Procurement challenges - two bites at the cherry?

Readers will be aware that under UK law, generally, a procurement challenge can only be brought if it is made within 30 days of the date the claimant first had knowledge (or ought to have first had that knowledge) of the breach being complained of. The principle behind the setting of this time limit is the creation of what the courts refer to as legal certainty - or in layman's terms the fact that it would be unjust to require contracting authorities and suppliers to enter into contracts with a perpetual possibility that further legal challenges might emerge out of the woodwork. The time limit's role is therefore to balance the interests of both potential challengers and the contracting parties; to allow for review and challenge but also to guarantee legal certainty after the expiry of the time period.

Having said that applying this principle is not always straightforward as a recent judgment from the European court demonstrates. In this case the contracting authority in the Puglia region of Italy (the CA) ran a competition for a four-year contract to clean and maintain its sewage systems. The contract fell within the scope of the Utilities Directive. In July 2011 the CA announced a decision to award the contract to a consortium and to permit early performance of the contract pending checks that each member of the consortium met the stated requirements (after which its contract award decision would take effect). In October 2011 the winning consortium notified the CA that one of its members had pulled out but that otherwise it still met all the requirements. On 17 April 2012 the CA authorised the withdrawal of the consortium member and concluded the contract. The third-placed bidder brought a challenge on 17 May 2012 on two grounds:

  • Firstly that the decision to approve the reduced consortium was unlawful because this altered one of the essential elements that were decisive in the adoption of the original award decision;
  • Secondly that the second placed bidder should have been excluded as one of its consortium members had failed to declare a conviction for a criminal offence.

The Italian government referred the case to the European court.

The CA and the winning consortium argued that the challenge on both grounds was out of time and also for the first ground questioned the relevance of the referral arguing that the complaint only concerned the second decision to award the contract to the reduced consortium; even if this decision was overturned it would not affect the status of the consortium as successful bidder in the original award decision. Note that like the UK Italian law prescribed a 30 day limitation period for bringing a procurement claim.

The Court held that the authorisation of the change in composition of the consortium (i.e. the potential breach) was an event which happened after the original award decision had been made and after the expiry of the original 30-day period for bringing an action as prescribed by the Italian legislation. It was not therefore possible for the challenging bidder to have been aware of this change via the communication of the original award decision plus reasons or via replies received in response to any debrief request.

The Court therefore judged that the 30 day period must start to run again from the date on which the tenderer receives notification of the decision authorising the change in the consortium or the date on which it became aware of that decision. The Court considered whether this approach would offend against the principle of securing 'legal certainty' (as discussed above) but decided this was not an issue as the authorisation took place before the final conclusion of the contract between the CA and the reduced consortium.

In relation to the second ground for the claim the Court ruled that the alleged declaration must have been made prior to the original award decision and that the claimant via the debrief requirements of the Remedies Directive and on the basis of the information it could have obtained through the exercise of ordinary diligence should have been in a position to raise any claim within the 'original' 30 day period starting with notification of the 'original' contract award decision. A claim outside this period should only be permitted where this allowed under national law.

The case does not represent new law rather the Court simply applied the usual test i.e. the time period for bringing a procurement challenge starts to run from the date of knowledge of the breach. If a breach occurs after the award decision has been made and communicated time will run from the date the claimant knew or ought to have known of the later breach - not from the date of the original award decision.

Contracting authorities should therefore take care and unsuccessful bidders remain vigilant in the period between notification of the award decision and contract conclusion. Breaches of procurement law in this period are just as susceptible to challenge as those leading up to communication of the award decision and will trigger a new 30 day limitation period.

You can read the judgment here Case C-161/13 Idrodinamica Spurgo Velox srl v Acquedotto Pugliese SpA

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