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Automatic suspension and withdrawal of the decision to award

Icons CourtColin Ricciardello examines a recent case where an authority sought to end an automatic contract making suspension by withdrawal of the decision to award the contract.

The coming together of these two elements in the procurement of public contracts under The Public Contracts Regulations 2015 (“PCR” ) was recently considered in Aquila Heywood Ltd v. Local Pensions Partnership Administration Ltd [2021] EWHC 114 (TCC). This decision is likely to remain relevant after the PCR rides into the sunset as the recently published Green Paper proposes to keep the automatic suspension [1].

This judgment provides definitive authority that where an award decision is challenged by proceedings (and the PCR Regulation 95 (1) automatic suspension applies), and that decision is then withdrawn, the automatic suspension also comes to an end.

Background

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The Defendant, The Local Pensions Partnership Administration Ltd (“LPPA”), administers local authority pensions schemes and it undertook an IT call off procurement under a framework agreement. The Claimant (“Aquila”) submitted a tender and at the conclusion of the procurement in September 2020 LPPA informed Aquila that: it had been unsuccessful ; the successful tenderer was Civica – “the first award decision”.

Because the contract was awarded under a framework LPPA was exempt from sending a Regulation 86 award decision notice (PCR Regulation 86(5) (c)). That exempts the requirement to give a standstill statement under PCR Regulation 86(2) (d) and observing the standstill requirements under PCR Regulation 87. However, LPPA volunteered to observe the standstill period.

Aquila was dissatisfied with the first award decision and on 2 October 2020 issued proceedings whilst the standstill period was running. LPPA made a concession on 14 October 2020 that mistakes had been made in the evaluation and that proper records of the evaluation process had not been made by LPPA. It accordingly decided to withdraw the first award decision and rewind the procurement by re- evaluating the tenders. LPPA served and filed its defence on 6 November 2020 and pleaded that the first award decision had been withdrawn, was ineffectual and made the whole claim academic. [2]

The evaluation undertaken in the rewound procurement led to LPPA again awarding the contract to Civica. Notice of that of decision (“the second award decision”) was given on 8 December 2020 in which LPPA again agreed to observe a ten-day standstill period.

LPPA believed that the automatic contract making suspension (arising out of the proceedings commenced in respect of the first award decision) was still in force and sought Aquila’s agreement to end the suspension on 10 December 2020. Aquila’s Calderbank reply was to offer to discontinue its claim if LPPA paid its costs – on a discontinuance of the claim the suspension would have fallen away under Regulation 95(2)(b). The response did not address the ending of the suspension request, there was no agreement and so LPPA issued an application under PCR 96(1) (a) to end the Regulation 95(1) automatic contract making suspension. Aquila did not oppose LPPA’s application to end the suspension so the argument before the Judge was about costs and that in turn depended on: LPPA’s argument that its application was successful; and Aquila’s arguments that: the application to end the suspension was misconceived as the contract making suspension arising out of the claim in respect of the first award decision did not apply to the second award decision; there was no suspension in framework awards because of the exemption in Regulation 86 (1).

The Judgment

The automatic contract making suspension provision at PCR Regulation 95(1) is triggered when: (a) a claim form has been issued “…in respect of a contracting authority’s decision to award a contract”; (b) the contracting authority becomes aware that a claim form has been issued; (c) the contract has not been entered into.

The requirement to refrain from entering into the contract continues until any of the circumstances in PCR Regulation 95(2) occur, namely (a) the Court brings it to an end on an application to do so under 95(1) (a); (b) the claim is determined at first instance, discontinued or otherwise disposed and no order to extend the requirement to refrain has been made.

The Judge decided he must construe PCR Regulation  95 by reference to its underlying purpose and interpreting its actual words in a way which best gives effect that purpose [paragraph 15]. He held that the purpose of the suspension was to prevent the contracting authority from implementing the challenged decision by entering into a contract before any of the Regulation 95(2) circumstances have occurred – namely an application to end the suspension is heard or the claim is determined. As to the meaning of the wording the Judge said: “… the natural reading of Regulation 95(1)…is that it prevents the contracting authority from entering into the contract pursuant to the challenged decision”. [paragraph 22].

Accordingly, with this purpose and construction the Judge concluded that the suspension only prevented LPPA from entering into a contract with Civica based on the first award decision – “Once that decision had been withdrawn and the bids re-evaluated, its served no further purpose. Where, as here, no challenge was pleaded to the second decision to award the contract either by way of fresh claim form or amendment to the initial proceedings, the contracting authority was not required to refrain from entering into a contract pursuant to the second decision. This was therefore an unnecessary application pursuant to regulation 96(1) (a). [Paragraph 25].

He swiftly dismissed the proposition that PCR Regulation 95 suspension was not engaged where the PCR framework exemption in PCR Regulation 86(5) (c) applied because: there was nothing in Regulation 95(1) which excluded it from the categories exempted in Regulation 86(1); the automatic suspension arises where the three conditions in PCR Regulation 95(1) were met; a contracting authority could elect to give a notice under Regulation 86(1); there was no reason in principle or policy why Regulation 95(1) should be construed as importing an additional requirement before it could apply to the exempt cases [paragraph 19].

Having decided that the PCR Regulation 96(1)(a) application was unnecessary, Aquila was held to be the successful party in the application to end the suspension. However, when it could, Aquila failed to agree to end the suspension and confirm that LPPA was free to enter into a contract with Civica. It withheld its agreement in order to secure a settlement on its costs liability on a discontinuance of the claim. It was also inconsistent over whether the suspension applied. That conduct was taken into account when the Judge only awarded Aquila half of its costs against LPPA.

Discussion

This judgment helpfully illuminates the scope of the Regulation 95(1) contract making suspension and the application of the standstill requirements where an exemption in Regulation 86(5) applies. It also provides useful guidance as to how to handle the automatic contract making suspension in cases where a decision is challenged by the commencement of proceedings and that decision is withdrawn. In these circumstances it would be prudent to try and agree in correspondence that the suspension is no longer in force – especially when the suspension does not end in cases where the claim is not discontinued because of the continuance of an accrued claim for damages (see Amey at footnote 2).

Colin Ricciardiello is a Partner at Sharpe Pritchard.

[1] However, Chapter 7 of Green Paper “Transforming Procurement” published on 15 December 2020 proposes to amend the test for ending an automatic suspension so it is no longer based on the American Cyanamid test for the grant of an injunction.

[2] Amey Highways Ltd v. West Sussex County Council [2019] EWHC 1291 however decided that a withdrawal of an award decision might not in itself defeat a claim for damages which accrued before the withdrawal of the decision challenged in the claim.

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