Procurement news blog

It is now almost six months since the launch in September 2011 of the model short form ICT contract for local government.

The Managed ICT Services Model Agreement, or MISMA, is based on the OGC model agreement which is familiar to many of those involved in public sector IT. The original model agreement was intended only for major IT projects, and work on a slimmed down "OGC lite" has been ongoing for several years. In the end the MISMA is aimed at a local government audience, as local government was perceived to have the greatest need for the short form IT agreement.

At a meeting of the IT suppliers association Intellect earlier today, none of the suppliers and lawyers present had seen any live use of MISMA, and it may be that this is due in part to lack of awareness of the contract amongst local government legal teams.

The document should also be helpful to those in other public bodies, including the NHS, and we are aware of proposed use of MISMA in central government.

A copy of MISMA, together with instructions for its use, is available via the Local Partnerships web site (registration is required).

In the meantime, MISMA's elder brother, the original OGC model agreement, is no longer officially maintained, but it is still in use in a number of IT procurements. A copy can still be accessed online via the National Archives.

The hope is that greater publicity around MISMA will encourage take up, to improve consistency of approach in local government IT procurements, and to take advantage of the considerable work invested in developing the new model.

In a presently unreported decision on 20 January 2012 the High Court considered as a preliminary issue whether Eurostar International Limited ("EIL") fell within the definition of a 'contracting authority' for the purposes of the Public Contract Regulations ("PCR"). The case was argued by procurement heavy-weights Michael Bowsher QC and Sarah Hannaford QC and was the subject of a detailed judgment. Although it focused largely on the Utilities Contract Regulations 2006 the judge gave detailed consideration to the definition of 'contracting authority' for the purposes of the PCR in particular what the definition of 'a body governed by public law' should be.

It is worth noting that under the Regulations as enacted in the PCR, but not under the Directive, a 'contracting authority' can only be a body within the UK. Directive 17 on the other hand applies the definition to a body within any Member State. EIL is a joint venture between SNCF (wholly owned by the French government) 55%, LCR (wholly owned by the Secretary of State for Transport) 40% and SNCB (wholly owned by the Belgian government) 5%. It is currently the sole provider of rail services through the Channel Tunnel and over the years has received a substantial amount of State Aid.

The case was brought by Alstom Transport which argued that EIL was a body 'governed by public law'. It was a body 'governed by public law' because:

• It has a legal personality; and
• It is established for the specific purpose of meeting needs in the general interest, not having an industrial or commercial character; and
• It is subject to management supervision by other bodies subject to public law.

The first limb of the definition was uncontroversial.

The second limb has two parts. The court was satisfied that EIL did meet needs in the general public interest. The ECJ threshold on this is not high so, in previous cases, the building of an office block in the town centre was considered to be 'meeting needs in the general interest'. The question therefore was whether the activities were of an industrial or commercial nature. The European jurisprudence on this places a good deal of weight on the extent of competition. The more competition there is the more likely the needs would have an industrial or commercial character. Alstom pointed to the fact that EIL was the sole operator through the Channel Tunnel and also to the fact that it had received a very considerable amount of State Aid.

EIL argued that, taken overall, while it was currently the only operator through the tunnel not only were there other options for crossing the Channel but also the market had been de-regulated and that from 2013 Deutsche Bahn would be running a service through the tunnel. Indeed the services EIL were seeking related to the future and to the prospect of that competition.

The judge agreed that it was right to take all the context into account and the future in which competition would increase and on that basis he found that EIL's activities were of an industrial/commercial character. Accordingly on that ground the submission that it fell within the definition of 'contracting authority' failed.

Notwithstanding this the judge also went on to consider whether EIL was subject to management supervision by other bodies subject to public law. It was undoubtedly true that all 3 of the joint venture partners-SNCF, SNCB and LCR were owned or controlled by the governments of Member States. Under the terms of the Directive this would be sufficient to show management supervision by other bodies subject to public law. The judge however took the view that the UK government had quite specifically implemented the Directive in the way that it had in the PCR so that only UK bodies could be considered contracting authorities. Once SNCF was taken out of the equation then it was not possible to argue that EIL was subject to management supervision by other bodies subject to public law.

