Public Procurement Litigation

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1 Irish Centre for European Law Trinity College, Dublin Public Procurement Litigation Public Procurement Conference 28 June 2012 Nathy Dunleavy

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3 CONTENTS 1. Threshold Questions A. Substantive Procurement Regulations B. Contracts outside the Substantive Regulations C. Remedies Regulations D. Procurement Litigation outside the Remedies Regulations E. The Standstill Period 2. Commencing Proceedings 3. Time Limits A. Applications under the Remedies Regulations 1. Locus Standi 2. Regulation 8 letters 3. Pleadings and commencing proceedings B. Applications Outside the Remedies Regulations A. Time Limits under the Remedies Regulations 1. Regulation 7(2) of the Remedies Regulations 2. Previous case law on time limits 3. Compatibility of Regulation 7(2) with EU law 4. Applications for Ineffectiveness B. Time Limits outside the Regulations C. Applications for an Extension of Time

4 Key Sources Irish Regulations A. S.I. No. 130 Of 2010 European Communities (Public Authorities Contracts) (Review Procedures) Regulations 2010 B. S.I. No. 131 Of 2010 European Communities (Award Of Contracts By Utility Undertakings) (Review Procedures) Regulations 2010 C. S.I. No. 420 of 2010 Rules Of The Superior Courts (Review Of The Award Of Public Contracts) 2010 (Scheduling Order 84A of the Rules of the Superior Courts) D. S.I. No. 691 of 2011 Rules of the Superior Courts (Judicial Review) 2011 (Amending Order 84 of the Rules of the Superior Courts) E. S.I. No. 329 of 2006 European Communities (Award of Public Authorities Contracts) Regulations 2006 F. S.I. No. 50 of 2007 European Communities (Award of Contracts by Utility Undertakings) Regulations 2007 EU Directives G. Directive 2007/66/EC amending Council Directives 89/665/EEC and 92/13/EEC with regard to improving the effectiveness of review procedures concerning the award of public contracts H. Directive 89/665/EEC on the coordination of the laws, regulations and administrative provisions relating to the application of review procedures to the award of public supply and public works contracts I. Directive 92/13/EEC coordinating the laws, regulations and administrative provisions relating to the application of Community rules on the procurement procedures of entities operating in the water, energy, transport and telecommunications sectors J. Directive 2004/17/EC coordinating the procurement procedures of entities operating in the water, energy, transport and postal services sectors K. Directive 2004/18/EC on the coordination of procedures for the award of public works contracts, public supply contracts and public service contracts

5 European Commission Documents L. Commission Interpretative Communication on the Community law applicable to contract awards not or not fully subject to the provisions of the Public Procurement Directives [2006] OJ C179/2 M. Commission Staff Working Paper concerning the application of EU public procurement law to relations between contracting authorities ( public-public cooperation ) (SEC) final Selected Recent Case Law (i) General and Threshold Questions QDM Capital Ltd v Athlone Institute of Technology (IEHC, Birmingham J, 3 June 2011) R(Hossack) v Legal Services Commission [2011] EWCA Civ 788 Alstom Transport v Eurostar International Ltd [2012] EWHC 28 (Ch) JBW Group Limited v Ministry of Justice [2012] EWCA Civ 8 Sidey Limited [2011] CSOH 194 (ii) Time Limits Dekra Éireann Teoranta v Minister for the Environment [2003] 2 IR 270 Veolia Water UK plc v Fingal County Council (No 1) [2007] 1 IR 690 Case C-406/08 Uniplex v NHS Business Services Authority (28 January 2010) Case C-456/08 Commission v Ireland, judgment of 28 January 2010 Traffic Signs and Equipment Ltd v Department for Regional Development [2010] NIQB 138 SITA UK v Greater Manchester Waste Disposal Authority [2011] EWCA Civ 156 Mermec UK Ltd v Network Rail Infrastructure Ltd. [2011] EWHC 1847 (TCC)

6 Public Procurement Litigation Threshold Issues, Time Limits and Commencing Proceedings Nathy Dunleavy Disclaimer: This paper is intended for discussion purposes only and does not contain any legal advice or assistance. No liability is accepted in respect of the materials in this paper. Scope The focus of this paper is the practice and procedure of public procurement litigation in Ireland. This paper will focus on two aspects of procurement litigation, (i) time limits and (ii) issues surrounding the commencement of proceedings and pleadings. Before addressing those two aspects of procurement litigation, the first section will consider certain threshold issues, providing a short overview of the rules that govern the award of public contracts, followed by an overview of the rules on remedies. Account will be taken throughout of the rules applicable to contracts that fall partly or wholly outside the formal procurement rules.

