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England and Wales High Court (Chancery Division) Decisions
You are here: BAILII >> Databases >> England and Wales High Court (Chancery Division) Decisions >> Sita UK Ltd v Greater Manchester Waste Disposal Authority (Rev 1) [2010] EWHC 680 (Ch) (29 March 2010)
URL: http://www.bailii.org/ew/cases/EWHC/Ch/2010/680.html
Cite as: [2010] 2 CMLR 48, [2010] EWHC 680 (Ch)
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CHANCERY DIVISION
Strand, London, WC2A 2LL |
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B e f o r e :
____________________
| SITA UK LIMITED |
Claimant |
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| - and - |
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| GREATER MANCHESTER WASTE DISPOSAL AUTHORITY |
Defendant |
____________________
MISS D. ROSE Q.C., MR. B. KENNELLY and MR. T. RICHARDS (instructed by
S J Berwin LLP) for the Defendant.
Hearing dates: 4th, 5th, 8th & 9th February 2010
____________________
Crown Copyright ©
- This is an application to strike out this action on the footing that it is time-barred. The claim arises out of the tendering process for a PFI project to provide waste disposal facilities for Greater Manchester. The defendant ("GMWDA") is the statutory authority with the function and obligation of achieving that waste disposal. A few years ago it decided to embark on a massive new project, which I am told is the largest waste disposal project to have been awarded in the UK. It invited a number of people to tender, but by the start of the period with which the present action is concerned, that number had been reduced to two. The first was a syndicate headed by Viridor Laing (Greater Manchester) Limited ("VL"), and the second was a syndicate headed by the claimant ("Sita"). They both submitted Best and Final Offers ("BaFOs") on 6th November 2006 and they were assessed in accordance with pre-prescribed criteria by GMWDA. On 26th January 2007 GMWDA announced that VL was its preferred bidder and that Sita was to be its reserve bidder. Thereafter it negotiated with VL towards a final contract. The progress towards that contract was interrupted by the credit crunch, but on 8th April 2009 GMWDA finally contracted with VL and issued a press announcement to that effect. That produced a protest from Sita that the proper statutory procedures had not been complied with and it ought to have been allowed back into the bidding process. It has a number of particular complaints to which I will come in due course. After a certain amount of correspondence with GMWDA, it issued these proceedings on 27th August 2009 claiming damages for GMWDA's failure to award the contract to Sita and/or for Sita's loss of the chance of being awarded the contract and/or for Sita's wasted tender costs. Particulars of claim followed on 11th September 2009.
- GMWDA does not accept that in the circumstances Sita has any basis of complaint. Furthermore, it also takes a limitation point, saying that the statutory material (appearing below) prescribed a three month limitation period (subject to a very limited discretion to extend, vested in the court) which started on 8th April and ended on 7th July but potentially subject to some short agreed extensions which do not assist Sita. It is therefore said that these proceedings were started out of time and that the discretion to extend the time should not be exercised.
- GMWDA takes these points in an application which I am invited to treat as an application to strike out under CPR 3.4 and/or an application for summary judgment under CPR 24. The application notice is, in form, probably only an application under the former, but no point was taken as to whether or not I could treat it as an application for summary judgment. I shall therefore consider this application under both heads. I doubt if it makes any material difference.
- The material that was presented to the court was voluminous, to an extent which might sometimes be thought to be unwise in an application which is based on the plainness and obviousness of one side's case. It consisted (in addition to a pleading from Sita) of long and detailed witness statements going through some of the minutiae of some detailed dealings between the parties, and eight volumes of exhibits. There were six volumes of authorities. Fortunately, large swathes of that material turned out to be surplus to requirements, which leads one to question why it was there in the first place, but I shall not dwell on that.
- It will assist an appreciation of the factual narrative which appears below if I first set out the legal context in which that factual narrative has to be set and against which it has to be judged.