This case is interesting because the initial reaction is to assume that EIL would not be caught by the PCR. Once you delve deeper into the structure and set up then it was certainly arguable that perhaps it should be and although the judge in this case eventually agreed that the EIL was not a 'contracting authority' it demonstrates that it is always worthwhile to delve a little bit deeper into the structure and activities of a 'contracting authority' if you consider that a challenge may be appropriate.

A recent Court of Appeal decision contains a useful review of the law relating to the award of “concession contracts”, a type of contract excluded from the main operative parts of the procurement regulations. It also considers the extent to which implied duties to consider a tender can be imposed on a contracting authority, where the contract falls outside the scope of the procurement regime.

The case concerned the Ministry of Justice’s decision to award contracts to bailiffs for recovery of unpaid magistrates’ court fines. The MoJ does not pay bailiffs for this service. Their fees are added to the fine and recovered from the defaulter; the bailiff carries the risk of non-recovery. JBW Group were unsuccessful in tendering. They claimed a breach of the procurement regulations and alleged that the MoJ had provided improper assistance to a rival bidder. The MoJ defended the claim on the basis that the contract was a service concession contract.

The judgment summarised the paradigm case of a concession as being:
“where the applicant is put in possession of a business opportunity which he can exploit by providing services to third parties and charging them directly for those services. The contractor then bears the risks of running the business which are typically greater than those involved in performing a contract for a fixed fee.”

Whilst Elias LJ commented that he found the question of whether the bailiff contracts were a concession “very difficult”, he nonetheless held that the requirements of a concession were met. Accordingly, the procurement regulations did not apply.

JBW’s alternative argument was that the MoJ was bound by an implied contract to consider all tenders in accordance with EU principles of equality and transparency.

The Court considered this argument in light of the earlier Blackpool Aero Club decision. The Court was prepared to hold an implied contract existed, which imposed duties on the MoJ to consider the tender in good faith, both as a matter of public and private law. However, it was not prepared to impose wider duties such as equality or transparency, since they were not necessary to give efficacy to the implied contract.

The Commission published in late December its draft legislative proposals on a replacement EU procurement directive (as well as a draft replacement utilities directive and a proposed new directive on concession contracts).

The revised draft rules are intended to provide clarity in a number of areas which have been the subject of case law under the current regime, to improve and streamline procurement procedures, and to facilitate cross-border competition and opportunities for SMEs. The many changes include the concept of "innovation partnerships" as a new procurement route, and the negotiated procedure becomes a "competitive procedure with negotiation". The draft regulations also contain new provisions on joint procurement by contracting authorities, market testing, tenders presented as an "electronic catalogue", and the concept of a "European procurement passport" which has previously been promoted as a means of reducing administration for SMEs.

The Cabinet Office has issued a Procurement Policy Note asking for feedback on some of the proposals contained within the draft. It expresses concern that the Commission has chosen not to exempt mutuals from the draft regulations, and at the level of governance requirements.

Negotiations on the draft directives are ongoing, and as a result these proposals may change significantly before any new regulations are adopted into EU law (expected to be in 2013), and then transposed into UK legislation.

The Commission and Cabinet Office have confirmed that the relaxation of the rules permitting the use of the accelerated restricted procedure will cease to apply from 1 January 2012.

The Commission had previously authorised use of accelerated restricted where the acceleration would benefit the economy (which was generally taken to apply to most substantial contracts). The Commission's decision therefore appears to reflect an EU view that the economic situation has now improved, which may be a surprise to those watching growth figures for EU member states!

The change will mean that only the more limited justification for accelerating the restricted procedure around urgency preventing the use of the standard time frames (as set out in Regulation 16) will apply for procurements commenced in the new year.

The Cabinet Office has confirmed this in a Procurement Policy Note, which also confirms the new procurement thresholds which will apply from 1 January.

How time flies…the European Commission has recently published the new public procurement financial thresholds which will apply from 1 January 2012.  The new thresholds will apply for award procedures under the Public Contracts Regulations 2006, the Utilities Contracts Regulations 2006 and the Defence and Security Public Contracts Regulations 2011.

