A recent case gives us an insight into the court’s likely approach to assessing limitation periods for procurement challenges.
It reminds would-be claimants of the importance of bringing a claim in a timely way. It also highlights to authorities the “limits of limitation” as a risk management tool.
In the case of Excession Technologies Limited v Police Digital Service  EWHC 413 (TCC] the authority, Police Digital Service (“PDS”) ran a procurement to appoint a contractor to a single-provider framework agreement. The procurement was for the provision of computer and information technology services in connection with a police surveillance operation room.
Due to the subject matter, this procurement was potentially regulated by the Defence and Security Public Contracts Regulations 2011 (the “Defence Regulations”) rather than by the Public Contracts Regulations 2015 (the “PCR 2015”).
However, PDS considered that the Defence Regulations did not in any event apply to the procurement, due to the exemption at regulation 7(1) for contracts “for the purposes of intelligence activities”.
On that basis, the procurement documents all noted that PDS did not consider the Defence Regulations to apply, and that, while PDS intended to hold an SQ and ITT stage for convenience, suppliers should not take this as meaning PDS considered itself bound by the duties and obligations in the Defence Regulations.
Whether the reliance on this exemption was in fact correct was one of the issues in dispute in this case. On the facts, the Court agreed with PDS that this procurement was for “intelligence activities” and that it was indeed therefore exempt.
Helpfully, though, it went on to consider what the position on limitation would have been, had the Defence Regulations applied.
This case concerned the Defence Regulations, but the regulations on limitation are substantially the same in the PCR 2015. This means the case gives us a helpful steer on how the courts are likely to approach limitation in the PCR 2015, which are of course far more commonly used than the Defence Regulations.
For the remainder of this blogpost, we will refer to the PCR 2015 since these are the regulations that most of us will be working with most of the time.
The rules on limitation for most procurement challenges are set out in Regulation 92 PCR 2015. The key elements are as follows:
- regulation 92(2) states that a claim must be started within 30 days of the date that the supplier first knew or ought to have known that grounds for starting proceedings had arisen; and
- regulation 92(4) states that the court may extend the time limits imposed where it considers there is a good reason for doing so.
In addition to regulation 92, there are a series of cases on the issue of limitation, which also provide guidance on how to interpret the regulation. In its judgment, the Court surveyed this line of caselaw and drew out some of the key principles, as follows.
The Claimant may not “sit on its hands”
There are several cases which emphasise that the claimant may not “sit on its hands” waiting for the “last” breach, before treating the limitation period clock as having started.
For example, in Keymed Limited v Forest Healthcare NHS Trust the court noted that if any other approach were adopted, a “supplier could select the last breach available to him, [and] apart from obvious problems of proving causation, it would mean that he could sit back and do nothing even in respect of breaches of which he was aware or which he apprehended.”
How much knowledge is enough to start the clock?
The court also looked at the case of Sita UK Limited v. Greater Manchester Waste Disposal Authority where the court held that “the knowledge must relate to, and be sufficient to identify, the grounds for bringing proceedings” and that “the standard ought to be a knowledge of the facts which apparently clearly indicate, though they need not absolutely prove, an infringement.”
We usually advise clients that a mere “suspicion” that a breach might have taken place will not be enough to start the clock running. Some more substantive knowledge is required, although obviously this falls well short of 100% certainty that the authority is in breach.
What was the correct limitation period here?
The court considered the scenario in which PDS had been incorrect to rely on the “intelligence services” exemption, and where this procurement did not comply with the Defence Regulations when, in fact, they had been applicable.
PDS noted that it had clearly stated its view that the Defence Regulations did not apply in the contract notice and the procurement documents. PDS considered that Excession was appraised of its view that the Defence Regulations did not apply at the point when it viewed the contract notice and procurement documents, and certainly by the time of the SQ stage, and that these events “started the clock” on the 30 days. On that basis, said PDS, Excession’s claim was out of time, since it was made later than the end of this 30-day period. If Excession considered that the reliance on the "intelligence activities” exemption was wrong, and that a fully regulated process should have been run, argued PDS, it should have brought a claim as soon as it knew that this exemption was being unlawfully relied on, rather than “sitting on its hands”.
Excession, however, argued that the clock was not started merely by virtue of its knowledge of an incorrect decision to rely on the “intelligence services” exemption. At this point, said Excession, the question of whether that exemption was correctly relied on or not was a matter of law and construction – how could this provide Excession with sufficient "knowledge” to start the clock, when this issue had not yet been adjudicated?
Excession argued that the clock had only begun to tick at the point where PDS actually failed to comply with the Defence Regulations in terms of how it ran the SQ and ITT stages. In other words, that the limitation period only commenced well into the life of the procurement process, at the point where PDS actually departed from its duties and obligations under the Defence Regulations.
The Court agreed with Excession’s view, that it would only have been at the point where an actual breach was committed by PDS, that Excession could be taken to have accumulated the necessary quality of knowledge so as to start the 30-day limitation period.
The limitation period was not commenced when PDS published the procurement documents setting out its reliance on the “intelligence services” exemption, nor did it start at the point at which Excession chose to participate by responding to the SQ, as no breach had yet crystallised.
When will the Court extend the 30 days?
Separate from the issue of whether the Defence Regulations applied, Excession alleged several other breaches, including a failure of transparency. This centred around an alleged failure to provide proper pricing information to Excession in order that it was put in a proper position to bid.
Excession first requested this information on 21 December 2020 and on 28 January 2021 PDS noted in the log its refusal to provide that information. Excession submitted its tender on 4 February 2021. The court decided that, had this been a breach by PDS, it was in clearly in breach by 28 January 2021 and Excession had knowledge of this. Even so, it did not bring a claim until 26 April 2021. The court said that this was clearly time barred.
It also noted that it could not see a “good reason” to extend the 30-day time limit, and the reasons it gave are useful to note:
- the three-month delay was persuasive – 3 months being a long time compared to the limitation period of 30 days;
- Excession provided no good reason for the delay and no evidence that it had made efforts to bring a claim more quickly;
- there was nothing to suggest that PDS had caused the delay; and
- if the extension were granted, this would unfairly prejudice the defendant, PDS.
We sometimes advise on procurements where an authority believes there is no obligation to apply the PCR 2015 in part or indeed at all. This might be, for example, where the contract is exempt under regulation 10 PCR 2015, or on the basis that the “light touch regime” for health and social services is applicable, or indeed on the basis that the contract is under the relevant value threshold.
Authorities in these circumstances may well still find it convenient to advertise and follow the outline of a regulated procurement process, without wishing to be bound by the duties and obligations. In this situation, an authority may well make a statement in the contract notice/procurement documents that it is running a procurement on a voluntary basis and that it does not consider itself bound by the PCR 2015.
Sometimes it is very clear that the PCR 2015 do not apply, or do not fully apply.
But in other cases, it can be less clear cut - and this is a risk that must be managed. We have sometimes seen authorities hope to rely on the limitation period as a way of mitigating that risk, perhaps taking the view that “even if we are wrong, and the rules do actually apply, it won’t matter because the claim will be well out of time anyway”.
This case shows us that this approach provides little comfort to authorities, as the limitation period is likely to start only at the point where the authority is actually in breach of a requirement, likely to be well into the procurement process.
It also shows claimants the importance of not “sitting on your hands”, because an extension of the 30-day limitation period is only like to be available in very exceptional circumstances.