- The English statutory instrument under which the claim is said to arise flows from Council Directive 89/665/EEC of 21 December 1989:
- In this jurisdiction the directive was given effect to by, inter alia, the Public Services Contract Regulations 1993 (SI 1993 No. 3228). There is a dispute between the parties, at least at a theoretical level, as to whether these regulations, or subsequent regulations made in 2006, strictly apply to the present situation. However, the parties agree that there is no relevant distinction between those two sets of regulations for present purposes, and that I can and should proceed on the footing that it is the 1993 regulations which govern for the purposes of determining the issue which I have to decide.
- Regulation 2 contains certain definitions. They include definitions of various procedures which are open to the public authority in question. One of them, and the one adopted in the present case, was the "negotiated procedure", which:
- Article 21 is headed "Criteria for the award of a public services contract":
- Sita alleges in these proceedings that GMWDA was under further obligations. It was under an obligation to afford both tenderers equal treatment. It is not disputed, at least for the purposes of this application, that such an obligation exists. It is also said that GMWDA failed to provide certain debriefing information which was required under the procedures, and/or that it failed to act with appropriate transparency. Again, for the purposes of this application at any rate, GMWDA does not dispute that those obligations exist.
- There are also obligations under Regulation 23:
- Regulation 32 provides for the enforcement of the obligations that arise and gives a right of action to a disappointed service provider:
- Regulation 32(4) ("the Regulation") contains the limitation provision which lies at the heart of this application. It reads:
- The main basis on which GMWDA seeks to strike out this case, or seeks summary judgment, is that these proceedings have been commenced outside the limitation period provided for by Regulation 32(4)(b). It says that Sita knew or ought to have known of the infringements by a date which was, at the latest, 8th April 2009, so that proceedings ought to have been commenced by 7th July 2009, subject to limited agreed extensions which do not, in the event, assist Sita. It also says that Sita has not established any case for the exercise of any discretion to extend allowed by the Regulation. Sita claims that it has commenced its claim in time, or at least that it is not sufficiently clear at this stage that it has not; and insofar as necessary invites me to exercise the discretion to extend.
- A consideration of these issues, on the facts of a case such as this, is not a straightforward matter of considering the effect of some uncontested or incontestable evidence. It involves construing the Regulation, considering the effect of a very recent European authority, considering a number of other authorities, and then analysing the disclosed events relating to a negotiation to which Sita was not, for the most part, a party. For GMWDA to succeed it would have to establish not merely some facts, but also what Sita knew about those facts. That last element inevitably makes the inquiry more difficult. There is a possible alternative of what Sita ought to have known. That is potentially a more difficult inquiry still. I have referred to the scope of the documentary and witness statement evidence before me.
- In those circumstances it is not surprising that Sita has deployed what I might call the usual authorities about the undesirability, or even impropriety, of having mini-trials at an early stage of proceedings on applications for summary judgment or to strike out, where material facts are disputed and the law is not straightforward. I will not lengthen this judgment by citing the detail of that authority; the cases were Hughes v Colin Richards & Co [2004] PNLR 35; Barrett v Enfield London Borough Council [2001] 2 AC 550; Intel Corporation v VIA Technologies Inc [2003] ECC 16; and Bridgman v McAlpine Brown [2000] LTL 19th Jan 2000 (CA). I accept that a claim should not be struck out unless it can be demonstrated sufficiently clearly that it is bound to fail, as a matter of law and/or fact, and that I should not determine a serious live issue of fact which requires oral evidence, or which requires the full scrutiny that a trial will bring to bear.
- For its part, GMWDA deployed dicta in Three Rivers District Council v Bank of England [2003] 2 AC 1 and Swain v Hillman [2001] 1 All ER 91, the latter referring to the merits of a summary judgment in giving the quietus to a case which it appears sufficiently clearly is bound to fail. It saves court resources, and enables the parties to know where they stand.