7 I. Threshold Issues A. Substantive Procurement Regulations 1. The substantive procurement rules The formal substantive public procurement rules are contained in SI 329/2006, the Public Sector Award Regulations (which implement Directive 2004/18/EC 2 into Irish law) and SI 50/2007, the Public Utilities Regulations (which implement Directive 2004/17/EC 4 into Irish law). These Regulations set out in detail the rules applicable to public tenders that fall within their scope. 2. Proposal for new directives Three new public procurement directives were proposed by the European Commission on 20 December Two of these would replace the core procurement directives, Directives 2004/18 5 and 2004/17, 6 and the third is a proposal for a new directive on concession contracts. 7 These new directives are still making their way through the legislative process. It seems likely that the current drafts will form the basis of new public procurement directives that may be adopted by the Council and the European Parliament during 2013 or This paper deals only with the rules currently in force. 3. Scope of the Public Sector and Utilities Regulations A detailed review of the application of the Public Sector Award Regulations and the Utilities Regulations (and the directives which they implement) is well beyond the scope of this paper. The following is merely a very brief overview of the remit of the Regulations: The Public Sector Award Regulations apply to contracting authorities, 8 defined as The State, a local authority or a public authority, or an association comprising one or more local authorities or public authorities, or local authorities and public authorities. 9 A non-exhaustive list of specific entities to which Directive 2004/18 applies is set out in Annex III of that Directive. Irish bodies that are listed include Enterprise Ireland, FÁS, the National Roads Authority and the Legal Aid Board; categories listed include hospitals and similar institutions of a public character, 1 SI No 329/2006 European Communities (Award of Public Authorities Contracts) Regulations Directive 2004/18/EC on the coordination of procedures for the award of public works contracts, public supply contracts and public service contracts [2004] OJ L134/ SI No 50/2007 European Communities (Award of Contracts by Utility Undertakings) Regulations Directive 2004/17/EC coordinating the procurement procedures of entities operating in the water, energy, transport and postal services sectors [2004] OJ L134/1. 5 Proposal for a Directive on public procurement COM(2011) 896 final (20 December 2011). 6 Proposal for a Directive on entities operating in the water, energy, transport and postal services sector COM(2011) 895 final (20 December 2011). 7 Proposal for a Directive on the award of concession contracts, COM(2011) 897 final (20 December 2011). 8 For a more detailed discussion of which entities are subject to the formal public procurement rules, see Dunleavy, Public Procurement, State Aid and Antitrust: Understanding the Intersections School of Law, Trinity College, Dublin (23 February 2009). 9 Public Sector Regulations, Reg 3(1). 1

8 agencies established to carry out particular functions or meet needs in various public sectors and other bodies governed by public law. The Utilities Regulations apply both to contracting authorities and public undertakings, 10 the definition of the latter following that in Directive 2004/17 essentially an undertaking over which a contracting authority may exercise a dominant influence. The Utilities Regulations also apply to private sector entities engaged in one of the activities covered by Directive 2004/17 and which operate under special or exclusive rights (a contracting entity 11 ). Specific entities to which Directive 2004/17 applies are listed in Annexes I to X of that directive. The definition of a contracting authority in both the Public Sector Award Regulations and the Utilities Regulations includes a public authority, the definition of which is similar to the definition of a body governed by public law in the underlying directives. 12 In the Public Sector Award Regulations, a public authority is defined as: any body corporate, not having an industrial or commercial character, that is established for a public purpose, and- (a) is financed wholly or substantially by the State, a local or regional authority or another public authority; or (b) is subject to management supervision by such a body, or (c) has an administrative, managerial or supervisory board, more than half of whose members are appointed by the State, a local or regional authority or another public authority, and, in particular, includes any body listed in Annex III to the Public Authorities Contracts Directive. 13 The Public Sector Award Regulations apply to public works contracts, public supply contracts and public service contracts, as those terms are defined in Regulation 3(1) of the Regulations. Regulation 4 of the Utilities Regulations state that the Regulations apply to contracts in writing (other 10 Utilities Regulations, Reg 3(1). 11 Utilities Regulations, Reg 3(1). 12 Directive 2004/18, Art 1(9); Directive 2004/17, Art 2(1)(a). On whether a body is a contracting authority and in particular whether it is a body governed by public law, see the recent judgment of Roth J in the English High Court in Alstom Transport v Eurostar International Ltd [2012] EWHC 28 (Ch), paras As Arrowsmith has explained, the concept of a body governed by public law excludes entities which, whilst connected with government, are not likely to apply national preferences because they are subject to commercial pressures to purchase efficiently. Most notably this applies to public entities providing goods or services to the market in competition with other firms (Arrowsmith, The Law of Public and Utilities Procurement, 2nd edn (2005), para 5.10). For a more general discussion of the concept of a body governed by public law in Community law, see Chiti, The EC Notion of Public Administration: The Case of the Bodies Governed by Public Law [2002] European Public Law Public Sector Award Regulations, Reg 3(1). A similar definition is contained in the Utilities Regulations, Reg 3(1). 2

