Public Contract (Amendment) Regulations 2009 and new procurement remedies

1. Public Contract (Amendment) Regulations 2009 and new procurement remedies John Conder, Partner

2. Key drivers for new remedies • Sufficient time for a bidder to review its position, and whether to challenge, before contract – adequate standstill period • Bidders not to lose the chance of a contract by a contract being entered into without an opportunity to review/challenge – contract can be declared ineffective • Easier to stop you in your tracks – automatic suspension

3. Key drivers for new remedies • Promoting increased transparency – by debrief information being given to all before contract concluded • Curbing illegal direct awards by power to declare contracts ineffective • Penalties for playing fast and loose with the rules – fines and contract shortening which are “effective, proportionate and dissuasive” (in addition to ineffective contracts and damages)

4. New or old rules? • New rules apply to all procurements commenced after 20 December 2009 • Where a framework is concluded through a procurement started before 20 December 2009, call offs under it are subject to the old rules

5. Public contracts • Contract between one or more economic operators and one or more contracting authorities • having as their object the execution of works, the supply of products or the provision of services within the meaning of this Directive” • Above threshold • Not excluded

6. Framework agreements – key principles • Not a public contract - an agreement or other arrangement which establishes the terms under which the economic operator will enter into contracts • Framework agreement awarded using chosen procedure on lowest price or MEAT • With one supplier or (if sufficient number meet criteria) 3 or more suppliers • Call off contracts awarded under it • By application of the terms of the framework agreement; or • Through a mini competition with all parties to the framework capable of performing the proposed contract

7. Ineffectiveness – Ground 1 You fail to publish acontract notice Unless: (1) you considered a contract notice was not required • You publish in the OJEU a voluntary transparency notice expressing your intention to enter into the contract and • contract not let for at least 10 days following notice

8. High risk areas • Significant variations to existing contracts • Contract awarded is outside scope of OJEU notice

9. Ineffectiveness – Ground 2 (1) There is failure to comply withstandstill rules i.e: • court proceedings started and yet you proceed to enter into the contract or • standstill period not observed which deprives bidder of pre contractual remedies and (2) Thereis also a substantive breach of the Regulations which has affected the bidder’s chance of obtaining a contract If (1) but not (2), the court must order fines or contract shortening instead

10. Ineffectiveness – Ground 3 An above threshold contract is awarded under a framework and the mini-competition rules are not complied with Unless: • You voluntarily apply the standstill period • You consider that you have complied with the mini-competition rules • You comply with the standstill notice requirements (or you breach the dynamic purchasing systems rules)

11. Standstill notice - recipients Must be sent to those who have submitted an offer andthose who did not submit an offer but who:- • applied to be asked to tender or to be a party to a framework agreement and • have not been informed of the reasons why their application was rejected

12. Standstill notice - content Unsuccessful tenderers must be told: • their score compared to the successful tenderer • the relative advantages of the successful tender (the reasons why they were unsuccessful?)

13. standstill notice - scope No standstill required where: • no OJEU contract notice was required or • only one tenderer and no candidates or • contract is awarded under a framework agreement

14. Standstill period Standstill of not less than 10 days or 15 days, depending on method of communicating award decision, but note: • must be communicated by most rapid means of communication possible • measured from when all economic operators have been informed • runs from compliant notices • if last day is not a working day, period is extended to end of next working day

15. Remedies: if no contract concluded • Start of proceeding, in respect of a decision to award, leads to automatic suspension of procurement – you are no longer permitted to enter into contract • Court may set aside decision, order you to amend any document and award damages

16. Remedies: if contract concluded • If court is satisfied that there are grounds for ineffectiveness, court must made a declaration of ineffectiveness, unless:- • a party to the proceedings raises the issue of reasons against it • there are overriding reasons relating to the general interest for not doing so (and such reasons cannot relate to costs directly linked to the contract)

17. Remedies: if contract concluded • If: • there are grounds for ineffectiveness but it is not ordered or • the standstill rules are breached but there is no declaration of ineffectiveness, then the court must order duration of contract to be shortened, or a civil penalty or both • Court may in addition orderdamages to any tenderer who has suffered loss (including loss of a chance)

18. What does ineffectiveness mean? • Prospectively ineffective from time declaration made by court • Court may make any order it thinks appropriate to address circumstances of case and any consequential matters arising from ineffectiveness • Court may address issues of restitution and compensation between parties to the contract (who are parties to the proceedings) as it considers just

19. What does ineffectiveness mean? • Court must not make an order inconsistent with anything agreed by parties to apply in the event of ineffectiveness (save where incompatible with prospective ineffectiveness). • Court must order contracting authority to pay a civil penalty (save for a call off contract being declared ineffective)

20. What does ineffectiveness mean? If a framework agreement is declared ineffective each call off under it is not automatically ineffective:- • a separate claim has to be made (within the time limit) for a call off to be declared ineffective • but the court will then declare it ineffective (even if it is below threshold) unless there are overriding reasons in the general interest against doing so • If there are such reasons the court must order contract shortening of the call off to the maximum extent compatible with those reasons

21. Contract shortening • Court can order restitution or compensation if a contract is shortened • Court must not make an order inconsistent with anything agreed by parties to apply in the event of contract shortening (save where incompatible with shortening)

22. Time limit for bringing proceedings – if ineffectiveness is not sought Claim form to be served: • within 3 months of becoming aware of relevant facts constituting the breach • but where proceedings relate to a decision sent to an economic operator, need not be brought before 10/15 days after economic operator has been informed of “a summary of the reasons for the decision” • and where it does not relate to a decision sent to an economic operator and the decision is “published”, need not be brought before 10 days after its publication (but period may be extended by the court where it considers there is good reason for doing so)

23. Time limit for bringing proceedings – if ineffectiveness is sought • within 30 days of day after:- • date contract award notice published in OJEU (only applies where no contract notice was issued and contract award notice includes justification for not issuing one) or • economic operator was told contract has been concluded and has been given a summary of reasons it was unsuccessful • or, in all other cases, within 6 months of day after contract entered into (with no court discretion to extend):

24. Supplementary notes These are included in the slides below

25. Mini-competition rules 1. If any term for a call off under a multi-party framework is not laid down in framework agreement, a mini competition must be held 2. On the same or more precisely formulated terms (on terms not substantially amended from the terms laid down in framework agreement) 3. May include other terms referred to in the [contract documents based on the] framework agreement (square brackets indicate wording in Regulations but not in Directive)

26. Mini-competition rules 4. Consult in writing with all economic operators capable of performing contract before inviting tenders 5. Fix a sufficiently long time limit for return of tenders 6. Tenders to be submitted in writing and to remain confidential until time for return 7. Award to best tender on the basis of the award criteria specified in the [contract documents based on the] framework agreement

27. Content of a standstill notice • precise statement of standstill period • criteria of the award • the reasons for the decision to award the contract or conclude the framework including the characteristics of the successful tender • the score (if any) obtained by the recipient of the notice and the score of successful tenderer(s) • (if applicable) the reasons why the recipient of the notice did not meet the technical specification requirements • name of successful tenderer(s) • Candidates must in addition be told the reasons why they were unsuccessful • unsuccessful tenderers must in addition be told the relative advantages of successful tender (the reasons why they were unsuccessful?)

28. Thank you John Conder Partner Morgan Cole LLP, Oxford Direct telephone number 01865 262651 John.conder@morgan-cole.com www.morgan-cole.com Please note that this training is designed to raise awareness of some aspects of a general nature and should not be relied on as a detailed exposition of the law to be applied to a particular case. Specific advice should be sought separate from this training on any specific application of the law to particular circumstances.