The document summarizes recent developments in UK and EU public procurement law. It discusses recent cases related to EC guidance on structural funds, separate vehicles being subject to procurement rules, errors in tenders, abnormally low tenders, disclosure in challenges, damages awards, and implications of Brexit. Key issues covered include what constitutes a public body, rules around clarifying tenders, evaluating abnormally low bids, disclosure in confidentiality rings, entitlement to damages, and transition arrangements in a no-deal Brexit.

1. Public sector breakfast club
April 2018

2. Public Procurement update and
what could happen…..
Peter Ware, Partner

3. EC Guidance
• In February the Commission issued guidance:
http://ec.europa.eu/regional_policy/sources/docgener/guides/publi
c_procurement/2018/guidance_public_procurement_2018_en.pdf
• Aimed at projects funded by the structural and investment funds
but very useful for all projects.
• Covers:
– Preparation and Planning
– Publication and transparency
– Submission and Selection
– Evaluation and award
– Contract implementation
• It also provides a series of toolkits

4. Separate vehicles

5. LitSpecMet UAB v Vilniaus Iokomotyvu
remonto depas UAB and another [2017]
EUECJ C-567/15 (5 October 2017)
VLRD the state railway company had awarded a contract
to its wholly owned company. This company claimed that
it was not a public body for the purposes of the
procurement regime.
The ECJ in its preliminary ruling held that:
• A company which was wholly owned by a contracting
authority and which carried out “internal” work for
that contracting authority and work for third parties
had, subject to the certain conditions, to be classified
as a “body governed by public law”.

6. LitSpecMet UAB v Vilniaus Iokomotyvu
remonto depas UAB and another [2017]
EUECJ C-567/15 (5 October 2017)
• The conditions were that the activities were necessary
for the contracting authority to exercise its own
activity and, in order to meet needs in the general
interest, that company was able to be guided by non-
economic considerations. The fact that the value of the
transactions with the parent CA may in future be less
than 90% or much less was irrelevant.

7. Remondis GmbH & amp, Co. KG Region Nord v Region
Hannover and others (Case C-51/15)
• Region and City of Hanover created a special
purpose association as provided for in local law and
assigned waste disposal functions to it.
• They transferred, at no cost, their bodies
responsible for other functions and also 94.9% of
shares in their wholly owned company which
carried out waste treatment on their behalf.
• Challenge brought by Remodis regarding waste
treatment tasks which had become the
responsibility of the association

8. Remondis GmbH & amp, Co. KG Region Nord v
Region Hannover and others (Case C-51/15)
• The court ruled:
– an agreement concluded by two regional authorities,
on the basis of which they adopt constituent statutes
forming a special-purpose association with legal
personality governed by public law and transfer to
that new public entity certain competences
previously held by those authorities and henceforth
belonging to that special-purpose association, does
not constitute a "public contract".

9. Remondis GmbH & amp, Co. KG Region Nord v
Region Hannover and others (Case C-51/15)
• The court ruled:
– However, such a transfer of competences concerning
the performance of public tasks exists only if it
concerns both the responsibilities associated with the
transferred competence and the powers that are the
corollary thereof, so that the newly competent public
authority has decision-making and financial
autonomy

10. Peters v London Borough of Haringey and
another [2018] EWHC 192 (Admin)
LBH had procured a private sector partner to
establish an LLP to develop land within the borough,
for a variety of uses in particularly housing and
regenerative purposes. Amongst other things the
claimant grounds of challenge were that the Council
could not use an LLP for this purpose since the
council was acting for a commercial purpose under
section 1 of the LA 2011 and therefore had to use a
limited company.

11. Tender errors

12. Dem-Master Demolition Limited v Renfrewshire
Council [ 2016 ] CSOH 150 CA 78/16
The Contractor submitted a tender via a website
portal in respect of all three lots. It failed to provide
a percentage figures for overheads and profit in
respect of Lots 1 and 2 and had submitted a blank
template as part of its offer for Lot 3. The contractor
immediately responded providing all of the missing
information and asked the council to evaluate, the
Council refused. The Contractor challenged the
decision.