9 than excluded contracts) entered into or to be entered into between a contracting entity and an economic operator under which the operator undertakes to carry out works for, or to supply a kind of product or service to, the entity relating to an activity described in Chapter 1 of Part 2 of the Regulations. Various of the terms in this definition are defined in Regulation 3(1) of the Utilities Regulations. The Public Sector Award Regulations and the Utilities Regulations only apply when the value of the contract is above a certain threshold. From 1 January 2012, the main thresholds are 130,000 for public supply and service contracts awarded by central government, 200,000 for other public supply and service contracts and 5,000,000 for public works contracts. 14 The Public Sector Award Regulations draw a distinction between Part A and Part B service contracts. Part A service contracts are subject to the entirety of the rules in the Public Sector Award Regulations, whereas Part B service contracts are only subject to Regulation 23 (the requirement to set out technical specifications) and Regulation 41 (the requirement to publish a notice of the result of the award). Identifying whether a particular service is Part A or Part B is not always straightforward Contract categorisation as an issue in litigation The categorisation of a contract as, for example, a public supply/service contract or a works contract or as a concession, can determine whether the formal procurement rules are applicable. Obligations under those rules may be avoided, for example, if the contract is classified as a works contract, to which the higher financial threshold (currently 5 million) applies, rather than a services or supply contract, to which a lower threshold applies. This question arose as a preliminary issue in QDM Capital Ltd v Athlone Institute of Technology, 16 one of the few recent procurement cases in Ireland that has resulted in a judgment of the High Court. It was argued by the applicant that a demolition and construction contract was a mixed service/supply contract to which the lower threshold for application of the formal procurement rules applied, and not a works contract, as the respondent institute maintained. 14 Commission Regulation (EU) No 1251/2011 amending Directives 2004/17/EC, 2004/18/EC and 2009/81/EC in respect of their application thresholds for the procedures for the award of contracts [2011] OJ L319/ The categories of services listed in Parts A and B are explained further in the Common Procurement Vocabulary ( CPV ) as set out in Regulation (EC) No 2195/2002 and updated by Commission Regulation (EC) No 213/2008 (see also the CPV Explanatory Notes (available at and the UN s Central Product Classification (provisional version) ( CPC ) (available at It is therefore necessary to examine these classifications to determine the appropriate service category applicable. A CPC and a CPV category are ascribed to each Part A and Part B service in Schedule 2 of the 2006 Regulations (and Annex II to Directive 2004/18). Where there are differences in interpretation between the CPC and CPV, the CPC nomenclature applies: Public Sector Award Regulations, Reg 3(2) and Sch 2, fn 2; Directive 2004/18, Art 1(14). The classification of a service as falling within Part A or Part B is a question of fact: see C-411/00 Felix Swoboda GmbH v Österreichische Nationalbank [2002] ECR I , para Judgment of Birmingham J of 3 June

10 Consequently, the applicant argued that the contract should have been advertised in the Official Journal of the EU as required by the Public Sector Award Regulations. The preliminary issue of whether the contract was a works contract was tried before the High Court. Following a review of the relevant directives and Irish Regulations and the case law on the categorisation of contracts, Birmingham J held that the essential obligation under the contract was the carrying out of works of a construction/refurbishment character and it was that obligation which gave the contract its character. The contract was therefore a works contract, to which the higher monetary threshold for application of the formal procurement rules applied, meaning that the respondent Institute had not been required to advertise the contract in the Official Journal. An appeal against this judgment is pending before the Supreme Court A similar question arose in QDM Capital Ltd v Galway City Council, 18 which concerned a contract for the replacement of a swimming pool heating system. If the contract was a works contract, it was below-threshold, whereas if it was a supply contract, it was above-threshold and the contract notice that had been issued would have been defective for failure to comply with the formal procurement rules contained in SI 329/2006. It was accepted that the contract was a mixed contract, containing elements of the supply of products and works. Feeney J concluded that the main purpose of the contract was works, considering all relevant elements, including the fact that the duration of the contract was expected to last 18 weeks. 6. Recently, the English Court of Appeal in JBW 19 has dealt with the question whether contracts for bailiff services to be provided to magistrates courts were service concession contracts, which were excluded from the scope of the formal procurement rules, or public service contracts to which the procurement Regulations applied. While the contracts did not fit neatly into either category and lacked many of the typical features of a concession, Elias LJ ultimately concluded that the contracts were concessions, although conceding that the categorization was a very difficult question. 20 B. Contracts outside the Regulations 7. General principles of EU law The general principles of EU law may apply to public tenders in addition to the formal procurement rules. This means that contracts governed by the Public Sector Award Regulations and the Utilities Regulations are also subject to compliance with general EU law principles (many of which are codified in the Regulations themselves). It also means that contracts falling wholly outside the Regulations (such as below threshold contracts), partly 17 Birmingham J issued a separate ruling on costs on 6 July 2011, with costs awarded to the respondent (the applicant had argued that application of the normal costs rule, that costs follow the event, would have rendered the public procurement legislative scheme and the rules on remedies inoperable and in particular would prevent many small and medium-sized companies from exercising their rights; Birmingham J saw no basis for adopting this approach). 18 [2011] IEHC JBW Group Limited v Ministry of Justice [2012] EWCA Civ JBW Group Limited v Ministry of Justice [2012] EWCA Civ 8, para 52. 4

