be a special purpose vehicle or some other body corporate governed by public law to be established to act as the “service provider” where multiple public authorities seek to cooperate with each other in performing their public interest tasks)8 and that an arrangement for such co-operation does not undermine the principal objective of the EU public procurement rules (i.e., the free movement of services and the opening-up of undistorted competition in all the Member States) as long as:

o the arrangement in question is “governed solely by considerations and requirements relating to the pursuit of objectives in the public interest”; and

o the principle of equal treatment is observed “so that no private undertaking is placed in a position of advantage vis-à-vis competitors”.

Applying these principles to the facts of the case, the ECJ concluded that there was nothing to indicate that Germany sought to circumvent the rules on public procurement, and ruled in Germany’s favour by dismissing the European Commission’s action.

6 From Article 1(c) of Directive 92/50/EEC. This expression is mirrored in Article 1(8) of Directive 2004/18/EC, which

defines “service provider” as “any natural or legal person or public entity or group of such persons and/or bodies which offers on the market… services”.

7 In reaching this conclusion, the ECJ referred to Case C-84/03 Commission v Spain, where the ECJ previously held that Spain had failed to correctly implement another predecessor Directive on public procurement by creating an absolute exclusion from public procurement law for cooperation agreements concluded between public authorities and the other public undertakings.

8 It is to be noted that the European Commission stated to the court that “had the co-operation at issue here taken place by means of the creation of a body governed by public law to which the various local authorities concerned entrusted performance of the task in the public interest of waste disposal, it would have accepted that the use of the facility by Landkreise concerned did not fall under the rules on public procurement”.


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2012 Update: On 29 November 20121, the ECJ clarified the Teckal exemption further in the Econord v. Comune di Cagno and others case.9

The ECJ ruled that .

Morrison & Foerster June 2009

9 See our December 2012 update Limitation Periods and Delays


10. Disclosure in Proceedings European Procurement & Government Contracts Digest

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Court Gives Guidance on Scope of Disclosure in Proceedings Brought Under the Public Contracts Regulations 2006

Disputes about public contract award procedures in the UK are becoming more common. If a dispute arises, a contracting authority may be required to disclose to the challenging bidder a very wide range of documents about how bids were treated or evaluated and how the procurement was conducted, and these documents might include information in competing bids that other bidders might regard as commercially sensitive. A Court in the UK has now confirmed the limited scope of public interest immunity in relation to such disclosure requirements.

What is the case?

The case is Amaryllis Limited v. HM Treasury (No. 2) [2009] EWHC 1666 (TCC), a decision by the English High Court in respect of an application for disclosure and inspection of documents made in a claim brought by a furniture supplier against HM Treasury for an alleged breach of the public procurement rules. The Court ordered HM Treasury to disclose various documents.

2010 Update: The principles emerging from this case were recently confirmed in Croft House Care Limited and others v. Durham County Council [2010] EWHC 909 (TCC), where the contracting authority was ordered to disclose to a complainant a variety of materials, including the PQQ and ITT responses submitted by the other bidders, as well as handwritten notes made during the evaluation of them. The court held that neither the confidentiality of the documents, nor the possibility that disclosure would make it harder for the authority to re-run a competition, justified withholding the documents requested by the complaining bidder. But the court did impose limits on the access to documents for certain personnel (e.g., documents would only be disclosed to solicitors, and copies could not be taken or used by people in apposition to mis-use documents for competitive purposes).


This judgment is the second in a series of judgments delivered by the High Court in respect of a claim for an alleged breach of the Public Contracts Regulations 2006 (“PCR”).1 This particular judgment clarifies and gives guidance on the extent to which documents relating to a contracting authority’s decision-making in a procurement process should be disclosed, and how the principle of public interest immunity applies in respect of such disclosure.

For contracting authorities, this case serves as an important reminder that:

• If a dispute does arise about a contract award procedure, the authority may be required to disclose a very broad range of documents relating to the internal decision-making process, and contracting authorities should never assume that public interest immunity will automatically shield their internal documents from disclosure.

• If public interest immunity is to be asserted, it must be claimed at the earliest opportunity and the decision to do so must be made by an appropriately senior official of the contracting authority.