- I bear all these points firmly in mind. The real question for me is whether it is clear enough, at this stage, that the claim is bound to fail on limitation grounds, and that a trial (or a fuller hearing of a preliminary issue) would not change that situation. Any doubt about it would have to be resolved in favour of the claimant. When I make any determination in this matter whether of fact law or discretion, I should be taken to be doing so on the footing that the point has been clearly established, and that the same result would clearly be reached at a trial.
- It might be thought that the wealth of evidence deployed in this case, coupled with the fact that it took the best part of 4 days to argue the point (an original estimate of 2 days being, in my view, wholly unrealistic) spoke loudly in favour of this all being too difficult for determination at this stage. That impression might be reinforced when the nature of the evidence (which I recite below) is brought into the picture. It becomes tempting to form a summary view as to whether to form a summary view. However, I resist that temptation, for a number of reasons. First, the application is not at first sight one that is unlikely to succeed. There appears to be something in it. Second, if successful it would obviate the need for a very long and very costly trial, possibly at the public expense. Third, the points involve a limitation period and a discretion to extend. The limitation point can be a threshold point and, if a defendant can utilise it to escape from a full trial, then it should, if possible (and fair) be taken as a threshold point. The same is true of the discretion. It would be better, if possible, to deal with discretionary extensions before the parties get too far down the road towards a trial, and a fortiori before they get to trial. Of course, if all the factual issues are too bound up with each other, then there would have to be a trial, but an attempt to avoid that is worthy of very serious consideration. Fourth, as will appear, the CJEU has acknowledged that the proper interests of the administration of public authorities requires that claims based on infringements of public procurement procedures should be dealt with rapidly (both in the sense of being determined quickly, and commenced quickly if they are to be commenced at all) – the objective of rapidity, as the court called it. There is, ostensibly at least, a short limitation period, designed to make sure that proceedings are not hanging over public authorities for an extended period of time. That strengthens the desirability of determining the limitation point at an early stage if that is possible. I accept the submissions of Mr Bowsher QC, for Sita, that that does not mean a different standard should apply to what has to be proved at this stage, but it does justify the appropriateness of a thorough consideration of the issues to see whether there is a proper claim to go forward. This applies to all questions of law and fact that arise.
- Hitherto the English courts have operated provisions in the nature of Regulation 32(4)(b) as follows. The primary obligation was to apply "promptly" once the breach of procedures had taken place. That might require the commencement of proceedings within a 3 month period. The three month period was a longstop date. However, it was acknowledged that a claimant might not know of the infringement until more than 3 months had passed. As Mr Bowsher QC (who appeared for Sita) pointed out, that is much more likely to be the case in public procurement cases where there is an "asymmetry of information" – the public authority would know what it was doing, but the other tenderers (particularly where one preferred bidder had been selected and was thereafter negotiated with) might well not. To mitigate the unfairness of requiring a party to challenge a decision before he knew it was susceptible to challenge the English courts applied the discretion so as to give that person an opportunity to challenge once he had become aware of the breaches.
- That manner of proceeding, in which the primary limitation period was defined in terms of promptness, was challenged and the matter was referred to the CJEU in Uniplex (UK) Limited v NHS Business Services Authority C-406/08. The decision was delivered on 28th January 2010, and the listing of this case was postponed slightly to allow it to be considered in argument.
- The essence of the first part of the Court's decision was that a limitation period defined by "promptness" was not sufficiently certain to be justified and it would be wrong to allow a limitation period to start before knowledge of the infringement was obtained by the complainant. Two questions were referred to the Court by the English court. I do not need to set them out because they are adequately summarised in the decision of the CJEU. The first is summarised as follows:
- The decision goes on:
- The court goes on to consider what an appropriate starting point would be for a period of limitation. It comes to the conclusion that the appropriate starting point is not the date of the infringement, but the date on which the victim knew or acquired knowledge of it:
- Thus the date of knowledge becomes the appropriate starting point and not the date of the infringement. It should be noted that the Court refers to knowledge of the infringement, and does not require knowledge that any loss or damage has been caused. The Court itself does not refer to that point. However, the opinion of the Advocate-General does. The Court came to the same conclusion as the Advocate-General had reached in relation to the requirement of knowledge before the period should start running. The Advocate-General went on to consider whether knowledge of damage was relevant. She concluded that it was not:
- The Court then passed on to consider the first part of the second question:
- Thus the "promptness" test in Regulation 32(4)(b) is contrary to the provisions of the Directive. Although the decision refers to the need to challenge preliminary decisions promptly in my view the same applies to the final decision to contract. The Directive does not distinguish between those two types of decisions.
