UK Public Procurement Law Digest: The Perils Of High-Speed Trains And The Elusiveness Of The Remedy Of Ineffectiveness

The UK High Court has struck out an application for "ineffectiveness" made by an aggrieved bidder under the UK procurement rules, clarifying the way in which the new contract set-aside remedy operates and reinforcing the importance of acting with promptness in seeking remedies under European public procurement law.

The remedy of "set-aside" or "ineffectiveness" was introduced in 2009 in order to allow courts to overturn contract awards in certain circumstances. Until now, there have been no reported cases to illustrate how the courts would approach the remedy. When first enacted, the remedy was considered potentially draconian, but decisions in cases such as the one described below show how hard it may be to make a sufficiently strong case to persuade a court to apply the set-aside remedy.

WHAT IS THE CASE?

The case is Alstom Transport v. (1) Eurostar International Limited and (2) Siemens PLC [2011] EWHC 1828, a decision made by the English High Court in an application made by the cross-channel train operator, Eurostar, and the successful bidder, Siemens, to strike out parts of a claim brought by Alstom, an aggrieved bidder who lost out in a tender for a contract to supply the new generation of trains as part of Eurostar's £700 million investment in its fleet.

WHY IS THIS CASE IMPORTANT?

This case involves an interim application, made by a private company which is alleged to be a "utility", to strike out parts of a claim made by an aggrieved bidder. As such, much of the substance of the aggrieved bidder's complaints remains to be determined at a subsequent trial. Nevertheless, this case clarifies the way in which the "ineffectiveness" remedy operates under the current procurement remedies regime, and it conveys a number of important messages for both bidders and utilities alike.

It is easy to forget that the procurement remedies regime applies equally to utilities, as well as to more traditional public sector bodies. So, whilst this case centres on the interpretation of the public procurement rules that apply to the utilities sector, due the similarity between the legal regimes that underpin the utilities sector and the non-utility public sector, the messages that emerge from this case would be equally relevant to those bidders and contracting authorities that engage in procurement outside the utilities sector.

The key messages that emerge from this case are as follows:

Awarding authorities/utilities and winning bidders should welcome this ruling, as it provides clarification that allegations as to subsequent alteration to an awarded contract will effectively not be covered by the ineffectiveness remedy, insofar as the allegation is that the contract finally awarded at the conclusion of a given procurement process was materially different from that which was initially advertised. This ruling also clarifies that the information which an awarding authority/utility is required to provide to unsuccessful bidders in order to benefit from the shorter 30-day limitation period for the ineffectiveness remedy does not have to be in writing or in any particular form. Awarding utilities should take heed of the unsuccessful attempt of the utility in this case to interpret the requirement for advertisement narrowly. It is now clear that the fact that the negotiated procedure was used and no "contract notice" in the conventional sense was issued does not mean that there was no requirement for advertisement for the purposes of the ineffectiveness remedy. A losing bidder will need to be mindful of the fact that, if it wishes to pursue ineffectiveness as a remedy, it must act promptly. Whilst the general limitation period for public procurement challenges is 3 months, and a claim for ineffectiveness has a 6-month limitation period, in most circumstances, it is likely that losing bidders will need to act within 30 days of the debriefing. If a bidder wishes to challenge formally an awarding authority/utility's decision, it could potentially weaken its case if it has failed to listen to what the awarding authority/utility asks the participating bidders to do in the ITT/ITN, BAFO, and other documentation released by the awarding authority/utility. An unwilling and reluctant bidder could potentially fall foul of an argument that any shortfall or non-compliance on the part of the authority would not have made any difference to the outcome of the procurement. WHAT HAPPENED IN THIS CASE?

The Background

Having decided that it was time to upgrade its fleet of trains, Eurostar embarked on a procurement exercise based on the negotiated procedure, issuing a pre-qualification questionnaire ("PQQ") to six potential bidders in January 2009. Alstom, along with Siemens and another...

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