13. Dem-Master Demolition Limited v Renfrewshire
Council [ 2016 ] CSOH 150 CA 78/16
• Court decided:
– Courts can only interfere in exceptional circumstances with a
CA’s decision to reject a non conforming tender;
– In order to avoid a breach of the principle of equal treatment,
any documents requested after the tender deadline must
predate the deadline and tender docs must not say that a
tender would be rejected if documents were not provided.
This was not the case here;
– The right to clarify information supplied relates to ambiguities
does not allow for the submission of late tenders it is also a
right not an obligation

14. Abnormally low tenders

15. TV1 GmbH v European Commission (T-
700/14) EU:T:2017:35 (26 January 2017)
Contract for live streaming let by Commission. A
number of grounds for challenge. Key ground was
that the Commission failed to carry out a thorough
investigation of the abnormally low offer made by the
winning bidder.

16. TV1 GmbH v European Commission (T-
700/14) EU:T:2017:35 (26 January 2017)
Court held:
• Just because a winning bid was lower than other
tenders (even the incumbent) did not make it
automatically abnormally low;
• Any post award failures is not a relevant
consideration only that information available at the
time of award can be taken into account.
Important to note the requirements of regulation 69
now.

17. Agriconsulting Europe V European
Commission (case C-198/16 P)
Tender for innovation partnership for agricultural
productivity and sustainability. It’s tender had not been
successful because it had failed to reach the minimum
score required for an award criterion and also because
its tender was abnormally low as regards certain prices
offered.
ECJ dismissed appeal by AE noting there was no
definition of AL tenders confirmed it was for the CA to
determine the methodology, provided that that method
is objective and non-discriminatory

18. Disclosure

19. Bombardier Transportation v Merseytravel
(No. 2) [2017] EWHC 726 (TCC)
Challenge to train procurement, Confidentiality Ring
was established and highly sensitive information put
into the ring. Claimant wanted to add consultant and
client representative to the ring winning bidder
objected.

20. Bombardier Transportation v Merseytravel
(No. 2) [2017] EWHC 726 (TCC)
Court held:
• Winning bid is disclosable;
• An unjustified fishing expedition was not shown at
this stage
• Absent evidence to the contrary court will assume
that individuals would comply with their
undertakings
• Access for the client representative was not
permitted

21. Cemex UK Operations Ltd v Network Rail
Infrastructure Ltd and another [2017] EWHC
2392 (TCC)
Challenge brought by CEMEX UK Operations Limited (Cemex),
against the decision of National Rail Infrastructure Limited
(NR), to award a contract concerning the manufacture and
supply of railway sleepers. Cemex had finished third and last
but issued and the contract award was suspended.
Key issue was the action for specific disclosure and the
disclosure of documents into a confidentiality ring. Winning
bidder was concerned about consultants in the ring having
access to their confidential information.

22. Cemex UK Operations Ltd v Network Rail
Infrastructure Ltd and another [2017] EWHC
2392 (TCC)
Court held:
• make-up of confidentiality ring “classically matters for
the parties to sort out and agree” not for court to rule
on.
• Cemex should have accepted disclosure on lawyers only
basis and in any event if experts were to be included they
should have accepted reasonable three year exclusions
from future procurements

23. Cemex UK Operations Ltd v Network Rail
Infrastructure Ltd and another [2017] EWHC
2392 (TCC)
• Disclosure winning bid was refused because:
– Disclosure has to focus on central issues and there
must not be a fishing expedition
– It was for the authority to decide on long term viability
– Disclosure would reveal the DNA of the winner to the
competitor challenger

24. Damages

25. Nuclear Decommissioning Authority v
Energy Solutions EU Ltd (now called ATK
Energy EU Ltd) ([2017] UKSC 34)
Long running piece of litigation based around NDA’s
failure to award a contract to the correct EO due to a
failure to exclude the winning bidder when it should
have done. The decision of the supreme court is
interesting as it has seemingly changed the position in
relation to when damages should be awarded.