- Then the court addressed the second part of the second question:
- Thus the proper approach involves the following steps:
- However, before doing so I shall have to consider the event to which the knowledge provision is said to apply, for the purposes of Regulation 32(4)(b). The CJEU did not actually make a finding about the triggering event in that regulation (or the equivalent that it was considering). It assumed (for the reasons given above) that it was the infringement. Mr Bowsher essentially challenges that assumption. The point turns on the meaning of the word "grounds" in the English Regulations. He says that as a matter of construction that includes not merely the infringement (of which the complainant now has to be aware) but also the fact that loss has been caused. The requirement of knowledge applies to both. So I shall have to address this question of construction, because it goes to the question of the starting date for the limitation period and how Regulation 32(4)(b) is to be applied.
- The final position of Mr Bowsher was that "grounds" included both the infringement and the existence of some potential damage, in the sense that it had to be apparent that there was some loss of a chance which was above de minimis. He argued this on the footing that it would be wrong, and indeed contrary to principle, to require that proceedings be commenced before there was a cause of action, and illogical to require proceedings to be commenced before the claimant knew that it had a cause of action. Since it was the case (as he argued) that damage was an essential ingredient of the cause of action (under Regulation 32(2)) it followed that the "grounds" of which one had to be aware under Regulation 32(4)(b) included the fact that there was a chance that loss had been caused. He did not go so far as to say that the awareness had to be of quantified loss – it was sufficient that there was an apparent loss of a chance. Translating that into the facts of this case, the relevant loss to Sita was the loss of the opportunity of being let back into the tendering process, and the consequential loss of the chance of being a successful tenderer. Once Sita knew there was a loss of that chance then they were aware of their grounds for bringing proceedings, but until then they were not. A litigant such as Sita does not know that it has "grounds" for bringing proceedings until it knows that there is (as he put it) a "genuine prospect of recovering damages".
- GMWDA's case was that all that was required to be known, or constructively known, was the infringement, without the additional element of knowledge of damage. Miss Rose relied on the effect of the words of the Regulation, and on authority, to which I will come.
- Sita's argument starts with the wording of Regulation 32(2). Mr Bowsher points out that the breach of duty is actionable "by any service provider who, in consequence, suffers, or risks suffering, loss or damage". He says that the italicised words show that, at least in the case of someone who complains after the event, it can only complain if it has suffered damage, so damage is an inherent part of the cause of action. It is therefore part of the "grounds" for the purposes of Regulation 32(4)(b).
- In support of this proposition Mr Bowsher relied on Brent London Borough Council v Risk Management Partners Ltd [2009] EWCA 490. That was a damages claim under the 2006 regulations referred to above and there was an argument that the proceedings were started out of time. The facts showed an intention to depart from the proper procedure, and then a departure when a contract was finally awarded at the end of the process. It was argued by the public authority that time had started to run under the equivalent of our Regulation 32(4) at the time when the departures from due process started to appear and breach was apprehended, rather than the time when the final contract was entered into. The judge at first instance and the Court of Appeal rejected that analysis. Pill LJ said:
- Moore-Bick LJ dealt with the point at paragraphs 250ff. He drew the same distinction. Having drawn a distinction between judicial review proceedings and a private law claim under the Regulations, he said:
- Mr Bowsher said that that supported his submission that damage was part of the cause of action. Again, it does not seem to me that these paragraphs were intended to address the point. Moore-Bick LJ was relying on the distinction between the position was there was merely an apprehended breach (i.e. it had not yet happened) and one where one had occurred. That is all he was dealing with. He says nothing much about damages at all.
