THE PUBLIC PROCUREMENT REMEDIES REGIME IN THE EU & THE UK

THE PUBLIC PROCUREMENT REMEDIES REGIME IN THE EU & THE UK DR AMA EYO

Aim Intended to increase suppliers and tenderers’ awareness and understanding of the EU and UK legal framework on procurement remedies

Outline • The Remedies regime – introduction and purpose • Legal framework on Procurement Remedies in the EU and UK • Enforcement of Public Procurement Law at EU level • Enforcement at national level • Practical tips on the regime for suppliers • Principles to be observed by contracting authorities

What is the Remedies regime? Legal actions which allow economic operators to request the enforcement of public procurement provisions and their rights under those provisions in cases where contracting authorities, either intentionally or unintentionally, fail to comply with the legal framework for public procurement

Purpose of the regime • Increase the transparency of contract award procedures • Build confidence in public procurement among businesses • Facilitate competition • Correct irregularities in contract award procedures • Useful mechanism for monitoring contract award procedures

Legal framework • Directive 89/665/EEC which relates to public sector contract award procedures • Directive 92/13/EEC which relates to utilities contract award procedures • Directive 2007/66/EC which amends and develops these Directives • Implemented in the UK by • Public Contracts (Amendment) Regulation 2009 • Utilities Contracts (Amendment) Regulation 2009 • The Public Procurement (Miscellaneous Amendments) Regulations 2011

Overview of the framework • Targets areas where bidders had in the past been frustrated • Increases the range and gravity of remedies • Attempts to lower hurdles faced by litigants

Enforcement of Public Procurement Rules Supranational system National System

Supranational System • Infringement proceedings by the Commission • Enforcement proceedings before the Court of Justice • interim measures – rarely used • enforcement proceedings against MS according to Art 258 TFEU • enforcement proceedings against MS according to Art 260 TFEU

Supranational System – an example C-503/04, Commission v Germany • 30 years service contracts awarded without notice • Subsequent action to judgment in C-20/01 and C-28/01 • Commission argued that the contract should be terminated, but MS initially refused to terminate the contract • Requested the Court to impose a daily payment of Euro 126,720 (C-20/01) and Euro 31,680 (C-28/01) until compliance

Effect of C-503/04, Commission v Germany • Established the principle that a breach of EU public procurement rules can lead to a duty to terminate the public contract in question • Follows from this that concluded contracts in specific instances can become ineffective • Principle now developed in the Remedies Directive and implemented in national laws • May lead to efficient enforcement and increased compliance of public procurement rules

Main Effects of the Directive • Standstill provisions • Time limits for review • Automatic Suspension • New remedy of ineffectiveness • Damages • Alternative penalties

The United Kingdom • First adopted public procurement regulations in 1991 • Until 2006, England, Wales, Northern Ireland and Scotland used to have the same regulations • However now separate procurement regulations for Scotland pursuant to the Devolution Settlement Agreements • Though separate Regulations, the regimes are very similar and implement all of the EU rules

Source of Bidders’ remedies • Public Contracts Regulations as CA’s obligations under the Regulations are a “duty owed to economic operators” • Breach of that duty actionable by any economic operator which, in consequence, suffers, or risks suffering, loss or damages • Judicial review of public law matters

The Remedies Regime in the UK • New law in the UK from 20 December 2009 • Main points: • Enhanced award notification requirements • Standstill requirements • Interim suspension of contract award procedure or implementation of any decision or action taken in the course of the procedure • Set aside of any unlawful decision • Award of damages • Shortening of contract • Declaration of ineffectiveness • Financial penalties

Enforcement in the uk - emerging trends • Previously no culture of bid protest • Slight increase in procurement litigation cases with about 20 cases per year • Most cases arise from Northern Ireland • Areas of challenge: • Award criteria • Weighting • Evaluation methodology • Unequal treatment • Lack of transparency • Termination of procurement procedure before contract award

Emerging picture

STANDING • Review proceedings for contracts covered by the Procurement Regulations is actionable by Any person who sought or seeks or would have wished to be the person to whom a contract is awarded if he or she suffers or risks suffering loss or damage due to the contracting authority’s breach • Judicial Review actions A party “with sufficient interest in the matter” has standing for judicial review ( S.31(3) Senior Courts Act 1980

Time limits for challenges • EU law permits MS to impose “reasonable” time limits for the initiation of review proceedings • Position before 1 October 2011 – Reg 47(D) “challenges to be instituted promptly and in any event within 3 months from when the grounds for review arose and not from the time when they became known to those concerned ” • Uniplex case – time limits have to run from the time when the applicant knew or ought to have known that an infringement of public procurement rules occurred • From 1 October 2011- 30 days from date of knowledge • Court has discretion to extend up to an absolute maximum of 3 months

Some specific issues – Standstill Old regime Current regime • 2 stage • Letter sent by contracting authority • If a debrief is requested within 48 hours, then further feedback • 1 stage • Obligation to provide all economic operators with a full set of reasons (including scores) for the contract award at the start of standstill period rather than upon a request

Some specific issues – Remedies Old regime Current regime • Injunction/set aside by interim order • Award of damages once contract signed • No periodic penalty payments and no financial or other alternative penalties • Automatic suspension • Contract shortening • Financial penalties (“effective, proportionate and dissuasive” • Ineffectiveness

Some specific issues - Automatic suspension • American Cyanamid • there is a serious issue to be tried • damages are an inadequate remedy; and • the “balance of convenience” favours holding up the procurement • Court may refuse to maintain suspension where the negative consequences are likely to outweigh the benefits, having regard to: • need for effective and rapid review • consequences for all interests likely to be harmed • public interest

Lifting of Automatic suspension cases • Indigo v Colchester Institute [2010] - American Cyanamid principles still relevant • Exel Europe Ltd V University Hospitals Coventry & Warwickshire NHS Trust [2010] - Regulation imports the injunction test and the Cyanamid principles and in assessing the balance of convenience, the potential harm to the public interest, as well as the interests of the parties, are to be taken into account • Halo Trust V Sec of State for International Devt[2011] - Public interest used to lift suspension • Metropolitan Resources v Sec of State for the Home Dept [2011] - - Balance of convenience favoured disapplying the suspension

The Future • Possibly more legal challenges • Settlement actions • Consequences (intended and unintended) for • contracting authorities • successful bidders • unsuccessful bidders • incumbent suppliers • sponsors and funders

SUPPLIERS • Know obligations that are owed to you by CA • On receipt of notification letter • Ensure early and careful consideration • Check for compliance with requirements • Any disclosure of breach? • Any cause for concern? • Does information provide “characteristics/relative advantages” • If you are the successful bidder check that • i) the contract was advertised correctly and • ii) there was a standstill period in which all the candidates were notified of the intention to award you the contract • Training, training, training!

CONTRACTING AUTHORITIES • Know your status! • Follow public procurement principles diligently - tighten up the specification, the selection and award criteria (including weightings) and the way in which bids are evaluated • Improve the quality of debrief information • Publish voluntary ‘ex ante transparency notice’ in relevant cases • Train procurement officers • Watch out for procurement fraud • Sometimes a short face to face meeting could resolve issues!

Thank you

THE PUBLIC PROCUREMENT REMEDIES REGIME IN THE EU & THE UK