In short, the new UK thresholds under the Public Contracts Regulations are:

• Supply/Service contracts awarded by central government- £113,057
• Supply/Service contracts awarded by other contracting authorities - £173,934
• Works contracts - £4,348,350

The new € EUR thresholds can be found here and the equivalent £ GBP thresholds can be found here.

The EU has issued some helpful (if lengthy) guidance called "Buying Green" - a handbook explaining how to introduce environmental factors into the procurement process.

The new handbook deals with the issue which has been the subject of some debate among procurement professionals - is it appropriate to consider green credentials at PQQ stage? The procurement regulations are quite clear on what can be taken into account at PQQ stage (see Regulations 23, 24 and 25). There is a brief reference to "environmental management measures" at Regulation 25(2)(h) but consideration of this is limited to "where it is necessary for the performance of the contract".

There is no clear basis in the Regulations on which you could ask, for example, "do you have an environmental impact policy in place?" and score that as part of the PQQ. However, the Buying Green paper points out, at pages 34 and 35, a number of areas where green credentials could be legitimately built in to standard PQQ questions, for example by asking about past experience of contracts with similar environmental requirements.

Procurement professionals in universities were excited to read the following in a recent Department of Business Innovation and Skills White Paper ("Students at the heart of the system") presented in June by David Willetts, Minister for Universities and Science:
"Changes to the way institutions are funded may also reduce regulatory requirements. For example, because in future most funding will follow students in the forms of loans and direct grant funding from Government will decrease, fewer institutions may be subject to EU Procurement Rules."

So what is the legal position? Are universities now exempt from the procurement rules?

In broad terms, a university will be a "contracting authority" (ie a public body subject to the procurement rules) if in excess of 50% of its funding is public funding. Public funding for these purposes includes sums paid by other contracting authorities in respect of tuition fees.

The relevant change here is that funding in respect of tuition which would have previously been paid to a university by the Higher Education Funding Council for England (HEFCE), will now be paid to the university by the Student Loans Company (SLC). As far as the university is concerned, payments from the SLC are payments for the provision of tuition to a student on a qualifying education programme. Therefore, in terms of the university as a recipient of the payments, there is no material difference in terms of the purpose and/or use of the payments, from the position where the sums were received from HEFCE.

The SLC will seek repayment from students via the tax system on the basis of a contract between the relevant students and the SLC. The university is not a party to the contract, and the money paid to the university is in no way contingent on, or impacted by, whether or not any sums are repaid by students. There is no consideration given by the university to the SLC in respect of the sums received.

The SLC is a non-departmental public body that is wholly owned by government and is therefore itself a contracting authority.

Given the above understanding of the position and the operation of the SLC, our view is that it is clear that sums received from the SLC are public funding for the purposes of the procurement rules - they are sums paid by a contracting authority to universities in respect of tuition fees.

On this basis, our current view is that an increase in the percentage of funding received by a university from the SLC and a corresponding decrease in the percentage from HEFCE will not have any impact on whether the university is subject to the public procurement rules. Those university procurement officers who were hoping to escape from the procurement rules are, for the moment, going to be disappointed.

There are two important points to note:
- Firstly, in the event that the Student Loans Company is privatised (and the government indicates in the White Paper that the sale of its loan book remains a possibility), this may have an impact on the above analysis - the precise impact would depend on what is privatised, and the structure of any privatised loans provider.
- Secondly, if the increase in tuition fees leads to an increase in students paying fees themselves direct to the university (ie students funding their course privately) then that will be relevant for a university in assessing the proportion of its income that comes from public funding. Public funding does not include tuition fees paid direct by students to a university.

Those procurement practitioners who have had to consider whether a contract is exempt from competition under the Regulations on the basis that it is an "in house" contract, will know that the rules in this area have been - at best - somewhat opaque.

The Commission has come to the rescue with a working paper on "public-public cooperation". The paper is intended as a summary of the existing position rather than to create new law, but is a surprisingly readable summary of this complex area, and gives a clear statement of the principles.

For authorities needing to consider whether a contract might be "Teckal exempt" the paper is a good place to start.

Those attending the annual White Paper Conference on procurement law last week were treated to an insight from leading commentators into the likely future direction of procurement law.