1 The first judgment, which reinforces and clarifies a number of important principles relating to the 3-month limitation

period that applies to claims against contracting authorities brought under the PCR, was previously discussed in our June 2009 update Limitation Periods and Delays



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For any bidder on a public contract, this case serves an important reminder that, if a dispute arises from a claim by a competing bidder concerning a perceived irregularity in the process, a very broad range of document and information that any bidder supplies to the contracting authority in the course of the procurement process could be potentially discoverable. Bidders should not assume that commercially-sensitive information disclosed to the contracting authority will automatically benefit from confidentiality in the context of a legal dispute.2

For both contracting authorities and bidders, these issues are particularly important to bear in mind, in light of the increased scrutiny to which the internal processes and procedures of contracting authorities will be subjected under the new public procurement remedies regime, which is due to be implemented in the UK by 20 December 2009.3


In November 2007, OGCbuyingsolutions (“OGCbs” – a part of HM Treasury)4 published a contract notice in the Official Journal of the European Union, inviting expressions of interest to tender for a framework agreement for the supply, delivery, and installation of furniture and associated services. The framework agreement was divided into multiple lots, and interested parties were required to submit a completed pre-qualification questionnaire (“PQQ”).

Amaryllis Limited (“Amaryllis”), a furniture supplier with a track record of supplying furniture to the UK public sector, including major government departments, duly completed and submitted its PQQ in January 2008 but, in March 2008, OGCbs notified Amaryllis that it was unsuccessful in respect of two lots, including the most valuable lot.

Dissatisfied with the lack of explanation provided by OGCbs as to why it was unsuccessful for those two lots, Amaryllis brought proceedings against OGCbs in June 2008 complaining that OGCbs had breached the core legal principles of transparency and equal treatment by, among other things, failing to indicate how the PQQ would be marked, and by failing to inform the bidders of the relative importance of the questions/topics in the PQQ.

Faced with a claim in excess of £11 million, OGCbs unsuccessfully sought to have Amaryllis’ claim struck out.5 Subsequently, the trial on liability was scheduled to commence in July 2009 but, at the last minute, a dispute regarding the adequacy of the disclosure made by OGCbs arose and Amaryllis made an application to the Court under Civil Procedure Rules (“CPR”) Rule 31.12, seeking an order that OGCbs disclose various documents relating to the procurement and the evaluation of the PQQ. OGCbs countered by making an application under CPR Rule 31.19 for permission “to withhold disclosure of a document on the ground that disclosure would damage the public interest”.

In general under CPR, a party to a litigation case is required to disclose only those documents “on which he relies” and those documents which “adversely affect his own case”, “adversely affect another party’s case”, or “support another party’s case”.6 Additionally, under CPR, any order for disclosure a court

2 The status of commercially-sensitive information under Freedom of Information law was discussed in our February 2009

update UK Freedom of Information. 3 For further details on the new remedies regime, see our May 2009 update Remedies Directive. 4 OGCbs (now renamed Buying Solutions) is an executive agency of the Office of Government Commerce in Her

Majesty’s Treasury, which procures goods and services on behalf of a large pool of public sector bodies in the UK, with the aim to maximise the value for money obtained by public sector bodies in the UK.

5 See our June 2009 update Limitation Periods and Delays. 6 See CPR Rule 31.6.





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makes must always be proportionate.7 With these principles in mind, the Court first considered whether or not the various categories of documents sought by Amaryllis were in fact relevant and prima facie subject to an order for disclosure.

The notable categories of documents sought by Amaryllis included the following:8

• Notes of the meetings that OGCbs held with various bidders prior to the commencement of the PQQ process

These documents, to the extent that they dealt with issues which related to the evaluation criteria, were relevant and had to be disclosed, subject to the question of public interest immunity and confidentiality.

• Correspondence between OGCbs and stakeholders (i.e., other government departments and agencies who were prospective purchasers of the furniture to be procured by OGCbs) as such correspondence related to the development of the PQQ

The request for such documents had to fail because such documents were simply not relevant to the issue in the case and, even if they had some marginal relevance, it would have been disproportionate to order OGCbs to locate them and disclose them.

• Amaryllis’ PQQ response as marked by OGCbs

Amaryllis’ PQQ response was previously disclosed by OGCbs in redacted form. However, there was no doubt that the marked version of the Amaryllis’ PQQ response was highly relevant and had to be disclosed without redaction.

• The other bidders’ PQQ responses

Subject to the question of public interest immunity and confidentiality, the other bidders’ PQQ responses were “plainly” something that had to be disclosed. In so concluding, the Court took note of the fact that “in the majority of procurement disputes arising out of the treatment or evaluation one company’s tender, comparisons with at least some aspects of the tenders of other third party companies are almost inevitable”.