11 outside the Regulations (such as above threshold Part B service contracts) or service concessions, and which have a cross-border interest, are subject to general principles of EU law. Of particular importance in procurement cases are the principles of transparency, equal treatment, non-discrimination on the grounds of nationality and proportionality Cross-border interest The obligation on contracting authorities to carry out tenders in respect of contracts that are not, or not fully, subject to the public procurement directives flows from the requirements of EU law. However, the application of EU law will only be relevant where there is a cross-border interest. As the Court of Justice explained in SECAP: 20. That does not mean, however, that contracts below the threshold are excluded from the scope of Community law. According to the established case-law of the Court concerning the award of contracts which, on account of their value, are not subject to the procedures laid down by Community rules, the contracting authorities are nonetheless bound to comply with the fundamental rules of the Treaty and the principle of non-discrimination on the ground of nationality in particular. 21. However, according to the case-law of the Court, the application of the fundamental rules and general principles of the Treaty to procedures for the award of contracts below the threshold for the application of Community directives is based on the premise that the contracts in question are of certain cross-border interest Is a potential cross-border interest sufficient? In Commission v Ireland, 23 Advocate General Mengozzi stated that if a public contract involves a crossborder interest, even if merely a potential cross-border interest, the rules that arise from the Treaty must apply. 24 The Court of Justice does not yet seem to have explicitly endorsed this view that merely a potential cross-border interest is sufficient to trigger the application of the Treaty rules to a tender. However, the case law cited by Advocate General Mengozzi does, arguably, implicitly approve the test of a mere potential cross-border interest, with the Court of Justice stating in Wall, 25 in respect of concessions, that the obligation of transparency applies 21 For a recent overview, see Brown, EU primary law requirements in practice: advertising, procedures and remedies for public contracts outside the procurement directives (2010) 19 Public Procurement Law Review 169. See also Commission Communication on the Community Law applicable to contract awards not or not fully subject to the provisions of the Public Procurement Directive [2006] OJ C179/02. The Commission Communication was endorsed by the General Court in Case T-258/06 Germany v Commission, judgment of 20 May 2010, as properly reflecting the EU law obligations that apply to contracts of crossborder interest that fall wholly or partly outside the formal procurement rules, the General Court stating at paragraph 162 that the Communication does not contain new rules for the award of public contracts which go beyond the obligations under Community law as it currently stands. Despite the guidance in the Commission Communication, there is some uncertainty as to the scope of the requirements that flow from the Treaty principles and the features of a procurement that will, if included or excluded, result in a breach of EU law. 22 Case C-147/06 SECAP SpA v Comune di Torino [2008] ECR-I 3565, paras (references omitted). 23 Case C-226/09 Commission v Ireland, judgment of 18 November Case C-226/09 Commission v Ireland, opinion of Advocate General Mengozzi, para 22 (emphasis added). 25 Case C-91/08 Wall AG [2010] ECR I

12 where the service concession in question may be of interest to an undertaking located in a Member State other that in which the concession is awarded. 26 This formulation has been cited a number of times by the Court, including in Commission v Ireland 27 itself, which concerned a Part B service contract. 10. When is there a cross-border interest? It is in principle up to the contracting authority concerned to determine whether a below threshold contract may be of cross-border interest, it being understood that that assessment may be subject to judicial review. 28 The particular characteristics of the contract need to be considered, with potentially relevant factors including the estimated value of the contract, its technical complexity and whether the location at which products are to be supplied or works or services performed is such as to be likely to attract the interest of foreign operators. 29 The proximity of the location in which the contract is to be performed to the border of another Member State may be a factor Sidey A recent example of a court addressing the question of whether a contract was of sufficient cross-border interest so as to impose EU law obligations on a contracting authority is the judgment of the Outer House of the Scottish Court of Session in Sidey. 31 A local authority contract for the replacement of kitchens and bathrooms was held not to be of cross-border interest. In reaching this decision, Lord Brailsford found that features in the tender documentation which were suggestive of a cross-border interest were not conclusive of there being such a cross-border interest. The fact that the local authority employees involved in the tender did not even consider whether there was a cross-border interest was held to be a more telling factor. Lord Brailsford explained his reasoning further: It seems to me that such employees familiar both with the nature and scope of the contract in question and with the placing of contracts of this sort in general would be likely to be aware whether or not a contract had the potential to generate any cross-border interest. Failure to consider the issue is in my view likely to be indicative of, in a pragmatic sense, lack of potential for cross-border interest. This view is strengthened by a consideration of both the nature of the contract and the value thereof. This was a contract for, in commercial terms, a relatively modest, contract price. It involved work of a fairly labour intensive nature in a relatively large number of local authority houses where it would be necessary to have local staff on the ground. When these facts are considered I do not find it surprising that the respondents employees responsible for the contract, whilst conceding that they did not consider the matter at the time of issuing the contract documents, did not consider that the contract would have generated cross border interest. Looked at as objectively as I can I have therefore formed the view that the position of the respondents is correct and that there is no question of cross-border interest in this contract Case C-91/08 Wall AG [2010] ECR I-2815, para Case C-226/09 Commission v Ireland, judgment of 18 November 2010, para Case C-147/06 SECAP SpA v Comune di Torino [2008] ECR-I 3565, para Case C-147/06 SECAP SpA v Comune di Torino [2008] ECR-I 3565, para Case C-147/06 SECAP SpA v Comune di Torino [2008] ECR-I 3565, para Sidey Limited [2011] CSOH Sidey Limited [2011] CSOH 194, para 19. 6