Predictions of future developments included:
- an increased focus on value for money and less of a technical and mechanistic approach to interpreting the rules;
- an attempt to breath new life into the competitive dialogue procedure, with reduced (if any) restrictions on its use, and scope for post-tender negotiation;
- the (welcome?) return of the negotiated procedure to mainstream use;
- further increases in the use of electronic procurement, including availability of all tender and contract documentation online earlier in the procurement process; and
- improved training and guidance for those involved in procurement.

Speakers also highlighted the need for clarity about how the government's extensive plans for mutuals would be impacted by the procurement regime. Watch this space!

The White Paper speakers also had some interesting things to say about developments on procurement challenges. Among the views expressed:
- the American Cyanamid test which has been adopted by the courts for dealing with automatic suspension cases is natural to English courts but imposes a real barrier to claimants;
- there may be insufficient weight given to the public interest in getting procurements right as opposed to procuring the service;
- ineffectiveness as a remedy was counter-intuitive to English courts and unlikely to be very…well…effective; and
- there was little prospect of the EU legislation on remedies being amended in the near future given how recently the Remedies Directive has been introduced.

In 2010 Mrs Hossack, the sole principal of a firm of solicitors which has its only office in Northamptonshire submitted a tender to the Legal Services Commission (“LSC”) for a contract to provide publicly funded services in social welfare law from 14 October 2010. The tendering process divided England & Wales into 125 geographical areas and Hossacks tendered for each. The tender documents required, amongst other things, that the prospective service provider should have, at least, a part-time office in each area where services were to be provided.

In making its bids, Hossacks submitted a pro forma containing identical information. That pro forma referred in each case to Wiltshire and contained information specific to that area. In particular it stated (it turned out wrongly) that Hossacks would open a part-time office in Wiltshire.

Accordingly, when it came to submitting a bid for Northamptonshire, where its sole office was situated, the erroneous information that the firm intended to have a part time office there was given.

In July 2011 the LSC rejected all of Hossack’s bids except that for Wiltshire on the grounds that all other tender forms submitted did not relate to the applicable invitations to tender.
So far, not particularly unusual. What was unusual was that rather than bringing a claim under the Public Contract Regulations (“the Regulations”), Hossacks sought leave to bring judicial review proceedings to challenge the LSC’s decision.

The usual counter to such proceedings is that the Regulations provide an alternative remedy in these cases and generally judicial review is only allowed where no other remedy is available.

This was probably accepted when the application for leave to bring judicial review proceedings was rejected on paper. On appeal, this position was certainly accepted by the judge who even indicated a willingness to transfer the claim to the Chancery Division so that it could proceed under the Regulations.

Hossacks maintained however that the Regulations did not give it an alternative remedy and this argument was accepted by the Court of Appeal handing down judgment on 8 July 2011. It allowed an appeal to bring judicial review proceedings in respect of the LSC’s rejection of the tender for the Northampton area.

The Court of Appeal considered whether judicial review was rendered inappropriate by the existence of an alternative statutory remedy in the form of an application under the Regulations and found that it was not. If Hossacks was to succeed in proceedings for judicial review the LSC’s rejection of its tender could be quashed and the LSC asked to reconsider with the possibility that a contract may be awarded at the end of it. It was not clear that the same result could be achieved under the Regulation where there was a risk that the only remedy was damages. Hossacks wanted the contract, not damages.

The judicial review was heard on 27 October 2011 and was rejected for reasons that are interesting but not the main focus of this blog post. What has been interesting is the willingness of the court to accept the argument that the Regulations do not always provide an adequate alternative remedy and that judicial review may be appropriate where the Claimant is seeking, effectively, a second chance at the tender process.

As the case law develops on the Regulations and the courts have so far seemed reluctant to apply the ineffectiveness remedy perhaps judicial review will be used as an option instead to secure a second bite of the cherry.

The Office of Government Commerce website (formerly at www.ogc.gov.uk) is now offline, as OGC's main activities have now been transferred to the Cabinet Office. However, the site contained a number of resources used by many procurement professionals (and linked from this and other websites, including the website of the Cabinet Office).