• Notes prepared by OGCbs’ personnel relating to Amaryllis’ PQQ response

Since these notes may well provide some insight into how Amaryllis’ PQQ response was evaluated, they were clearly relevant to the issue of fair and transparent evaluation and had to be disclosed.

7 See CPR Rules 1.1(b) and 31.3(2); also see Practice Direction 31PD.2 and 31PD.4.2. 8 Disclosure of other types documents was also sought in the application made by Amaryllis but they are not discussed

because they either: (a) ceased to be an issue when OGCbs consented to their disclosure (such documents included those documents that detailed the development of PQQ, OGCbs’ internal business case for the procurement, and the development of the contract notice, as well as the questions regarding the PQQ raised by the bidders and OGCbs answers to these questions); or (b) relate to particular sets of facts that are not of general importance or interest for the purposes of this discussion.


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• Notes prepared by OGCbs’ personnel relating to the other bidders’ PQQ responses

These documents are not relevant and “even if they had some peripheral relevance, it would not be proportionate, particularly in view of the lateness of this application, to require the Defendant to disclose them”.

• OGCbs’ PQQ evaluation report dealing with the PQQ responses received from all bidders and the scoresheet summarising the results of that report, including the attachments

The report and the scoresheet were “beyond doubt” highly relevant documents that should be disclosed subject to the question of public interest immunity and confidentiality. The position was no different in respect of the three attachments to the PQQ evaluation report, namely the marking and weighting criteria spreadsheet, the evaluation results spreadsheet, and the project plan and timescales. These documents all had to be disclosed without redaction.

• “Documents relating to the decision-making process”

The Court was not prepared to make any order in respect of this category of documents, which were very similar in nature to the other documents which prima facie had to be disclosed, as well as those documents relating to the development of the PQQ OGCbs consented to disclosure.9 In any event, this category was too broad and would impose a disproportionate burden on OGCbs to investigate whether any further documents caught by these wide words have not already been disclosed in other categories.

• Documents relating to re-consideration of weightings prior to the PQQ being finalised, and the draft versions of the PQQ marking scheme

This request arose from a reference to possible re-evaluation of a particular question and the associated weighting and percentage which was made in an e-mail sent by OGCbs to some of the stakeholders. In light of the fact that the underlying e-mail was sent before the finalised version of the PQQ was made available, the Court ruled hat this category of document did not have to be disclosed. In so concluding, the Court noted that: “It does not seem to me that it is relevant to know precisely how percentages and weightings were calibrated in advance of the PQQ; what matters are the percentages and weightings that were actually applied to the Claimant’s tender and to the tenders of the other suppliers who completed the PQQ”.

By the same token, the Court held that the request for earlier draft versions of the PQQ marking scheme was not relevant to the issues and did not have to be disclosed.

Once the questions of relevance and proportionality were addressed, the Court went on to consider the issue of public interest immunity and confidentiality. The Court reviewed the relevant authorities on this issue, including Science Research Council v. Naase [1980] AC 1028, R v. Chief Constable of West Midlands Police ex parte Wiley [1995] 1 AC 274, and Case C-450/06 Varec SA v. Etat Belge.

The Court also took particular notice of the fact that, where an objection to disclosure of documents is to be made before trial on the grounds of public interest immunity pursuant to CPR Rule 31.19, the decision

9 See point (a) in note 8 above.


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to object must be taken by the Minister or, in certain circumstances, the permanent secretary in charge of the Department in question.10

Thus, on the question of public interest immunity and confidentiality, the Court concluded as follows:

• The public interest immunity could not be claimed in respect of the internal documents relating to OGCbs’ decision-making process, and they had to be disclosed to the extent that they were relevant.

In reaching this conclusion, the Court placed much emphasis on the fact that OGCbs failed to comply with the procedure set out in CPR Rule 31.19 until the very last minute, and that there was no evidence that any senior official of OGCbs or HM Treasury has even considered the issue of public interest immunity, or evidence that the requisite process for decision-making was complied with or even contemplated. The Court also noted that no proper justification for the application of public interest immunity was put forward by HM Treasury.

According to the Court, “in any case involving Regulation 4, the way in which the evaluating body has gone about the exercise will be central to the issue of whether the process was conducted in a fair and transparent way. In those circumstances, it would be a truly exceptional case where there was some form of public interest in keeping secret any aspect of that internal evaluation process”.11

• All documents relating to third parties that were relevant had to be disclosed, and any concerns as to confidentiality could be addressed adequately through redactions and substitutions

The Court accepted that at least some of the documents sought by Amaryllis contained information furnished by Amaryllis’ competitors which might be regarded as commercially sensitive. Given that a comparison between competing bidders’ PQQ responses was inevitable in this case, the question for the Court was one of balance between, on one hand, the need for transparency, and, on the other hand, the need to protect sensitive commercial information.

