The challenges of public procurement law have come into sharp focus in recent times in Northern Ireland, as a number of high-profile projects (including public-private partnership projects) have become the subject of judicial scrutiny. Several recent decisions of the Northern Ireland High Court (including those at interlocutory stage) have provided valuable insights into the difficulties awarding authorities can face during the tendering process and also into the thinking of the courts in applying relevant procurement law principles.

In Natural World Products v ARC 21, ACR 21, a consortium of public authorities, sought to award a contract for the provision of organic waste services which included the construction of at least one compaction waste facility. The contract was put out to tender and the plaintiff bid accordingly. However, it was unsuccessful and subsequently sought to challenge the decision of the authority on the grounds that it was unlawful and in breach of the Public Service Contracts Regulations 1993 (now superseded by the Public Contracts Regulations 2006, which transpose the Public Sector Directive 2004/18). Central to the authority's decision was its view that it would be inappropriate to take account of one particular waste facility which the plaintiff alleged would be available to it for support in the event that the facility to be constructed might not have been able to cope with the relevant waste tonnages. The High Court held that this was in breach of both the duty to consider fairly the bids of all tenderers in a project and the regulations (which allowed for supplementary information to be provided by bidders in the course of a restricted procedure). The Court set aside the decision to award the contract to the initially announced winner and ordered that the awarding authority return to the plaintiff's bid and complete their evaluation taking into account the supporting facility in question.

Fair issue

Partenaire Limited v Department of Finance and Personnel concerned a major project to award a large contract for the refurbishment/build The challenges of public procurement law have come into sharp focus in recent times in Northern Ireland, as a number of high-profile projects (including public-private partnership projects) have become the subject of judicial scrutiny. Several recent decisions of the Northern Ireland High Court (including those at interlocutory stage) have provided valuable insights into the difficulties awarding authorities can face during the tendering process and also into the thinking of the courts in applying relevant procurement law principles.

In Natural World Products v ARC 21, ACR 21, a consortium of public authorities, sought to award a contract for the provision of organic waste services which included the construction of at least one compaction waste facility. The contract was put out to tender and the plaintiff bid accordingly. However, it was unsuccessful and subsequently sought to challenge the decision of the authority on the grounds that it was unlawful and in breach of the Public Service Contracts Regulations 1993 (now superseded by the Public Contracts Regulations 2006, which transpose the Public Sector Directive 2004/18). Central to the authority's decision was its view that it would be inappropriate to take account of one particular waste facility which the plaintiff alleged would be available to it for support in the event that the facility to be constructed might not have been able to cope with the relevant waste tonnages. The High Court held that this was in breach of both the duty to consider fairly the bids of all tenderers in a project and the regulations (which allowed for supplementary information to be provided by bidders in the course of a restricted procedure). The Court set aside the decision to award the contract to the initially announced winner and ordered that the awarding authority return to the plaintiff's bid and complete their evaluation taking into account the supporting facility in question. of the Northern Ireland Civil Service office estate, part of the Workplace 2010 programme. The applicant alleged that various errors (including errors concerning decant proposals and errors in the evaluation of the financial proposal) had been committed by the Department of Finance and Personnel in the evaluation of its tender and that this led to an unlawful decision to exclude that applicant from the best and final offer stage of the tender process. The court granted an interlocutory injunction, staying the tender process pending a full trial of the action, ruling that there was a fair issue to be tried, damages would not be an adequate remedy in the circumstances and that the balance of convenience rested in favour of granting the injunction, bearing in mind that an undertaking in damages had been provided and that an early trial date had been set.

Contracts by inference

In Scott and others v Belfast Education and Library Board the plaintiffs sought an injunction against the defendant restraining it from proceeding with its tendering process in relation to various building and maintenance works. In dealing with certain preliminary issues, the High Court held that an implied contract between a contracting authority and a tenderer can arise by inference, from the presumed intention of the parties and also from the tendering process for a public works contract (notwithstanding that the particular contract was below the relevant financial threshold). A duty to consider the tenders "fairly and in good faith" was also implied into the contract. The concept of fairness was stated to apply to the nature and application of the specified procedures, the assessment of tenders according to particular criteria and the evaluation of tenders in a uniform manner and as intended by the tender documents. It was also extended to ensuring the "absence of any material ambiguity in the tender documents that would significantly affect" tenders. The court also made it clear that the transparency principle requires that award criteria must be formulated in the contract notice or contract documents in such a way as to allow all reasonably well-informed and normally diligent tenderers to interpret them in the same way. Award criteria must be interpreted throughout the process objectively and uniformly in respect of all bidders.

Code of practice

In another case, J & A Developments v Edina Manufacturing and others, J & A was invited to submit a tender for the construction of offices. Notwithstanding that the regulations did not apply to the contract, the conditions of tender stated that the tendering procedure was in accordance with the principles of a code of practice. While the code imposed no obligation upon the defendants to accept the lowest tender, they bound themselves to accept either no tender at all or one at the price at which it was submitted, subject to the possibility of negotiations with the lowest tenderer for a reduction in price in return for an appropriate modification to the specification of the work (only if these negotiations failed could the next lowest tenderer be approached).

Although J & A submitted the lowest tender, the defendants invited three tenderers to lower their quotes and ultimately accepted an offer lower than J & A's tender, in breach of the code. The court held that the code was incorporated into the tendering process and any failure to follow the procedure was a breach of a collateral contract between the contracting parties and the employer. Damages were awarded to the plaintiff.

Objection to criteria

In Henry Brothers (Magherafelt) and others v Department of Education for Northern Ireland, the plaintiffs sought an interim injunction restraining the Department of Education from concluding the Northern Ireland Schools Modernisation Framework Agreement as they objected to its criteria for choosing between tenderers. The relevant criteria required each of the tenderers to specify their respective fee percentage within hypothetical ranges of contract value. The court placed importance upon establishing an objective evaluation of the cost of a contract in the course of assessing the most economically advantageous tender. The fee percentages were arguably flawed in that they made no attempt to determine the actual cost of the works objectively. On this occasion the court decided that the 'balance of justice' favoured not granting an injunction; however, it did comment that there was a serious question to be tried with regard to whether the criteria were lawful in view of the issues in respect of objectivity in evaluating the tenders.

The recent spate of public procurement litigation and the serious consequences this can have for projects has certainly heightened awareness of the law in this area. The cases illustrate that the courts will be assiduous in requiring all interested persons to adhere strictly to the terms of relevant tender documentation and to have regard to the basic requirements of equality, fairness, objectivity and transparency. Applying these principles in practice can, it seems, be challenging, and there is no question that great care needs to be taken to avoid the many pitfalls that can arise.

Peter Curran is a partner at Arthur Cox in Belfast.

NIJune2008