- Miss Rose submitted that in fact the judgment of Moore-Bick LJ implied the opposite. She drew attention to paragraph 250 in which he referred to the creation of a flaw in the process before the final step, and also relied on what Hughes LJ said at paragraph 255(x):
- I do not need to develop further the idea of how causes of action accrue in a transaction with a number of steps. It suffices to say that I draw two conclusions from these citations of Brent. First, it expressly contemplates a cause of action in respect of an infringement which might occur at an early stage at which point a complainant might be able to do no more than to identify the infringement and not necessarily form any clear view of what sort of loss of a chance that represents to him personally. That is not articulated in the judgments I have cited, but must be a consequence. Second, that is inconsistent with what Mr Bowsher seeks to get out of the case – indeed, it is the opposite. As a matter of construction of the Regulations, a complainant who was otherwise participating, or who would otherwise have participated, in the tender process in that situation can, in my view, sue because he "risks suffering loss or damage" within Regulation 32(2). Those words exclude third parties who have no interest in the matter, but include those who potentially have.
- Accordingly, I do not think that that case assists Mr Bowsher to make good his proposition.
- Mr Bowsher also prayed in aid other cases to support his claim that loss was an ingredient of the cause of action and that therefore knowledge of some form of loss was required for there to be knowledge of grounds for the purposes of Regulation 32(4)(b). In my view none of them assist him. I will deal with them shortly.
- Evropaiki Dynamiki v Court of Justice T-272/06 was a case concerning procurement by European institutions. In its judgment the CFI said:
- Mr Bowsher said that those citations indicated that in order to ascertain whether it was appropriate to make a claim it must be possible to work out whether the applicant is affected and whether it can make a case. That is probably right, but it says nothing about the extent to which applicants must appreciate some form of loss. It is sufficient for the purposes of those citations that the applicant can determine whether his bidding process has been affected, without more.
- In another case about procurement with the same title as the previous case, Case T-345/03, the CFI made some "General Observations"
- Mr Bowsher said that this demonstrated that it had to be shown that the defect would (actually it says "could") have made a difference. If there was no case for saying there was a loss, there was no cause of action. I do not think that the Court was analysing the matter in that way. It was setting out the logical approach to dealing with a complaint, and was saying that if the applicant could not establish that the defect made a difference then he would lose. It was not considering things on the technical level of what is necessary to constitute a cause of action. In any event, what is in issue in the present case is the particular wording of the English instrument which itself creates the cause of action. Generalised statements such as these in this context do not help. Mr Bowsher himself said that Brent was the best explanation in terms of English law. For the reasons that I have given, that does not assist him. Nor do a couple of other cases to which he referred, which deal with different matters.
- Thus the case law does not enable Mr Bowsher to establish that knowledge of "grounds" means knowledge of potential loss, as opposed to knowledge of infringement. If anything, it points the other way.
- So the answer to the question lies in the proper construction of the Regulation, to which I return. The question is: Do the words "the date when grounds for the bringing of proceedings first arose" mean just the infringement, or the infringement plus potential loss? Taking the words by themselves, they seem to me more naturally to refer to the former. It is more natural to refer to those grounds as being the events which constitute the breach of duty. The grounds for bringing a negligence claim are negligent driving (or other form of activity); the grounds for bringing a breach of contract claim are a breach of contract. This interpretation is supported by use of the word "grounds" in Article 1 of the Directive (see above), where the grounds referred to are that a decision "infringes Community law". It focuses on the infringement. It also provides a consistent scheme within Regulation 32 itself. The duty is owed to service providers (those who compete or who wish to compete). Regulation 32(2) suggests a distinction between a breach of duty (an infringement) and the person at whose suit it is actionable. The expression "grounds" seems to me to ally itself more closely to the infringement element of that dichotomy. Paragraph (4)(a) requires that the contracting authority be notified only of the breach, and not of any claimed loss. In that context the natural meaning of "grounds" in the next sub-paragraph is that it means the same breaches referred to in sub-paragraph (a).
