Cautionary lessons for unsuccessful bidders in challenging

The judgment in Perinatal Institute v Healthcare Quality Improvement Partnership [2017] EWHC 1867 highlights two cautionary lessons for unsuccessful bidders in challenging unsuccessful tenderers. Read our analysis here...

The judgment in Perinatal Institute v Healthcare Quality Improvement Partnership [2017] EWHC 1867 highlights two common but key areas of risk for challenging unsuccessful tenderers, being:

the 30 calendar day limitation period when there is a need to amend an existing claim; and
deciding whether or not to claim damages, having regard to the impact on (i) the court fee charged, (ii) the automatic suspension and (iii) potential relief.

Case Summary

This case considered:

an application by the Claimant (an unsuccessful tenderer that had issued proceedings challenging a public contract award) to amend its Claim Form and Particulars of Claim to add new causes of action following disclosure (the Amendment Application); and
the Defendant contracting authority's cross-application to strike out the Claimant's original claim (the Strike Out Application).

The Amendment Application

The Defendant opposed this application on the basis that it was time-barred. Regulation 92 of the Public Contracts Regulations 2015 (PCR) provides that proceedings must be commenced within 30 calendar days of the date when the Claimant first knew or ought to have known that grounds for starting the proceedings had arisen.

The PCR provides that proceedings are only started when the Claim Form is issued. The Claimant argued that issuing the application to amend an existing Claim Form amounted to issuing proceedings.

However, the Court held that the amended proceedings did not commence until the date of the actual hearing of the application, which took place after the 30 day time limit had expired. The date the application was issued is irrelevant.

Fortunately, the Court decided to exercise its discretion in this case and grant the Claimant the maximum extension of time permitted under the PCR for limitation, which is 3 months, which meant that the amended proceedings had been started in time.

Although the Court appreciated the reasons why the Claimant had sought to amend its original claim (for example, because it was more time and cost effective to amend a claim, rather than issue a new claim), the Court advised that commencing fresh proceedings would have been a better course of action.

Unsuccessful tenderers should consider issuing a fresh claim if new causes of action arise during existing proceedings, unless they can be confident that amendments to an existing claim will be approved (by consent or otherwise) during the 30 day limitation period.

The Strike Out Application

The Claimant's original claim sought an order from the Court setting aside the decision to award the contract to the successful tenderer, with no claim for damages in the alternative. This option is on occasion taken by challenging bidders, as the difference in the Court fee alone between claiming damages or not can be up to £10,000 – and in the present case the Claimant initially argued that it would not suffer a monetary loss which could be compensated. The Defendant had subsequently successfully applied to the Court to lift the automatic suspension of the award of the contract (triggered by the Claimant's claim). The contract between the Defendant and the successful tenderer was then entered into.

The Defendant then argued that, if the original claim was allowed to proceed, a substantial amount of court time and resources would be expended on a claim which, ultimately, could not result in the Court granting the Claimant any remedy it had sought.

The Court granted the Defendant's application in part, as it decided that only those sections of the original claim not material to the amended claim would be struck out.

Unsuccessful tenderers should include a claim for damages (where appropriate) at the outset when challenging an award decision. This prevents a challenging bidder's claim becoming invalid in the event that the Defendant successfully applies to lift the automatic suspension.