13 12. It is arguable that this decision grants overly generous deference to contracting authorities by suggesting that if employees of contracting authorities did not consider the issue of cross-border interest, this is indicative of the fact that there is none. However, it is also apparent from the judgment that the nature of the contract and its low value were important considerations in deciding that the contract was not of cross-border interest. 13. Exemptions from public procurement and Treaty rules Depending on the circumstances pertaining to a particular public contract, there may be scope for the contracting authority to argue that it is exempt from the public procurement rules and/or the Treaty rules. Exemptions may apply both in the case of contracts subject to the formal procurement rules and those outside the rules but of crossborder interest. A detailed discussion of exemptions is beyond the scope of this paper. There are specific exemptions contained in the formal public procurement rules, for example, the partial exemption that a contracting authority can award a contract using the negotiated procedure and without a prior advertisement in cases of extreme urgency. 33 Exemptions contained in the Treaties include those contained in Article 51 TFEU on the exercise of official authority, in Article 52 TFEU on grounds of public policy, public security or public health, in Article 106(2) TFEU on services of general economic interest 34 and in Article 346 TFEU on the security interests of a Member State. Other exemptions include those for inhouse provision of services (the Teckal exemption 35 ) and an exemption for contracting authorities engaging with each other for the provision of shared services. 36 There may also be situations where it is possible to argue that the procurement rules do not apply for other reasons, for example because there is in fact no contract at issue, 37 with the relevant service carried out pursuant to an administrative scheme or in some other way that does not give rise to a contract. 14. Other grounds of challenge If a Part B service contract or a below threshold contract does not have a sufficient cross-border interest, then there is unlikely to 33 Public Sector Award Regulations 2006, Reg 32(1)(c). 34 See Case C-160/08 Commission v Germany, judgment of 29 April 2010 (Germany unsuccessfully arguing that a contract for ambulance services was exempt from Directive 92/50 and Directive 2004/18 on the basis of Article 106(2) TFEU). 35 Case C-107/98 Teckal Srl v Commune di Viano [1998] ECR I See, in particular, Case C-480/06 Commission v Germany [2009] ECR I-4747 and Commission Staff Working Paper concerning the application of EU public procurement law to relations between contracting authorities ( public-public cooperation ) (SEC) final. 37 See, eg, Public Sector Award Regulations 2006, Reg 4, which states that the Regulations apply to public contracts. The term public contracts is defined in Directive 2004/18, Art 1(2)(a) as contracts for pecuniary interest concluded in writing between one or more economic operators and one or more contracting authorities and having as their object the execution of works, the supply of products or the provision of services within the meaning of this Directive. See, on this issue, Case C-399/98 La Scala [2001] ECR I-5409, in particular at paras (discussing whether the contractual element as required by Directive 92/50 was present; contract found to exist, with the Court holding at para 73 that the fact the agreement was governed by public law and was concluded in the exercise of public power did not preclude, but rather militated in favour of, the existence of a contract within the meaning of Directive 92/50). Cf Case C-220/05 Auroux [2007] ECR I-385 (no exemption from the procurement rules on the ground the agreement may be concluded only with certain legal persons, which themselves have the capacity of contracting authority and which will be obliged, in turn, to apply those procedures to the award of any subsequent contracts; see, in particular, the opinion of Advocate General Kokott, paras 70-78). 7

14 be any basis on which an applicant can invoke EU law to challenge a decision of a contracting authority in relation to that contract. Ireland does not have a national procurement law that can be invoked in such a situation. An applicant wishing to challenge a decision in relation to such a contract would need to consider what other grounds of challenge might be available. An applicant in proceedings under the Remedies Regulations or in the case of contracts with a cross-border interest outside the Regulations, may also wish to consider adding such other grounds of challenge. These might include, for example, general administrative law grounds (e.g. irrationality or breach of a legitimate expectation 38 ), a claim that the contracting authority has breached an implied contract, 39 or claims that the contracting authority has acted ultra vires. C. Remedies Regulations 15. Remedies rules Remedies for breaches of the public procurement rules are regulated by overlapping schemes of EU directives, case law of the Court of Justice of the European Union, domestic regulations and domestic case law. A distinction should be made between contracts that are the subject of the formal remedies rules (governed by the Public Sector Award Regulations or the Utilities Regulations) and contracts that fall outside these rules. The procedures relevant to applications for review of the latter types of contract are different to those governed by the formal remedies rules. The application of the formal remedies rules will be discussed first, before turning to contracts falling outside of those rules. 16. Irish Remedies Regulations The current remedies regulations in Ireland are: (i) in respect of public sector contracts, SI 130/2010 (implementing Directive 89/665, 40 as amended by Directive 2007/66 41 ) (referred to here as SI 130/2010 or the Public Contracts Remedies Regulations ), and 38 For example, a legitimate expectation that the contracting authority would follow its stated procedures. In Sidey, the petitioners were successful in making out a breach of their legitimate expectation that the respondents would apply the principles of equal treatment and transparency to their evaluation of the tender documents (Sidey Limited [2011] CSOH 194, paras 20-22). The Court also found, at para 23, that there was substantial merit in the argument that that the respondents failed to apply their procedures correctly or rationally. 39 The Northern Irish courts have recognised implied contracts in the context of tender documents: see, eg, Scott v Belfast Education and Library Board [2007] NICh 4; McConnell Archive Storage Limited v Belfast City Council [2008] NICh 3. The English courts have also been prepared to recognise that pursuant to an implied contract, a contracting authority has an obligation to consider a tender submitted to it and that such consideration should be in good faith (see, eg, JBW Group Limited v Ministry of Justice [2012] EWCA Civ 8, para 61 (Elias LJ), applying Blackpool Aero Club v Blackpool Borough Council [1990] 1 WLR 1195). The question of an implied contract in this context does not appear to have recently been considered by the Irish courts. In a very different context, the Irish High Court rejected the incorporation of an implied term in a bidding process for the sale of the company that the selling shareholders would complete the transaction with the highest bidder (Howberry Lane v Telecom Éireann [1999] 2 ILRM 232 (Morris P)). 40 Directive 89/665 on the co-ordination of the laws, regulations and administrative provisions relating to the application of review procedures to the award of public supply and public works contracts [1989] OJ L395/33. 8