Old OGC content can be viewed as part of the National Archives by adding the following text before the original OGC web address: http://webarchive.nationalarchives.gov.uk/20110601212617/

Click below for example links:

• Example link 1
• Example link 2

Going forward, procurement guidance now falls under the "Transparency" heading of the Cabinet Office site, and the most recent Procurement Policy Notes are available here.

The Cabinet Office has issued new guidance, effective immediately, on the transparency obligations relating to the publication of contracts and tender documentation. The guidance applies to central government departments, agents and agencies and non-departmental public bodies as well as NHS bodies and trading funds.

There are a number of amendments to the guidance, including updates to address dynamic purchasing systems, and new guidance on the "consultancy value statement" which must be completed relating to all consultancy purchases of over £20K.

The guidance is available to download in two parts - Publication of New Central Government Contracts, and Publication of Tender Documentation.

The EU has recently been considering the problems faced by small and medium-sized enterprises (SMEs) in competing for public contracts under the current EU procurement regime. SMEs win only 31-38% of public procurement contracts by value which is substantially less than their overall share in the economy (52% of combined turnover) suggests they should. Ironically therefore measures designed to increase competition and to free the market for all potential bidders is actually having the opposite effect by making it too costly for most SMEs to participate in tenders for public contracts.

The Committee for the Internal Market and Consumer Protection has recently considered this point and unanimously approved measures to remove the administrative barriers for SMEs to allow them to participate more effectively in competitive tenders. Those measures include a proposal for an EU-wide "electronic procurement passport" which would prove that the holder complies with EU rules on public procurement without the need to go through a substantial paper exercise for each new bid. MEPs also backed a proposal to divide public contracts into lots to give SMEs a better chance of bidding.

Although we are still a long way from any firm proposals, let alone the introduction of further legislation, the mood in Europe is clearly to lighten the load for SMEs, not-for-profit and social economy operators when it comes to the current requirements for bidding for public contracts. The Commission has been seeking views since January 2011 on this and is currently preparing a series of legislative proposals which will be tabled later this autumn.

Further up-dates on this will be available via our blog in due course.

On 27 August, European Commission Implementing Regulation 842/2011 was passed, introducing new proformas for various OJEU notices (for example, prior information notices, advertisements, award notices and voluntary ex ante transparency notices). The regulation will come into force on 16 September, meaning the new proformas must be used from that date.

The regulation is available here; the new proformas themselves are contained in the annexes to it.

From 1 October 2011 new Regulations (the Public Procurement (Miscellaneous Amendments) Regulations 2011) will implement the judgment in the Uniplex case into UK law.

In Uniplex the European Court of Justice considered Regulation 47(7) of the Public Contract Regulations and in particular the requirement to bring proceedings for infringement "promptly and in any event within 3 months from the date when grounds for the bringing of proceedings first arose, unless the Court considers there is a good reason for extending the period". This was very much in line with practice in English courts in particular in judicial review cases.

In Uniplex the ECJ held that in order to guarantee the effectiveness of the remedy provided by the EU Remedies Directive:

• The limitation period for bringing proceedings to establish an infringement or to obtain damages should not start to run until the date on which the potential Claimant knew or ought to have known of the alleged breach of the procurement rules; and
• That the requirement to bring proceedings promptly, which left the court with a discretion to dismiss an application before the 3 month time limit for bringing a claim had not yet expired, was inconsistent with EU law as it was not precise and made the limitation rules uncertain.

Judgment in Uniplex was handed down in January 2010. In November the Cabinet Office began consulting on the necessary amendments to the Regulations in order to implement it. The conclusion of the consultation was to amend the Regulations so that the time limit for bringing legal proceedings should be 30 days starting from the date of knowledge of the matters which might give rise to a claim but preserving a discretion for the court to extend the period to an absolute maximum of 3 months from the date of knowledge.

Ahead of the formal implementation of Uniplex the courts have ignored the word 'promptly' in Regulation 47(7) thus largely implementing the judgment of the ECJ by default. As a result, the principal battleground has been over the date of knowledge. The Cabinet Office have chosen not to define this any further than the date on which the potential Claimant first knew, or ought to have known, that grounds for starting proceedings had arisen. The leading case on this is Sita UK Limited v Greater Manchester Waste Disposal Authority which held that the time period begins to run when the potential Claimant has knowledge of the basic facts which apparently clearly indicate (although do not necessarily prove) an infringement of the Regulations.

