Readers of this blog may remember from 2010 the interesting case involving Leeds City Council and developer Montpellier Estates. At the 2010 initial hearing, the judge decided that the bidder had a claim that ought to be heard at full trial. The main trial was held recently, and judgment in favour of the Council was handed down in early February.
In this case, Leeds City Council was looking to develop an arena on a site in the city and sought bids. £20 million of public sector gap funding was available. The council separately and outside of the procurement process considered a Plan B proposal whereby the Council would develop the land itself in the event that this alternative offered better value for money. During the procurement process market conditions worsened as the 2008 credit crunch took hold meaning that it was increasingly difficult to make any development scheme viable with gap funding at £20 million. The Council decided to abandon the procurement process and instead resort to Plan B. It was common ground between the parties that it did so in accordance with the rules on abandonment.
Montpellier Estates Limited (MEL) was one of the bidders in that competition. It brought several claims including a claim in deceit and a breach of implied contract claim. For our purposes the most interesting element of this long judgment is the section on MEL's claims under the public procurement regulations in which it alleged that the parallel development of the Plan B proposal introduced a new public sector comparator evaluation criterion into the process in an untransparent manner. It argued that this was a development relevant to the process of which bidders were not made fully aware breaching the requirement to run the procurement in a transparent way. The Council's duty to behave in a transparent manner applied to every facet of a procurement process including whether there were developments taking place outside the process which could affect it.
Leeds City Council on the other hand argued that the fact that a public body might judge vfm by using a public sector comparator ought to have been obvious to any reasonable bidder. It also argued that the duty to act transparently applies to the process of selecting the most economically advantageous bid only and does not extend to other questions for example whether the process should be continued or abandoned or whether an alternative solution may be explored in parallel.
The judge decided in Leeds' favour holding that Plan B was not a competitor bid in the procurement process nor was it an evaluation criterion. It was merely a comparator which had a legitimate purpose of assisting the Council to decide whether the competition should continue or be abandoned. The documentation stated that comparison with the public sector comparator was an internal evaluation process and is intended to evaluate bids commercially in terms of the value for money these present. It is not intended to be used to deselect any bidder. ? The analysis will assist in understanding the quality of bids to date and enable [the Council] to determine how the competition should move forward.
As such MEL's claim failed. Even had it succeeded it would have been out of time since it was made more than three months after MEL had knowledge of the alleged breaches.
The judgement provides comfort to contracting authorities that the courts in the absence of deceit or sham and provided that the requirements of the regulations are followed will support the discretion of a contracting authority to abandon a procurement or to explore alternative solutions. It also confirms that the courts will not treat public sector comparators as evaluation criteria where these are used to assist the contracting authority in deciding whether the competition should continue or alternatively be abandoned in favour of an in-house solution.
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