15 (ii) in respect of utilities contracts, SI 131/2010 (implementing Directive 92/13, 42 as amended by Directive 207/66) (referred to here as SI 131/2010 or the Utilities Remedies Regulations ). 17. Similarity of Public Sector and Utilities Remedies Regulations SI 130/2010 and SI 131/2010 contain very similar provisions and many of the regulations are numbered and worded identically. For the most part, this paper will focus on SI 130/2010 and will tend to avoid duplication by not always discussing the corresponding provision (which will often be the same) in SI 131/2010 (SI 130/2010 and SI 131/2010 are referred to together as the Remedies Regulations ). 18. Scope of SI 130/2010 Regulation 3 of SI 130/2010 provides that the Regulations apply to decisions taken, after the coming into operation of these Regulations, by contracting authorities in relation to the award of reviewable public contracts, regardless of when the relevant contract award procedure commenced. Regulation 2 in turn defines a reviewable public contract as follows: [A] contract (including a framework agreement and a dynamic purchasing system) to which the Public Authorities Contracts Regulations apply in accordance with Part 2 or 9 of those Regulations, or a design contest to which Part 10 of those Regulations applies. 19. Part B service contracts This definition of a reviewable public contract would appear to mean that SI 130/2010 applies to Part B, as well as Part A, service contracts, although the position is not beyond doubt. Regulation 4 of the Public Sector Award Regulations, which is contained in Part 2 of those Regulations, states that the Regulations apply to above threshold Part B service contracts. It can therefore be argued that Part B contracts are contracts to which the Public Sector Award Regulations apply in accordance with Part 2 of the Regulations. Even though Part B contracts are merely mentioned in Part 2, that Part of the Regulations only deals with the Scope of These Regulations, so being mentioned may be sufficient for purposes of the definition of a reviewable public contract in Regulation 2 of SI 130/ However, Regulation 21 of the Public Sector Award Regulations states that Part B contracts are subject only to Regulations 23 and 41. Regulation 23 is contained in Part 5 of the Regulations and Regulation 41 in Part 7. So, the substantive rules applicable to part B contracts are not rules within any of Part 2, 9 or 10. Consequently, despite the listing of Part B contracts in Regulation 4 (contained in Part 2), it may at least be arguable that Part B contracts are not contracts to which the Public Sector Award Regulations apply in accordance with Part 2 or 9..[or..10].. as no substantive provisions in any of those parts apply to Part B contracts. However, given that Part 2 only deals with scope and not with 41 Directive 2007/66/EC amending Council Directives 89/665/EEC and 92/13/EEC with regard to improving the effectiveness of review procedures concerning the award of public contracts [2007] OJ L335/ Directive 92/13 co-ordinating the laws, regulations and administrative provisions relating to the application of Community rules on the procurement procedures of entities operating in the water, energy, transport and telecommunications sectors [1992] OJ L76/14. 9

16 substantive rules, the better view may be that the mere mention of Part B contracts in Part 2 is sufficient to bring them within the definition of a reviewable public contract. 21. Assuming then that a Part B service contract is a reviewable public contract and so subject to SI 130/2010, it is in any event the case that the entirety of the rules in SI 130/2010 does not apply to Part B contracts. For example, as the Public Sector Award Regulations do not require a standstill period for Part B contracts, the requirement in Regulation 5 of SI 130/2010 for a contracting authority to observe a standstill period and provide a statement of reasons does not apply in the case of Part B 43. SI 130/2010 does not apply at all to contracts outside the Public Sector Award Regulations, such as service and supply contracts falling below the relevant financial thresholds in the Public Sector Award Regulations. 22. Scope of SI 131/2010 The scope of SI 131/2010 is framed in a similar way to SI 130/2010. Regulation 3 of SI 131/2010 provides that the Regulations apply to reviewable contracts, in turn defined in Regulation 2(1) as contracts to which the Utilities Regulations apply. 23. National Regulations to be interpreted to conform with EU Directives A general point in considering how the Irish courts might apply the Remedies Regulations is the requirement on the courts to interpret national implementing regulations, so far as possible, in light of the underlying EU directive. As the Court of Justice stated in Marleasing: 44 [In] applying national law, whether the provisions in question were adopted before or after the directive, the national court called upon to interpret it is required to do so, as far as possible, in the light of the wording and the purpose of the directive in order to achieve the result pursued by the latter 24. This point was also made by Fennelly J in Albatros Feeds v Minister for Agriculture and Food, while emphasizing that this EU law obligation could not lead to a contra legem interpretation of the national law: See further, para 31 below, discussing the possibility that the general Treaty principles may require a standstill period to be applied to Part B service contracts in particular circumstances. 44 Case C-106/89 Marleasing SA v La Comercial Internacional de Alimentación SA [1990] ECR I -4135, para Albatros Feeds Limited v Minister for Agriculture and Food [2007] 1 IR 221, See also, Case C- 403/01 Pfeiffer [2004] ECR I-8835, paras ; the judgment of McKechnie J in Eircom Limited v Commission for Communications Regulations [2007] 1 IR 1, 24 (noting the obligation on the national court to interpret various national regulations which were passed in order to incorporate Directives into national law, in a manner, so far as is possible in conformity with the Directives ); the judgment of Edwards J in Environmental Protection Agency v Neiphin Trading Ltd [2011] IEHC 67 (on the interpretation of Irish legislation enacted to give effect to EU directives in the environmental law context); and, on the limits of the conforming interpretation obligation, the judgment of Roth J in Alstom Transport v Eurostar International Ltd [2012] EWHC 28 (Ch), paras and para 93 (UK Regulations were applicable to domestic bodies and to interpret the provision in the Regulations to cover bodies in all other 26 Member States would go against the grain of the Regulations; Roth J recognized that this finding, which strictly was obiter, was problematic); and the judgment of Kitchin LJ in Football Association Premier League Ltd v QC Leisure [2012] EWHC 108 (Ch) (a defence to copyright infringement in national legislation, which was not 10