26. Nuclear Decommissioning Authority v
Energy Solutions EU Ltd (now called ATK
Energy EU Ltd) ([2017] UKSC 34)
• Pre this decision it was considered that, once breach and
consequent loss or damage was proved, the successful claimant
was entitled to damages as of right.
• The Supreme Court decided that entitlement to damages was
subject to the Francovich conditions namely:
– the rule of law infringed must be intended to confer rights on
individuals
– the breach must be sufficiently serious, and
– there must be a direct causal link between the breach of the
obligation and the damage sustained by the injured party.

27. Fosen-Linjen AS and AtB AS (Case
E-16/16)
Decision of the EFTA court on the same issue but came
to a different conclusion to the supreme court in NDA:
“A simple breach of public procurement law is in itself
sufficient to trigger the liability of the contracting
authority to compensate the person harmed for the
damage incurred, pursuant to Article 2(1) (c) of the
[Remedies Directive], provide that the other
conditions for the award of damages are met,
including, in particular, the condition of a causal link.”

28. Cross border interest

29. Oftalma Hospital Srl v CIOV, Regione
Piemonte (Case C-65/17) EU:C:2018:263
Existing contract for care services provided by
Oftalma to various public bodies the contract had
been let at a time when there was a distinction
between different types of services and no tender
exercise had been undertaken. The Contract had
been varied and Oftalma was in dispute about the
amount it was due. The Public bodies tried to claim
that he contract was void because no tendering
procedure had taken place.

30. Oftalma Hospital Srl v CIOV, Regione
Piemonte (Case C-65/17) EU:C:2018:263
• Court held:
– Where a contract is not subject to the regulations a CA must still
comply with general treaty principles where there is cross border
interest at the date of its award unless specifically excluded.
– Matters which may effect cross border interest include:
 Value (although for health contracts value alone was not
enough)
 Place
 Specific characteristics
 Genuine complaints made by EOs in other member states
However, note Recital 114

31. Brexit, what we know, kind of

32. Draft Agreement on Transition (DTA)
• Mostly agreed in principle on 19th March
• Nothing agreed until everything is agreed.
• Transition period would run until 31 December
2020.
• Provides some specific rules on procurement
(although not everything is agreed)

33. Draft Agreement on Transition (DTA)
Article 71 defines the relevant rules covered by the
transition period and these include all of the relevant
procurement directives, CPV and “the general
principles of Union law applicable to the award of
public contracts”

34. DTA
• Article 72 Establishes the principle of “initial subject, always
subject”. The relevant rules will applicable to any procedure
launched before the end of the transition period.
• Launched means when a call for competition or any invitation to
submit applications has been made (per the relevant rules) and it
is finalised when the award notice is issued or, where not
required, contract executed.
• Framework agreements are also caught and therefore arguably it
would seem a framework agreement let during the transition
period will be under the terms of the DTA for its term including all
call offs.

35. DTA
Article 73 establishes the application of the
remedies directives. This is not settled yet due to the
ongoing disagreement over the role of the CJEU
Article 74 Deals with the period of access to e-Certis

36. WTO GPA
• We are only members through the EU
• We will have to join again
• No clarity on what the final process for us joining
to GPA
• The “normal” route takes some time.
• If we have a hybrid special route because of the
existing commitments (as an EU member) and our
promise to keep to all of them then it might be
straight forward. This will take agreement.

37. Questions
Peter Ware, Partner
E: peter.ware@brownejacobson.com
T: 0115 976 6242

38. All information correct at time of production.
The information and opinions expressed within this
document are no substitute for full legal advice. It is for
guidance only and illustrates the law as at the published
date. If in doubt, please telephone us on 0370 270
6000.
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