Parties settle following decision for specific disclosure in procurement dispute

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In July 2014, the High Court granted an application for early specific disclosure in favour of Wealden Leisure Limited, which alleged that Mid-Sussex District Council’s £120m leisure services concession procurement breached EU procurement law.

Background

Wealden Leisure Limited (Wealden) was previously the incumbent leisure service provider to Mid-Sussex District Council (the Council), when it was informed that the Council’s preferred bid was 20% cheaper than its proposal. Wealden was concerned that the preferred bid was abnormally low, unsustainable and non-compliant. It also discovered that the Council had permitted the preferred bidder to make significant changes to its pricing submissions once bids were opened. It has been reported that the Council admitted that it had allowed the preferred bidder to increase costs by more than £200, 000 per year.

Wealden challenged the legality of the Council’s decision by issuing a claim in the High Court alleging that the Council had breached its obligations under EU law (Article 56 TFEU) which constituted a breach of statutory duty (section 2 of the European Communities Act 1972). In order to substantiate its allegations that the preferred bid was abnormally low, Wealden sought early specific disclosure of the final tenders received by the Council. The Council initially refused this even though Wealden had proposed that the disclosure would be restricted to lawyers and an independent expert. This sort of confidentiality ring is commonly used to allow cases to proceed without contractors seeing commercially confidential information about each other’s bids which would affect future competitions.

Concession contracts

Concession contracts are contracts for works and/or services where a contracting authority grants a private entity a right to exploit the market. Fees paid by users (usually members of the general public) are kept by the contractor and the public authority does not pay. Such contracts were not subject to the Public Contracts Regulations 2006 (and are outside the new 2015 Regulations). Where there is a cross-border interest in the opportunity, EU Treaty principles including transparency, equality of treatment and non-discrimination apply and can be used to challenge a contracting authority. Further, Directive 2004/23 on the award of concession contracts regulates such contracts, which is implemented in national law.

 

Order for specific disclosure

Relying on well established case law regarding early specific disclosure, the High Court ruled that the Council must disclose the tenders that it had received. The Council was also invited by the High Court to disclose evaluation documents in order to show any investigation it had conducted about the sustainability of the preferred bid. The Council agreed to the early specific disclosure and prior to trial the parties negotiated a settlement, the terms of which remain confidential.

Significance of this case

This case is significant because the challenge brought by Wealden outside the Public Contracts Regulations relied on breach of statutory duty, as opposed to judicial review. This brings specific benefits in that it provides for an extended limitation period (six years from the time of the breach, instead of three months for judicial review), there is a greater chance of disclosure being granted for an application for breach of statutory duty than in an application for judicial review and damages under such proceedings are available as oppose to setting the decision aside.

If you would like advice on public concession contracts or public procurement, please contact Daniel Milnes at Forbes Solicitors.

Nat Avdiu

About Nat Avdiu

Nat Avdiu is a Paralegal in the Contracts and Projects team at Forbes Solicitors. Nat provides updates for clients on a range of issues including: governance, data protection and freedom of information, procurement and charity law.
This entry was posted in Corporate & Restructuring, Dispute Resolution.

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