As a result of implementing Uniplex there are some further consequential amendments dealt with in the new Regulations. These include:

• A provision that for the purposes of the automatic suspension provisions under Regulation 47G6 the claim need only be issued and not served on the contracting authority;
• The issued claim must, however, be served, within 7 days of issue; and
• If the contracting authority is in any event aware that proceedings have been issued then the automatic suspension will still apply.

There is also a modification of the requirements for sending standstill notices. It will no longer be necessary to send a standstill notice to all tenderers who submitted an offer. There will be no requirement to send the notice to those economic operators whose tenders have been 'definitively excluded'. A tender has been 'definitively excluded' where that exclusion has either been held to be lawful in proceedings or where the time limits for bringing a claim have already expired

Readers may well be aware that the European Commission is currently consulting on the modernisation of public procurement policy with a view to updating the current EU Directives.

The UK government has recently published the UK's response to this consultation, the highlights of which are as follows:

• a warning note is sounded about the conflict between (1) using procurement policy to achieve societal and wider policy objectives, and (2) allowing authorities to achieve value for money and achieve their purchasing objectives;
• the regime should be made more friendly to small and medium-sized bidders;
• a proposal is made that contracts could be directly awarded for a fixed period of up to three years to employee-led organisations or mutuals, to allow employees to gain experience of running public services prior to being required to take part in a fully competitive procurement process;
• Part B services should remain separate from the Part A services regime and there should no be no extension of the rules currently applicable to Part B procurements;
• definition of contracting authorities - the catch-all provision that a body subject to "management supervision" by another contracting authority should be clarified so that it does not catch organisations where the government or other public body merely retains some light tough oversight, or long-stop step-in rights, but provides no funding or general management control;
• call for increased financial thresholds beyond which the EU procurement rules should apply;
• procurement procedures should be improved to reduce timescales and bureaucracy; the option of using the negotiated procedure with notice should be made generally available; and
• selection and award criteria should be made more flexible; particularly, it should be possible to examine past performance, skills and qualifications at a later stage than simply at selection/PQQ stage.

The Commission is now formulating new legislation, which we expect will be available by the end of 2011.

Readers will probably be aware that the Remedies Directive made available a new remedy to claimants known as a “declaration of ineffectiveness”. Briefly, this allows the court to overturn an awarded contract in three specific situations:

• Ground one - where the contract was “directly” awarded without notice or appropriate competition
• Ground two - where the contracting authority failed to run a compliant standstill period, which deprived the bidder of the opportunity to suspend the award process prior to award
• Ground three - where the contract was awarded under a framework arrangement and the rules on “mini-competitions” were not followed correctly.

This new regime has its own time limits which are separate from the general time limits for procurement damages claims. In short, a claimant has up to 6 months from the day after the contract was entered into, unless:

• a contract award notice is published in the OJEU; or
• the contracting authority informs the bidder of the award and a summary of the relevant reasons and relative advantages and characteristics of the successful bid.

In the latter two cases, the bidder’s time limit is reduced to 30 days from the day after the notice is published or the reasons given.

Last week the first claim for one of these declarations of ineffectiveness was heard, in the case of Alstom v Eurostar which concerned a contract for the replacement of the Eurostar fleet of trains.

Back in 2010, Alstom had already applied for an injunction to prevent award – this failed and the contract was duly awarded. Alstom therefore turned to the new ineffectiveness regime to try to get the contract overturned. The claim was actually brought under the Utilities Contracts Regulations 2006, which run parallel to the more commonly used Public Contracts Regulations 2006 and contain many of the same provisions, although there are also some key differences.

The contract was awarded using a qualification system, which is provided for in the Utilities Regulations but not in the Public Contracts Regulations. Alstom complained that:

• the qualification notice Eurostar issued was not a “notice” for the purposes of the first ground of ineffectiveness, therefore there had been no notice and the first ground of ineffectiveness was satisfied; and
• the standstill period had not been run correctly and Alstom had been deprived of an opportunity to seek redress for breaches.