17 It is, at the same time, perfectly clear that the court is under an obligation to interpret national law, so far as possible, in the light of the Community law provisions it is designed to implement. The important qualification is: so far as possible. The European Court of Justice does not interpret national law. It is a fundamental principle that the Community law respects national procedural autonomy. The national court is subject to the obligation of conforming interpretation, There are, however, limits to that obligation. Most recently, the European Court of Justice in its judgment in Adeneler v Ellinkos Organismos Galaktos (Case C-212/04) [2006] IRLR 716 repeated at para 110 that the obligation on a national court to refer to the content of a directive when interpreting and applying the relevant rules of domestic law is limited by general principles of law, particularly those of legal certainty and non-retroactivity, and that obligation cannot serve as the basis for an interpretation of national law contra legem. D. Procurement Litigation outside the Remedies Regulations 25. Form of proceedings The most obvious route for bringing a challenge in respect of a public contract not covered by the Remedies Regulations is by way of judicial review. However, it might also be possible to bring an action by way of plenary proceedings 46. Another option for an aggrieved bidder is to make a complaint to the European Commission (this can also be done when the Remedies Regulations apply. However, the most that will occur in this case is that the Commission will investigate the matter and possibly take an infringement action against Ireland and there may be no real benefit to an aggrieved bidder from this course of action. Proceedings outside the Remedies Regulations are discussed further below. 47 E. The Standstill Period 26. The standstill period A standstill period is a period of time, after which a contracting authority has made its award decision, during which the contracting authority cannot conclude a contract. The purpose of the standstill period is to allow disappointed tenderers time to bring proceedings for review of the award decision before the contract has been entered into. 27. Basis of the requirement for a standstill The requirement for a standstill period in principle was established by the Court of Justice in the Alcatel case, 48 and the requirement has since been codified and expanded on in the Remedies Directives and the Remedies Regulations. Recital 6 of Directive 2007/66 provides that the standstill period should give the tenderers concerned sufficient time to examine the contract award decision and to assess whether it is appropriate to initiate a review procedure. Article 2a(1) of Directive 89/665, as amended, provides that Member States shall ensure that there is sufficient time for effective review of the recognized by the relevant EU copyright directive, could not be construed away as this would go against the grain of the legislation (para 77)). Note also the potential relevance of the fact that national courts have a duty of sincere cooperation pursuant to Article 4(3) of the Treaty on European Union. 46 See O Donnell v Dun Laoghaire Corporation [1991] ILRM 301; Hogan and Morgan, Administrative Law in Ireland, 4 th ed (2010) para et seq. 47 See para 57 et seq. 48 Case C-81/98 Alcatel Austria AG v Bundesministerium fur Wissenschaft und Verkehr [1999] ECR I-7671, para

18 contract award decisions taken by contracting authorities, with Article 2a(2) requiring a standstill period of at least 10 calendar days in the case of fax/electronic communications and 15 calendar days in other cases. 28. Standstill period in the Remedies Regulations The Remedies Regulations provide for minimum standstill periods of 14 and 16 calendar days respectively, depending on the method of notification. Regulation 5 of SI 130/2010 sets out the details of the standstill period: 5. (1) A contracting authority shall not conclude a reviewable public contract to which a standstill period applies under these Regulations within the standstill period for the contract. (2) There is no standstill period for (a) a contract where the Public Authorities Contracts Regulations do not require prior publication of a contract notice in the Official Journal, (b) a contract where the only tenderer concerned is the one who is awarded the contract and there are no candidates concerned, (c) a contract entered into or awarded on the basis of a framework agreement in accordance with Regulation 33, 34 or 35 of the Public Authorities Contracts Regulations, or (d) a specific contract entered into on the basis of a dynamic purchasing system in accordance with paragraphs (5) to (12) of Regulation 36 of the Public Authorities Contracts Regulations. (3) The standstill period for a contract begins on the day after the day on which each tenderer and candidate concerned is sent a notice, in accordance with paragraphs (2) and (3) of Regulation 6, of the outcome of his or her tender or application. (4) The duration of the standstill period must be at least (a) if the notice under Regulation 6 is sent by fax or electronic means, 14 calendar days, or (b) if the notice is sent by any other means, 16 calendar days 29. Tenderers and candidates protected by the standstill It is apparent from Regulation 5(3) that the standstill period can apply to both tenderers and candidates concerned. A tenderer shall be deemed to be concerned if not yet definitively excluded from the contract award procedure. 49 A candidate will only be deemed to be concerned if the contracting authority has not made available information about the rejection of their application before the notification of the contract award decision to the tenderers concerned SI 130/2010, Reg 2(3)(a). 50 SI 130/2010, Reg 2(3)(b). 12