- This conclusion is also consistent with policy. In Uniplex the Court referred to the need for rapid review, and in paragraph 38 (above) identified the limitation period as being something that should be framed with this in minds. The date on which an infringement takes place is a fact which is relatively easy to understand and ascertain. It is a date which can be made to fit in with the objective of rapidity. The date, if different, on which it somehow objectively becomes apparent that loss has or may have been caused is (if different) not so readily definable and is a less certain date from which to start a limitation period which is supposed to be short. Policy is therefore better served by the construction that I would otherwise put on the words, which is another factor supporting that construction. The point is even stronger if one compares knowledge or constructive knowledge of an infringement with knowledge or constructive knowledge that that has led to a real opportunity being lost. The former has its problems in terms of uncertainty, but they cannot be avoided in the light of the decision in Uniplex. The latter has much greater problems.
- I would add one thing. I think that this debate might turn out on any particular set of facts to be a somewhat arid one. I strongly suspect that most if not all instances an infringement will, in its context, when known, almost inevitably give rise to an immediate awareness of a possibility of loss, so that the infringement and the cause of action (on Mr Bowsher's analysis) inevitably occur on the same date. There would be enough to plead at that point, if that is the relevant test. And once the provider knows of the one, he will inevitably therefore know of the other. So even if knowledge of both factors were required, I rather think it would make no difference.
- I therefore find the construction point against Mr Bowsher. I consider that I can safely arrive at this conclusion on this application and it does not require a trial to test it further. It is, at the end of the day, a pure point of statutory construction.
- The next step is to apply that finding in relation to the approach to the Regulation that has to be adopted in the light of Uniplex. The first question is whether that provision can be interpreted so as to make the limitation period start from the date of knowledge or constructive knowledge. The relevant paragraph is paragraph (b). I have difficulty in seeing how it can be interpreted so as to comply with the Directive. If the test had merely been promptness, without any express reference to a starting date, then as a matter of interpretation it might have been possible to fix the starting date as the date of knowledge. However, promptness, as a period-defining concept, is not permitted under the Directive. Accordingly, that does not help. The long stop date is plainly and in terms one which starts with the infringement rather than knowledge of it. The expression "from the date when grounds for the bringing of the proceedings first arose" is not capable of any other interpretation. There is nothing else in the wording of the provision which is capable of introducing a start date based on knowledge. The first approach, based on interpretation, is therefore not a route to a compliant state of affairs.
- The next step is therefore to see whether the provision permits a discretion under which the period for bringing proceedings can be extended so as to make sure that it starts on the right date. The closing words of the section undoubtedly provide a discretion. Is that provision capable of applying so that the "limitation period" can be made to start from the right date? The first question is what is the limitation period? Because the primary period is one based on "promptness", and since that is not an appropriate definition of a period, that cannot be the period. The next candidate is the three month period referred to in the Regulation. On one view it is a long stop date, not a limitation period. However, it is plain that it was intended as an ultimate limitation period (subject to an extension by discretion) and in my view it is capable of being a limitation period for the purposes of the analysis of the Court. Of course, on its own terms it starts on the wrong date, but for these purposes I do not think that that matters. Three months is still a period. It is a period which the court can take for the purposes of the second line of approach proposed by the Court, and which can be used within the discretion. One therefore turns to the discretion and applies it to the limitation period which starts on the wrong date. The discretion is then applied so as to allow the same period, but starting on the right date (the date of knowledge or constructive knowledge). It seems to me that such an approach complies with the Court's directions, and does not effect a distortion of the English provision. The essence of paragraph 48 is that if a local provision has a period but it starts from the wrong date, then if the court has a discretion to extend that period it should do so so as to make it start from the right date. That is the approach that I intend to adopt in this case.
