EU Procurement: The 3-Month Rule

It is well known that claims brought for a breach of the 2006

Public Contracts Regulations must be made within a tight 3 month

time limit. There have been two recent cases Brent London

Borough Council v Risk Management Partners Ltd, [2009] EWCA

Civ 490 and Amaryllis v HM Treasury, [2009] EWHC 962 (TCC)

which have considered this principle.

Regulation 47(7) makes it clear that there is a two step

process:

(7) Proceedings under this regulation must not be brought

unless –

the economic operator bringing the proceedings has informed

the contracting authority ... of the breach or apprehended breach

of the duty owed to it.....and of its intention to bring

proceedings under this regulation in respect of it; and

those proceedings are brought promptly and in any event

within 3 months from the date when the grounds for the bringing of

the proceedings first arose unless the court considers that there

is good reason for extending the period within which the

proceedings may be brought.

Brent London Borough Council v Risk Management Partners

Ltd

The Brent case came before the Court of Appeal. Here

RMP claimed that certain contracts of insurance had been awarded by

Brent Authority to the London Mutual Ltd ("LAML") outside

of a tender process in which they participated. It is important to

note that RMP were only making a claim for damages. Amongst other

issues, Brent said that the claims were started more than three

months after the date on which the grounds for bringing the

proceedings first arose. In particular, Brent submitted that

grounds for bringing proceedings existed (and that time therefore

started to run) in November 2006 when RMP were told that Brent was

obtaining insurance elsewhere. Proceedings were not commenced until

6 June 2007. If Brent was right, RMP were well out of time.

Pill LJ noted that:

When considering when grounds for proceedings first arose it

is necessary to bear in mind that the Regulations prescribe the

procedure which a contracting authority must follow before entering

into a contract with a supplier of goods or services... It follows

that a failure by the contracting authority to comply with any step

in the required procedure involves a breach of duty sufficient to

support a claim under the Regulations. Moreover, because the

procedure governs the whole process from the formation of the

intention to procure goods or services to the award of the contract

and is structured in a way that is intended to ensure equal

treatment and transparency throughout, a failure to comply with the

procedure at any stage inevitably undermines the integrity of all

that follows.

In doing so, he expressly recognized the problem that whilst

grounds for bringing proceedings may exist well before the

procedure reaches the award of a contract, the Regulations do not

expressly identify the point at which that will occur. The relevant

chronology was as follows:

On 9 October 2006, Brent resolved in principle to participate

in LAML;

On 7 November 2006, the RMP were told by Brent's brokers

that Brent "had committed to going into the Mutual" but

that there was uncertainty whether it would be ready by the next

renewal date (1 April 2007) and there would be some insurance that

would be sought outside it anyway. Accordingly there was to be a

full tender exercise;

At a meeting on 13 November 2006, Brent resolved to approve

participation in LAML;

In December 2006 Brent invited tenders for cover generally from

1 April 2007;

On 18 January 2007, Brent began membership with LAML;

Because incorrect documentation had...