The application was again unsuccessful and the contract was upheld. The judgment brings out the following useful pointers as to how the courts are minded to apply these new provisions:

• a qualification notice was a notice for the purposes of the first ground of ineffectiveness. Note that this is a concept particular to the Utilities Regulations and the ineffectiveness provisions in the parallel Public Contracts Regulations clearly state that it is an OJEU contract notice which is required (as opposed to, say, a Prior Information Notice);

• given that Alstom had brought injunction proceedings back in 2010 to try to prevent the award, it could hardly argue that the second ground of ineffectiveness applied now. The fact that it made the application for the injunction demonstrated that, whether or not the standstill period had been correctly run, it had not been deprived of a chance to prevent the award of the contract; and

• the judge applied the 30 day time limit and made some useful observations about the duty to “give reasons” in these situations, saying that this should be done in a short document in order to lessen commercial uncertainty; “it is undesirable to have a limitation period dependent on a long and potentially contentious document”.

On Tuesday, judgment was handed down in the interesting case of Mears Limited v Leeds City Council, which concerned a procurement for the maintenance of public housing stock. The case illustrates some of the rocks on which an evaluation process might founder and provides a helpful practical application of the recent line of cases around disclosure of award criteria. It also provides useful guidance on how contracting authorities might best structure evaluation schemes so as to avoid potential breaches of the procurement regulations.

Leeds ran a competitive dialogue process for tenders to maintain its public housing stock. The process contained several stages. The claimant, Mears, was successful in getting through the initial selection phase, but was unsuccessful in reaching the final bid phase. The assessment of the bids involved three elements which would later prove to be contentious:

• an Evaluation Table, divided into several sections, with each section containing several questions. Each overall section was given a weighting, but within each section, no weightings were given to individual questions. Before the bid deadline, a bidder asked for clarification as to how each question would be weighted and was simply referred back to the Evaluation Table itself (in which each section of questions had an overall weighting). The claimant argued that the questions amounted to separate sub-criteria that should have been weighted, and that this was a breach by Leeds.

• internal Scoring Guidance, which suggested that, this being a competitive dialogue process, full marks on certain elements could be reserved for those bids which showed innovation or exceeded the specification in some way. The claimant argued, following the findings in Letting International v London Borough of Newham, that the failure to tell bidders that full marks could only be obtained by exceeding the stated requirements was non-transparent and was therefore a breach of the regulations.

• internal Model Answers, which gave guidance to evaluators as to what might be expected in answers to the questions in the Evaluation Table. The claimant argued that the content of these Model Answers amounted to separate criteria which should have been disclosed.

An interesting precursor to this hearing is that there was a previous trial in January of this year to decide whether the internal Model Answers should be disclosed to the claimant. Mears became aware of the existence of these Model Answers during the feedback stage, when Leeds explained that marks had been lost because “answers do not hit Model Answers”. Leeds then refused to disclose the Model Answers during the feedback stage on the grounds that to do so would defeat the purpose of the procurement and result in identical, “tick box” answers from all the bidders, between which it would then be impossible to distinguish. The court recognised this as a legitimate concern, but also held that it was essential to Mears’ case that Mears had sight of the Model Answers, and ordered disclosure within a “confidentiality ring”, to Mears’ named representative and solicitors only. This illustrates the dangers of unwittingly providing “ammunition” to bidders during the feedback stage (although of course it can always be argued that bidders will have a right to a wide range of information via a Freedom of Information Act request in any case).

Turning back to the recent hearing, the judge first looked back at the leading recent cases around evaluation and summarised the current state of the law. Criteria, sub-criteria and weightings need to be disclosed to bidders upfront in order that bidders can prepare the bid with an understanding as to how it will be assessed and what the contracting authority’s requirements are. There are however a couple of situations where a contracting authority is justified in not disclosing a criterion; first, because it does not, on a reasonable view, introduce different or new criteria, sub-criteria or weightings; or secondly, because it could not have affected the tenders in any event.

In the light of this, the judge decided that:

• the unweighted questions in the Evaluation Table did amount to sub-criteria and should have been weighted. Bidders may well have bidded differently had they understood the relative importance of each question. This was therefore a breach by Leeds.