Here, the Court observed that:

o because the PQQs themselves contained “very little information that could possibly regarded as commercially sensitive”12 and because the procurement in question did not involve any sensitive subject-matter such as defence technology (i.e., this was not the sort of sensitive procurement which was an issue in Case C-450/06 Varec SA v. Etat Belge),13 it was unlikely

10 See paras 43-44 of the judgment; also see the “White Book” on Civil Procedure, 2009 Edition, Volume 1, p808 at para

31.1.3.33. 11 See para 56 of the judgement. Also see para 55 of the judgment, where the Court noted that it was “incontestably wrong

in principle for the Defendant to confirm, on the one hand, that they are committed to open government and compliance with Regulation 4(3) of the Public Contracts Regulations 2006, and then to assert, on the other, apparently without proper consideration, that it would cause real damage to the public interest if the public knew how [OGCbs] had approached and performed this important procurement task”.

12 In the Court’s opinion, “the highest that it can be put is that there is some information there about turnover and other business activities which may be sensitive”.

13 In Case C-450/06 Varec SA v. État belge, a bidder sought disclosure from the Belgian government of certain sensitive technical documents provided by the winning bidder. The ECJ concluded that parties to a procurement dispute were not entitled to “unlimited and absolute access to all of the information relating to the award procedure”, because the right to access information held by contracting authority had to be balanced against the right of other bidders to protect their


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that HM Treasury had possession of particularly sensitive or confidential information concerning the other bidders; and

o the PQQ itself made very clear to each bidder that the information each bidder submitted in response to the PQ may be subject to disclosure in response to a request made under the Freedom of Information Act 2000, and specifically instructed each bidder to identify any commercially-sensitive information the bidder includes in the PQQ response and to explain what harm may result from the disclosure of such information. Yet, there was no evidence that any of the other bidders said in their PQQ response that any of the information they furnished was confidential, nor was there any evidence that the bidders complied with such instruction.

Accordingly, the Court concluded that any concerns as to confidentiality of the other bidders’ information could be adequately addressed by appropriate redactions and substitutions.14

2011 Update: In Mears v. Leeds City Council (2011) the court considered whether disclosure and inspection of certain documents was necessary for disposing fairly of the proceeding. In making the decision, the court considered whether any special measure, such as redaction or hearings in private should be adopted. The court ordered disclosure of certain documents with the proviso that any confidentiality should be preserved. Accordingly, the documents were only provided to the claimant’s legal representatives for inspection with the possibility left open that, if appropriate, they may also be seen by an individual within the claimant’s organisation who had not been involved in the procurement.

Morrison & Foerster 23 September 2009

confidential information and business secrets. OGCbs unsuccessfully sought to argue that this ECJ decision was authority for the proposition that confidentiality itself may give rise to public interest immunity.

14 It is to be noted that one of the specific orders the Court gave was to replace the identity of the individual bidders in the various documents with an anonymous designation.

11. New Threshold Values for 2010 & 2011 European Procurement & Government Contracts Digest

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New Lower Procurement Threshold Values to Apply from 1 January 2010

From 1 January 2010, the threshold values that trigger the need for a regulated public procurement exercise in the UK and across Europe will be lowered.

1. What is the development?

The snappily-titled Commission Regulation (EC) No. 1177/2009 of 30 November 2009 (the “Regulation”) amends the existing European directives that set out the EU public procurement rules and will come into force on 1 January 2010. Utilities-related procurement (governed by Directive 2004/17/EC of 31 March 2004) as well as non-utilities-related procurement (governed by Directive 2004/18/EC of 13 July 2009) will be affected by the change.1

2. Why is this development important?

The EU public procurement rules require that all requirements leading to a contract awarded by a public or government body – including utilities – must follow openly advertised tendering and contract award procedures, and comply with principles of transparency, fairness and equality. A number of exceptions exist, among which is that the rules only apply to requirements above a certain financial threshold: i.e., small contracts are not required to follow the same rules.

The European Commission updates the Europe-wide threshold values every two years in order to make sure that they are consistent with the thresholds under the World Trade Organisation’s Government Procurement Agreement. On the biennial review, the thresholds have been reduced, which will catch more procurement activity.