19 30. Standstill periods for contracts outside the Remedies Regulations? As evident from Regulation 5(3), the start of the standstill period is determined by the date on which the required standstill notice, containing a summary of the reasons for the award decision, is sent to losing tenderers. The contents of the standstill notice are set out in Regulation 6 and the duty to give reasons for decisions by contracting authorities is discussed further below. Regulation 5(2) lists contracts in respect of which a standstill period is not required. These include contracts which do not require prior publication of a contract notice in the Official Journal, 51 which includes Part B service contracts. Obviously, contracts not covered by the Remedies Regulations, such as those below the monetary thresholds in the Pubic Sector and Utilities Regulations, are not subject to the standstill required by the Remedies Regulations. 31. Even though certain contracts are exempt from the standstill requirement under the Remedies Regulations, it is possible that in certain circumstances, a court would find that the application of general principles of EU law imposed a standstill obligation. In Federal Security, 52 the Northern Irish High Court ruled that in certain circumstances, a standstill requirement applies in respect of Part B services contracts. In this case, the respondent had entered into a contract for the provision of security services (a Part B service) on the same day that it notified the applicant that it was not successful. In deciding that a standstill period was required in the particular circumstances given, inter alia, the cross-border interest in the contract, its significant value of approximately 60 million and the fact that the applicant submitted the lowest-priced tender, the Court noted that fundamental principles of EU law, including transparency, equal treatment and the effectiveness of remedies, may, in particular factual situations, require the use of a standstill period in contract procedures normally excluded from that obligation. 53 In practice, it seems that contracting authorities generally apply a standstill period even where this is not required by the Remedies Regulations. This is certainly the safer course for a contracting authority to follow. 32. Duty to give reasons The provision of adequate information to a losing tenderer is an essential requirement to ensure that the disappointed tenderer can decide whether there are grounds for bringing an action for review of the contracting authority's award decision. The obligation in the Remedies Regulations to provide reasons, which is contained in Regulation 6, is intertwined with the requirement for a standstill period. The losing bidder must be given sufficient time for effective review of the award decision and, according to Article 2a of the Remedies Directive, the standstill notice must contain a summary of the relevant reasons for the decision as set out in Article 41(2) of Directive 2004/18. Article 41(2) in turn requires the contracting authority to identify the characteristics and relative advantages of the tender selected as well as the name of the successful tenderer or the parties to the framework agreement. Additionally, the principle of effective 51 SI 130/2010, Reg 5(2)(a). 52 Federal Security Services Limited v Chief Constable for the Police Service of Northern Ireland [2009] NICh Federal Security Services Limited v Chief Constable for the Police Service of Northern Ireland [2009] NICh 3, para 32 (McCloskey J). 13

20 judicial protection of EU law rights suggests that contracting authorities are required to state the grounds of their award decisions so as to allow for the effective exercise of the right to judicial review. 54 This means that sufficient reasons must be provided even for contracts falling outside the formal procurement rules. 55 The principle of effective judicial protection is enshrined in Article 47 of the Charter of Fundamental Rights. It may also be worth considering in particular circumstances, for example in the case of below threshold contracts, whether it might be arguable that there is a duty to give reasons as an aspect of fair procedures and justice guaranteed by the Constitution and, possibly, as an unspecified right under Article However, it should be noted that the case law in this area illustrates that the obligation to give reasons is limited and that the degree to which a decision has to be supported by detailed reasons depends upon the nature of the decision itself. 57 The extent of the duty to give reasons is an issue that frequently arises in practice and there is considerable uncertainty as to the scope of the obligation. Unfortunately a more detailed treatment of this area is beyond the scope of this paper See, eg, Case 222/86 Unectef v Heylens [1987] ECR 4097, para See Commission Communication on the Community Law applicable to contract awards not or not fully subject to the provisions of the Public Procurement Directive [2006] OJ C179/02, para 2.3.3: In order to comply with this requirement of effective judicial protection, at least decisions adversely affecting a person having or having had an interest in obtaining the contract, such as any decision to eliminate an applicant or tenderer, should be subject to review for possible violations of the basic standards derived from primary Community law. To allow for an effective exercise of the right to such a review, contracting entities should state the grounds for decisions which are open to review either in the decision itself or upon request after communication of the decision. 56 See De Blacam, Judicial Review, 2 nd ed (2009) Garda Representative Association v Minister for Finance [2010] IEHC 78 (Charleton J) para 32. See also the discussion by Kelly J of the obligation to give reasons in Mulholland v An Bord Pleanála (No. 2) [2006] 1 IR Relevant cases that might be consulted on the duty to give reasons include, among others, Case T-89/07 VIP Car Solutions SARL v European Parliament; Case T-437/05 Brink s Security Luxembourg v Commission [2009] ECR II-3233; Case T-300/07 Evropaïki Dynamiki v Commission; Case T-465/04 Evropaïki Dynamiki v Commission [2008] ECR II-154; Case T-70/05 Evropaïki Dynamiki v European Maritime Safety Agency, judgment of 2 March 2010 (upheld on appeal, Case C-252/10 Evropaïki Dynamiki v European Maritime Safety Agency, judgment of 21 July 2011); Case T-63/06 Evropaïki Dynamiki v European Monitoring Centre for Drugs and Drug Addiction (EMCDDA), judgment of 9 September 2010; Case T-387/08 Evropaïki Dynamiki v Commission, judgment of 9 September 2010 (appeal dismissed, Case C-561/10P Evropaïki Dynamiki v Commission, Order of 20 September 2011); Case T-50/05 Evropaïki Dynamiki v Commission [2010] ECR II-1071; Case T-19/95 Adia Interim SA v Commission [1996] ECR II Note also that there is a potential argument that to the extent that Regulation 6(5) of the Remedies Regulations (which states that the information to be provided to a losing tenderer may be provided by setting out scores) is read to mean that the reason-giving obligation can always be met by merely providing scores, this provision is incompatible with EU law. However, it can also be argued that this provision can be read to conform with EU law, by interpreting it to mean that it does not state that scores will always be sufficient, but may be so in particular circumstances. 14

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