(Still) Going Underground… Lifting the automatic suspension in public procurement cases – a recent example
The Technology and Construction Court (TCC) has recently considered and upheld an application for the lifting of the automatic suspension imposed by the issue of a number of claims in relation to a procurement.
The claims had been brought by three bidders, Bombardier, Hitachi and Alstom (Claimants), against the decision of London Underground Limited (LUL) to award the contract for the provision of a new fleet of trains for the Piccadilly line and associated services to Siemens. In accordance with the Utilities Contracts Regulations 2006, upon issue of the claims LUL was prevented from entering into the new contract with Siemens (automatic suspension). LUL applied to the Court to have the automatic suspension lifted.
The TCC judgment
In her judgment, Mrs Justice O'Farrell applied the well-known American Cyanamid test to determine whether the automatic suspension should be lifted. That test requires the Court to consider:
- Whether there is a serious issue to be tried; if so
- Whether the award of damages would be an adequate remedy for (i) the Claimants and, if not, (ii) the Defendant; and
- Where there is doubt as to the adequacy of damages for one or both parties, where the balance of convenience lies (i.e. whether maintaining or lifting the automatic suspension is likely to carry the least risk of injustice).
Serious issue to be tried
As is often the case, the question as to whether there was a serious issue to be tried was conceded by LUL as the contracting authority. LUL nevertheless sought to argue that the strength (or in fact, in LUL's view, the apparent weakness) of the Claimants' cases was a factor to be taken into account in the balance of convenience. The Judge dismissed this argument and declined to make any observations on the strength/weakness of the claims in the absence of the full evidence and submissions.
Adequacy of damages
The Court then determined that damages would not be an adequate remedy for the Claimants, as the procurement was highly prestigious, very high value and of global interest – loss of the procurement could adversely affect the Claimants' reputations and that could not be compensated for in damages. However, the Court also determined that damages would not be an adequate remedy for LUL for various reasons either, including that significant non-financial harm would be caused with regards to the core public functions of the service and delays to the anticipated improvements.
Balance of convenience
The Court went on to consider the balance of convenience test, finding that, in the circumstances of this case, there was a strong public interest in lifting the automatic suspension. The starting point in the analysis was to determine how long the suspension might have to be kept in effect. Importantly, the Court considered and dismissed the Claimants' application for an expedited trial, preferring LUL's longer estimated trial length and considering it likely that expert evidence would be needed, even though this is very rare in procurement cases. The Court however also dismissed LUL's assertion that it should also take into account the further delay that would be occasioned if LUL was ordered to re-run the procurement following trial. The key factor that seemed to weigh heavily with the Court was the public interest in having the upgraded fleet of trains available as soon as possible. The ageing current fleet was proven to be deteriorating and needing further downtime and maintenance, causing reliability issues and inconvenience. In contrast, the new fleet would deliver significant benefits.
The Court also considered, but found unpersuasive, a number of arguments raised by the Claimants and frequently deployed by challenging bidders in support of an argument that the automatic suspension should be maintained. These included:
- That other alleged delays in the overall procurement process justified a further "proportionate" delay - the Court considered there to have been no such unjustified delay in this case;
- That the public interest was in avoiding a contracting authority paying twice for a service and upholding adherence to procurement law - the Court considered that risk to be balanced against the contracting authority's entitlement to get on and award a properly procured contract and, as the Court was not in a position to assess the merits of the case, those factors taken together were neutral; and
- That there was no clear urgency for the suspension to be lifted - the Court made clear that urgency is not a requirement of the test, it is simply a balancing of the competing harms that would be caused by delay.
Finally, the judgment is instructive in relation to a number of other points, including the restrictions on the hearing of procurement challenges in private, even when there are issues of confidential information. Those issues should be dealt with by other means wherever possible such as proper application of confidentiality rings, rather than requiring hearings to be held in private. This is an approach which procurement practitioners and those parties familiar with dealing with challenges are well used to.
If you would like to discuss any of the points raised in this note please contact Bill Gilliam or Ryan Geldart.