The Regulation has a direct effect in all EU Member States, and all EU Member States will have to apply the new threshold values to their national procurement rules. As the Regulation lowers the threshold value across the board, both contracting authorities and bidders need to be aware of these changes and adjust their existing processes and procedures accordingly.

The Regulation prescribes the new threshold values in terms of Euros, and a separate communication from the European Commission sets how these new values should be translated into local currencies in EU Member States that have not converted to Euros yet.

In the UK, the new threshold values that apply from 1 January 2010 are as follows:

Non-Utilities Procurement

For contracting authorities and other regulated bodies whose activities do not fall within the utilities sector (e.g., central government departments/agencies, local authorities, etc.), the new threshold (exclusive of VAT) will generally speaking be:

1 Directive 2009/81/EC of 13 July 2009, which lays down the rules applicable to defence/security-related procurement, is

also affected, but this new Directive is unlikely to become implemented in EU member states before 21 August 2011, which is the deadline for implementation prescribed by this new Directive (see Article 72(1)).


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• £101,323 (or €125,000) for supply and services contracts, as well as design contests, to be awarded by central government departments and agencies2 excluding the following contracts:

o contracts for the provisions of research and development services;3

o contracts for certain telecommunication services;4 and

o contracts for the provision of so-called ‘Part B’ services,5

in respect of which the applicable threshold will be £156,442 (or €193,000);

• £156,442 (or €193,000) for supply and services contracts, as well as design contests, to be awarded by contracting authorities other than central government departments and agencies (e.g., local authorities);6 and

• £3,927,260 (€4,845,000) for works contracts to be awarded by any contracting authority.

In respect of subsidised contracts, the threshold will become:

• £3,927,260 (€4,845,000) for contracts for major civil engineering projects and the construction of hospitals, schools, universities and other public buildings, where the works are subsidised directly by contracting authorities by more than 50%; and

• £156,442 (or €193,000) for services contracts that are subsidised directly by contracting authorities by more than 50% (to the extent such services contracts relate to contracts for major civil engineering projects or the construction of hospitals, schools, universities and other public buildings that are also directly subsidised by contracting authorities by more than 50%).

Where a contracting authority enters into multiple contracts to cover a single requirement, the Euro-value of threshold applicable to each lot is unaffected by the Regulation and will remain at:

• £64,846 (or €80,000) for each lot of a supply and services contract; and

• £810,580 (or €1,000,000) for each lot of a works contract.

Note that separate thresholds continue to apply to procurement of goods and services by the Ministry of Defence, as well as planned procurements to be included in prior information notices.

2 These are entities listed in Schedule 1 to the Public Contracts Regulations 2006 (which reflects Annex IV to Directive

2004/18/EC). 3 These are services that fall within Category 8 of ‘Part A’ services listed in Schedule 3 to the Public Contracts

Regulations 2006 (which reflects Annex II A of Directive 2004/18/EC). 4 These are services that fall within Category 5 of ‘Part A’ services listed in Schedule 3 to the Public Contracts

Regulations 2006 and have CPV codes that are the equivalent of CPC reference 7524, 7525, and 7526. 5 These are services that fall within ‘Part B’ services listed in Schedule 3 to the Public Contracts Regulations 2006 (which

reflects Annex II B of Directive 2004/18/EC). 6 These are entities not listed in Schedule 1 to the Public Contracts Regulations 2006 (which reflects Annex IV to

Directive 2004/18/EC).


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Utilities Procurement

For contracting authorities and other regulated bodies that pursue activities in the utilities sector (e.g., operators of gas/electricity distribution networks, operators of public transport services, etc.), the new threshold (exclusive of VAT) will, generally speaking, be:

• £313,694 (or €387,000) in respect of supply and services contracts as well as design contents organised as part of procurement for services; and

• £3,927,260 (or €4,845,000) in respect of works contracts.

Where multiple contracts are awarded to cover a single requirement, the Euro-value of threshold applicable to each lot is unaffected by the Regulation and will remain at:

• £64,846 (or €80,000) for each lot of a supply and services contract; and

• £810,580 (or €1,000,000) for each lot of a works contract.

Note that separate thresholds will continue to apply to planned procurements to be included in periodic indicative notices.

Morrison & Foerster 31 December 2009

Why MoFo? European Procurement & Government Contracts Digest

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Summary – Why MoFo?

Top Quality Legal Advice

Our approach to each of our client engagements is consistent: we provide high quality legal services in a down-to-earth and practical manner; and we offer our clients the highest levels of commitment and responsiveness.

