When will the Public Contracts Regulations 2015 or the Concession Contracts Regulations 2016 apply?

Background

Dukes Bailiffs Limited, an enforcement agency company, had a dynamic purchasing system (“DPS 953”) arrangement for public procurement, under which it was the enforcement provider for a consortium of local authorities (the “Consortium”) which included Breckland.  All the contractual documents under DPS 953 assumed that the PCR 2015 applied to the dynamic purchasing system itself and to any call-off process (mini competition) under it.

Breckland, on behalf of the whole Consortium, issued an invitation to tender (“ITT”) for the provision of debt enforcement services for a two-year contract with an option for a further one-year extension. The ITT was issued under DPS 953, implying that the general contract terms would be similar to the draft included within the DPS953, and that PCR 2015 would apply to the contract.  However, the ITT referred to Breckland’s own specific terms and conditions and set out the information, instructions, scope, and specifications for the contract to be awarded..

Duke Bailiffs’ tender was unsuccessful – it was narrowly outscored by 2.5% in the evaluation criteria by a rival bidder.  Duke Bailiffs disputed the tender award and commenced court proceedings against Breckland.

Legal issues

 Dukes Bailiff issued two claims:

• First, a claim in the Technology and Construction Court (the “TCC”) contending that Breckland had breached the PCR 2015 due to apparent bias of the tender evaluator and it sought an order requiring Breckland to award it the contract.  Both the PCR 2015 and CCR 2016 set out statutory obligations and remedies for those involved in a tender process subject to (different) threshold values, but which regulations apply depend on the type of contract involved.  The obligations under CCR 2016 are also regarded as less stringent than those contained in PCR 2015. The crucial issue for determination by the court in this case was whether the PCR 2015 or the CCR 2016 applied and whether Dukes Bailiff could benefit from the appliable statutory obligations and remedies.
• Secondly, a public law judicial review claim based on the allegations that Breckland had been biased in the tender process and it had failed to give reasons for its decision to award the contract to a third party.

Breckland defended the claim issued in the TCC on the basis that PCR 2015 did not apply as the contract awarded at the conclusion of the tender process was in fact a concession contract under CCR 2016.  It also argued that its decision to award the contract to a third party could not be challenged under the judicial review process on the basis that its decision concerned a commercial decision.

Breckland issued an application for summary judgment, seeking the early dismissal of Duke Bailiff’s claims.

Decision

 Tindal J, made the following findings after reviewing the contract at the centre of this matter:

• The contract awarded by Breckland at the conclusion of the tender process was a services concessions contract as defined in the CCR 2016.
• However, the CCR 2016 did not apply in this case as the threshold contract value of £5,336,937 (inc VAT) had not been met.
• This decision meant that the statutory obligations and remedies under CCR 2016 and PCR 2015 were not available to Dukes Bailiff to rely on and Breckland’s claim under CCR 2016 was therefore dismissed by the Court.
• Breckland’s judicial review claim was also dismissed as it did not involve a sufficient public law element, rather it involved a challenge to a commercial decision and so Dukes Bailiff’s claim did not come with the types of decision which are subject to the judicial review process.

Comment

This decision has provided useful guidance on what a concession contract is for the purposes of CCR 2016 and how this differs from a contract for services under PCR 2015.   It is also a useful reminder about the circumstances within which the PCR 2015 or CCR 2016 apply and the approach the courts are likely to take when a judicial review claim is brought which involve an element of commercial decision making.

This case also provides an important reminder to businesses about the need for tender documents to be clear about the procurement rules that apply and for the contract itself to be clear and well-drafted to avoid future arguments.

Earlier this year, we shared some practical tips for businesses about challenging a tender decision including important insight relating to the PCR 2015 which you can view here:  How to challenge a public tender decision & the Public Procurement Bill. There are of course going to be lots of changes next year with the new Procurement Act 2023 (which received Royal Assent on 26 October 2023) and will come into force in October 2024. We will keep you updated on key changes.

We advise clients on all aspects of bringing or defending public procurement or tender challenges, across a variety of sectors including food, agriculture, education, medical devices and construction. If you need help, please get in touch.