Public procurement claims can often be challenging for many reasons and one specific challenge is establishing whether or not a claimant has ‘standing’ to bring a claim in the first place. A recent decision in the High Court which was endorsed by the Court of Appeal has highlighted the meaning of ‘standing’ and how it can be interpreted.
What is Standing in a public procurement claim?
Standing generally refers to whether a party has a right to bring a claim and this has been tested recently in a very public case. The case involves public procurement - the process public bodies follow when awarding contracts to third parties. To ensure that contracts are awarded fairly and to the best bidder, public bodies have to follow a legal process which is set out in the Public Contract Regulations 2015. Where public bodies fail to follow this process, this can lead to a contract being voided or damages being paid out to parties who lost the opportunity to bid or have their bid fairly considered.
It is important to note though that even if there has been a breach of procurement rules, not everyone can bring a claim; only those which have ‘standing’.
The case - Community R4C Limited v Gloucestershire County Council
The team recently acted for Community R4C (CR4C), in a procurement claim against Gloucestershire County Council (GCC). CR4C claimed that GCC had failed to follow procurement rules when it awarded a £600m contract to a third party for the construction and operation of a waste incinerator in Gloucestershire.
Not only did CR4C say that GCC had acted unlawfully, but it also claimed that it would have made a successful bid if it had been given the chance to do so.
Before the court could decide whether GCC had breached procurement rules, it had to decide if CR4C had ‘standing’ to bring a claim. This considered whether:
- CR4C was an ‘economic operator’ which means whether it offered waste treatment services on the market and
- CR4C could have satisfied GCC’s tender requirements.
The court also had to decide if CR4C was out of time for bringing a claim, which it would be if it failed to bring a claim within 30 days of knowledge of any potential breach. Importantly for CR4C, the court decided that CR4C’s claim was not out of time; it could not have known any sooner than it did about the changes to the contract. GCC had in effect kept this ‘secret’ for around three years.
However, on the evidence available, the court decided that ultimately, CR4C did not have ‘standing’ to make a bid for the contract.
The test applied by the court on Standing
In deciding whether CR4C had standing, the test used by the court was whether it was more likely than not that CR4C could show it had standing (i.e. 51% or more). It decided that it did not meet this threshold (or the threshold outlined below) and this has since been supported by the Court of Appeal when it decided to refuse CR4C’s application for permission to appeal.
The alternative test
The alternative test which CR4C said the court should have used was whether it had more than a ‘fanciful chance’. CR4C reasoned that a less demanding test should apply where there had not been an opportunity to tender and as such it was being asked to show that it could have met a hypothetical tender, at a hypothetical date, with a hypothetical consortium of companies. The balance of probabilities test actually applied by the court and subsequently confirmed by the Court of Appeal would have meant having a viable bid ‘ready to go’ without knowledge that a contract would be put out to tender. Ultimately this proved to be an insurmountable challenge, as it would for most new market entrants.
What will this mean for disputes in the future?
It appears the courts have set a high bar when deciding if a claimant has standing to bring a procurement claim. As a consequence, it is likely to make procurement claims even more challenging; particularly for parties who are new to the market or pioneering a new type of service/product.
It remains to be seen whether this approach will be followed, particularly in light of potential changes to public procurement law following the UK’s departure from the EU.
On the upside, the court’s finding that CR4C could not have known about the changes to the contract, until three years after they were carried out, is an encouraging finding for parties considering bringing claims in future and who may be concerned about their claim being time barred.
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