knowledge 1 March 2016 |

Court of Appeal Overturns High Court to Confirm Strictness of Public Procurement Challenge Deadlines

Time Limits for Public Procurement Actions

A challenge to a public procurement decision which is subject to the European procurement Directives must be taken within 30 calendar days after the challenger was notified of the decision, or knew or ought to have known of the infringement alleged. The court retains discretion to extend the time period where it considers there is “good reason to do so”.

Facts of the Case

On 30 September 2014, Galway County Local Community Development Committee decided to appoint a single provider to distribute funds aimed at tackling poverty in rural County Galway rather than separate Galway into two lots as had been done previously. Forum Connemara was the incumbent for one of the two existing lots and objected strenuously to the decision to amalgamate the County into a single lot for the purpose of the contract. Nevertheless, Forum Connemara participated in the tender procedure for the single contract. It was informed on 2 March 2015 that it had been unsuccessful. It commenced a challenge on 23 March 2015, seeking an order overturning the decision of 30 September 2014 to structure the contract as a single lot, as well as an order overturning the decision of 2 March 2015 to reject its tender.

While the High Court did not find it necessary to determine exactly when the time limit began to run (because it held that it would be justifiable to extend the time limit in any event, as set out below), the Court of Appeal confirmed that the challenge period must be taken to have commenced on 30 September 2014. Forum Connemara had known of the alleged infringement as of that date, and there was no suggestion that the procurement process itself had been conducted in breach of the relevant rules. The basis of Forum Connemara’s case was an alleged illegality in the decision to treat the County of Galway as a single lot, which was known to them as of 30 September 2014.

High Court Decision

The High Court had regard to a number of factors which it determined were unique to this case, and determined that there was good reason to extend the challenge period. The Court of Appeal summarised as follows:

• Forum Connemara was a community organisation, rather than a sophisticated commercial entity, and might not have appreciated the need to take proceedings within 30 days. Legal costs were also prohibitive.
• The allegations made went to the heart of good government, and there was a public interest in allowing the challenge to be heard.
• Forum Connemara, before the decision of 30 September 2014, had received an assurance from the Department of the Environment, Community & Local Government that the funds would not be distributed in the way they ultimately were.
• The decision to proceed on the basis of one lot had caused great concern in the local community.
• The contract was not a typical public contract, in that it was for the disbursement of funds to vulnerable members of society.

Court of Appeal Decision

The Court of Appeal overturned the High Court’s decision, finding that there was nothing unique about the case at hand that would justify the approach taken at first instance. To extend time in the absence of strong reason to do so would significantly undermine the efficacy of the public procurement regime. The Court of Appeal emphasised the long line of authority confirming that public procurement challenges must be pursued quickly and was particularly critical of the factors identified by the High Court as marking this case apart from a typical procurement case. For example:

• The Court of Appeal noted that Forum Connemara employed 200 people and submitted a sophisticated tender for the contract in question; it was not reasonable to infer that an organisation of that kind would not have appreciated the need to seek legal advice to protect its rights. The desire to avoid legal costs by exploring other avenues (such as political representation), is typical of any aggrieved party and is not unique to Forum Connemara.
• It was not reasonable to rely on the Department’s assurance when that had clearly been overtaken by later events.
• Every challenge to a public procurement decision alleges a breach of the principles of good government, and this case is no different from any other in that respect.
• It is common for public procurement decisions to generate controversy; the fact that the community were concerned in this case was not sufficient to mark this case apart.
• While the contract might be for a social purpose, Forum Connemara was a large commercial enterprise and this contract represented how it would make its money, like any other business.

The Court of Appeal also emphasised that Forum Connemara had participated in the tender procedure, notwithstanding its objections to the structure adopted. The Court of Appeal reaffirmed the case law that states that a tenderer cannot “have his cake and eat it”. If a tenderer is aggrieved by a decision taken at the outset of the process it must decide at that point whether to challenge; it cannot wait to challenge that same decision only after it is told that its tender has been rejected.

Finally, having found that there were no “good reasons” to extend the time, the Court of Appeal held that there was a factor which weighed heavily against such an extension, namely the prejudice to the entity which had been identified as the winner of the contract, but whose ability to commence work had been suspended by Forum Connemara’s challenge.

Conclusion

The Court of Appeal has restored a welcome degree of certainty to the circumstances in which a court will exercise its discretion to extend time for late procurement challenges. While a court retains a power to extend the time period, it seems that this will only be done in exceptional circumstances. It appears that a court, in deciding whether or not to extend the challenge periods, must also have regard to the effect that this would have on third parties, such as the winning bidder.