Experience of UK Public Sector IT Projects

Our London office is recognised as a market-leader in advising on projects procured in accordance with the Public Contracts Regulations. Our group leader, Alistair Maughan, is one of the foremost lawyers in the UK in this field and is a member of OGC’s Legal User Group.

Relevant Expertise

MoFo is a world leader among law firms advising on IT and outsourcing projects: we are the only law firm with a top-tier technology transactions practice across 3 continents. We combine this with expertise in key areas such as public procurement law, HR, data privacy/security and freedom of information law.

Named, Dedicated Team We have assembled a team of lawyers with strong experience on government technology projects. This allows us to flow-down work to more junior, cost-effective resources without loss of quality or relevant experience.

Authority-side work

We have a strong track record of advising government departments on outsourcing and procurement projects. We have been involved in public sector projects for, among others, HMRC, NPIA, DWP, UK Border Agency, UK Benefits Agency, DVLA, department for Transport and Ambulance Radio.

Bid-side work

Our team has experience of advising bidders on major public sector projects including Fujitsu, EDS, PwC, IBM, Booz & Co. and 3M. During the bid phase, we understand the dynamics of the customer relationship that our clients need to preserve – and we seek to optimise bids and enhance our clients’ distinguishing features through the commercial negotiations.

More than just Lawyers

We do more than just provide legal advice. We will help our clients to avoid unnecessary risks and deliver their project on time and on budget. We look for creative and innovative solutions to our clients’ business issues. Each project is a commercial, regulatory, technical and economic jigsaw. We’re great at project management (and jigsaws!).

Thought Leaders We’re helping to shape the public sector and outsourcing industries. Check out our library of useful materials at www.mofo.com/sourcing

The MoFo Way We commit to our clients and become a part of their team. We avoid legalese, jargon and academic answers to issues. Think lawyers with their sleeves rolled up, not academic legal advisors.

http://www.mofo.com/sourcing

Contact Details European Procurement & Government Contracts Digest

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Alistair Maughan, Partner and Chair of the Global Sourcing Group

Academic Background:

Law degree, Leicester University (1984); College of law, Chester (1985).

Years of experience in matters relevant to public procurement projects:

21 years’ experience.

Contact:

[email protected]

020 7920 4066

Alistair Maughan leads our UK public sector group and is acknowledged to be one of the UK’s foremost public sector IT lawyers. His recent transactions include:

• advising HMRC on all aspects of the ASPIRE contract including the merger of ASPIRE with HMC&E’s ISA contract, as well as claims against HMRC’s suppliers relating to NTC, CHIEF and other matters;

• advising National Police Improvement Agency on its national fingerprint identification system and its project for the delivery of a UK emergency mobile radio network (including the major extension to cover the London Underground network);

• advising UK Border Agency on the procurement of a global visa application system for the United Kingdom.

His other public sector clients over the years have included the Ministry of Defence, Department for Transport, the Benefits Agency, DWP, CCTA (predecessor to OGC), Rural Payments Agency.

He also advises bidders on major public sector projects. Clients on part projects include Fujitsu, EDS, PwC, IBM, and Booz & Co.

He has advised on all forms of public procurement projects, including one of the first successful competitive dialogue projects, HMRC’s “CHIEF” project to replace the UK’s import/export tracking system.

Alistair focuses on IT, software, IP and outsourcing projects for major companies and public sector organisations. His primary areas of expertise include advising on outsourcing transactions (both IT and business process-driven; and both on-shore and offshore); negotiating contracts for the supply and acquisition of technology equipment, services and software; advising on issues and contracts related to e-commerce; counselling public bodies on procurement policy and procedures; and drafting, negotiating and advising on all types of technology contracts and issues.

Professional qualifications and/or recognition/awards and publications:

Alistair Maughan was admitted as a solicitor in England and Wales in 1987. He has practised law on both sides of the Atlantic and was also admitted to the New York Bar in 1990. Alistair is a highly-regarded commercial lawyer. The Legal 500, Chambers Global and Chambers UK, leading independent guides to the legal profession, recommend him as having “a formidable reputation on major projects”, and comment that he “impresses clients with an outsourcing profile that is judged to be ‘as good as you can get’...”; and is “the best outsourcing lawyer ever when it comes to acting for the customer end of the market,” and “the King of outsourcing.” PLC Which Lawyer describes him as “A leader in the field, particularly highly regarded for his public sector-related work.”

Alistair is a regular speaker at seminars and conferences on procurement, IT and outsourcing issues.

mailto:[email protected]