• on the evidence, the Scoring Guidance was guidance only and although it suggested that innovative bids might score top marks, it was not impossible to score full marks without innovation. As such this was not a matter that needed to have been disclosed to bidders. The judge seems to have been influenced by the fact that this was a competitive dialogue process where bidders should expect that a contracting authority is looking for offers of individual and potentially innovative solutions. Perhaps his view would have been different had this been a more simple process under the open or restricted procedures.

• a couple of the Model Answers did amount to undisclosed award criteria and therefore this was a breach by Leeds. But, those two answers excepted, there was no requirement to disclose the Model Answers as the majority of them were not award criteria or sub-criteria and were merely guidance. The judge seems to have accepted that there should not be a general rule to disclose Model Answers as this would create “identikit” bids which it would become impossible to evaluate. However he warned that Model Answers must be scrutinised to ensure that they do not contain award criteria or sub-criteria which have not otherwise been disclosed.

Having established that there had indeed been some breaches by Leeds, the judge went on to consider whether the claimant had actually suffered any loss which needed to be remedied. Leeds argued that Mears would still not have obtained a high enough score to advance further in the process even if the breaches had not taken place. But the judge decided Mears only needed to demonstrate more than a “fanciful chance” of being successful had it had access to the information that Leeds had not disclosed, and decided this test was met.

The judge finally looked at what remedy ought to be given to Mears – the choice being to award damages, or to order the re-running of the procurement, or indeed both – the court having a discretion to decide on a remedy under the procurement regulations. He decided that there was a strong public interest issue, in that Leeds would be left without contracts to maintain its social housing, and on that basis that only damages should be awarded and that the procurement should be allowed to stand.

The case is reassuring to contracting authorities that in general model answers are not disclosable in advance provided they do not introduce new criteria; this has been a troubling question in the light of the recent trend in case law to insist on disclosure of award criteria, sub-criteria and in some cases sub-sub-criteria. Contracting authorities would be well advised to ensure that evaluation aids such as model answers and scoring guides, if they are not to be disclosed, do not contain new criteria and are expressly stated to be for guidance only and not prescriptive. Of more concern to contracting authorities is the fact that the case also demonstrates that, where breaches are established, the claimant does not need to show that it would have definitely won the contract had the breaches not taken place; the "more than a fanciful chance" test is not a great hurdle for a claimant to surmount once a technical breach has been established by the court.

At the end of last month it was announced that the Bribery Act 2010 will come into force in July of this year. As readers may be aware, the Act essentially codifies what was previously rather a hotch potch and outdated collection of statutory and common law offences relating to bribery and corruption. It also introduces a new offence known as the "section 7" offence, whereby a company which fails to have adequate procedures in place to prevent bribery can itself be convicted of the criminal offence of failure to prevent bribery.

One of the interesting questions from a public procurement perspective has been the issue of how the Bribery Act 2010 will be cross-referenced into regulation 23(1) of The Public Contracts Regulations 2006 (the Regulations), which deals with mandatory exclusion criteria. Regulation 23(1) in its current form requires a contracting authority automatically to exclude any bidder which has a conviction for the offence of bribery or for corruption under the Public Bodies Corrupt Practices Act 1889 or the Prevention of Corruption Act 1906; these two statutes will be repealed in full when the Bribery Act 2010 comes into force.

We can therefore expect to see updated drafting of regulation 23 to reflect the Bribery Act 2010; a consultation is expected to be held shortly on how this should be achieved.

Given that conviction for the offence of bribery is a case for mandatory exclusion at present, we presume that the two new basic offences under sections 1 and 2 of the Bribery Act 2010 (broadly speaking, offences relating to bribing or accepting a bribe) will remain in the mandatory exclusion category, although this has not been formally confirmed.

The interesting angle is that Kenneth Clarke MP has confirmed that a conviction for the new "section 7" corporate offence of failure to prevent bribery will not require mandatory exclusion by contracting authorities - rather, they will be permitted to exercise their discretion as to whether to accept the bid or not, under regulation 23(4). It is expected that guidance will be published on how contracting authorities might approach the exercising of this discretion.

We will post further updates once the consultation is published.