Procurement update: tender termination & damages claims

Amey Highways Limited v West Sussex County Council

Unsuccessful bidders should be aware of the decision in Amey Highways Limited v West Sussex County Council [2019] EWHC 1291 (TCC). Mr Justice Stuart-Smith held that where a bidder suffers loss as a result of a contracting authority’s alleged breach of the Public Contracts Regulations 2015, it could still have a damages claim against the contracting authority, even where the contracting authority had abandoned the procurement and placed the contract back out to tender.

Challenging a notice to terminate

Amey was the second placed bidder in the Council’s procurement for a highways contract. It lost out to Ringway Infrastructure Services by just 0.03% on scoring. Amey had been instructed by the Council during submission of its final tender to make certain changes to its costs submission, which Amey alleged were unlawful. It also considered the Council to have made manifest errors in its evaluation. Amey viewed that it should have been awarded the contract and it commenced proceedings against the Council on the basis that it should have scored higher than Ringway.

The Council then gave notice that it was “terminating” the procurement and would be re-procuring the highways contract. Amey had spent just under £1m in participating in the procurement and so promptly challenged the notice to terminate on the basis that the Council’s decision was a deliberate attempt to deprive Amey of its cause of action.

Powers of discretion and accrued causes of action

At a preliminary hearing on the abandonment issue the court noted that once Amey’s complaint had come to light, the Council decided that the best option would be to terminate the procurement, in the hope that as a consequence, it would extinguish any claim by Amey (or Ringway for that matter).

The court noted that the Council had not acted unlawfully. In making its abandonment decision it had been seeking to avoid the additional expenditure involved in protracted litigation and/or settlement. It had also been trying to seek a solution so its critical highways programme could be delivered whilst litigation with Amey was ongoing. However, the court held that whilst a contracting authority can use its wide powers of discretion to terminate a procurement process, termination does not necessarily affect accrued causes of action already in existence. The damages claim raised by Amey therefore could continue, even though the Council had abandoned the highways contract and it was subject to a re-procurement.

Points for bidders to note

This case will be of interest to unsuccessful bidders, as they may still have a claim for damages in circumstances where a procurement has been abandoned, provided that the cause of action existed prior to its termination.

Unsuccessful bidders looking to challenge award decisions should therefore review standstill letters carefully and question any inconsistencies contained in the letters, scores and feedback. Bidders will be aware that the timescales for challenges are short and if there are concerns with the process, bidders are often advised to act quickly rather than waiting until the end of a procurement process to see whether they are successful or not.

Where a procurement process is abandoned, contracting authorities are required to provide reasons for the decision not to proceed to award the contract and unsuccessful bidders will want to review such a notice carefully. Successful bidders may also wish to take steps to protect themselves, in circumstances where they have been identified as the winner but the contracting authority subsequently takes the decision to abandon the procurement.

As noted above, this decision relates to a preliminary ruling and may be overturned on appeal. As the main issue at stake (i.e. whether or not the Council has breached the Public Contracts Regulations 2015 in relation to evaluation) has yet to be decided, the court has not yet considered the issue of damages. Bidders should watch this space for further developments.