- Mr Bowsher submitted that I could not take that approach. He said it amounted to legislation and relied on Fleming v HMRC [2008] 1 WLR 195. In that case the House of Lords declined (in effect) to provide some transitional provisions to cover a gap that seemed to exist in legislation. Their Lordships declined to do so, on the footing (amongst other things) that it would have been legislating. Mr Bowsher said that the above approach amounted to the same thing, and I should not do it, with the result that the Regulation did not apply at all and the only period was the 6 year period applicable to breach of statutory duty under the Limitation Act 1980. I reject that submission. The House of Lords was dealing with a very different piece of legislation, with no prospect of any gap being bridged by judicial discretion. As Lord Hope of Craighead said (at paragraph 10):
- Accordingly I reject Mr Bowsher's submissions to the effect that since the first two approaches of the Court cannot be applied, so that the only limitation period is that provided by the Limitation Act 1980 for breaches of statutory duty.
- Miss Rose's prime case turned on what can be seen about Sita's knowledge from letters that it wrote after 9th April 2009, and in particular a letter which was intended to be the statutory letter before action required by the Regulation. Her case was based principally on actual knowledge, rather than constructive knowledge. That is no doubt a realistic approach. On facts such as the facts of this case, constructive knowledge is going to be much more difficult to establish to the clear level required for GMWDA to succeed on it. Accordingly, though it is necessary to consider the facts leading up to the events of April 2009, the real focus will be on what the events after that time clearly establish about the knowledge of Sita (or the lack of it).
- By an advertisement published in the OJEU on 5th February 2005, GMWDA invited expressions of interest in entering into a contract to design, build, finance and operate waste facilities. It set out the procedure and said it would operate the "negotiated procedure". Under this procedure the contracting authority negotiates the terms of the contract with one or more persons selected by it. Its criterion for selection under the Regulation was to select the "most economically advantageous tender" (abbreviated in these proceedings, unattractively, to "MEAT"), as opposed to the "lowest price" criterion. The process whittled down the potential tenders to VL and Sita and, as indicated above, both were invited to put in their BaFOs (best and final offers).
- The bids were put in on various bases, known as MSB1 and MSB3. Under MSB1 the bidders were to be responsible for the full treatment and disposal of waste, including the production of refuse-derived fuel ("RDF"). Under MSB3 the bidders would be responsible for the production of RDF to meet specified output requirements, but would not be responsible for the end disposal of it. The bidders could each put in varied bids ("VBs").
- Sita would not have known of the details of VL's bid. Its own bid, on an MSB1 basis, involved a cost over the years to GMWDA (or the benefit to Sita) of £3.3 billion. On 26th January 2007 GMWDA announced the selection of VL as its preferred bidder, and it did so in a press release. The press release did not give full details of VL's then current bid, but it did say that the bid "…involves over £300m of investment in new infrastructure and is estimated to be worth about £3 billion". Sita would have known from this information that VL's was, on that very limited analysis, a cheaper bid, but that was not the basis of the selection of VL. The selection of VL was, of course, not the same as the award of the tender. It was the prelude to further negotiations which took place over the next two years.
- Under the applicable procedures, GMWDA was obliged to give feedback to Sita. Sita sought that feedback and it was provided by two means. First, a letter was sent on 26th January 2007 giving certain details. Each of the bids had been evaluated on a points basis according to pre-prescribed criteria, and a table was provided showing the results. Sita's MSB1 bid scored 63; VL's MSB1 bid scored 70. At a subsequent debriefing meeting, Sita were told that VL's bid was more expensive than the £3 billion figure given in the press release, and the expenditure figures were different too. They were also told that the reason that Sita scored lower than VL was a combination of issues on technical and service quality, funding and commercial criteria. Sita's proposals failed to meet GMWDA's recycling and composting target.
- Sita was left as reserve bidder. That means that it was not totally out of the picture because in certain circumstances GMWDA might come back to it and negotiate with it.
- During the ensuing period GMWDA developed its negotiations with VL. In particular it developed the solution for the disposal and use of RDF. VL's MSB1 proposal had included a proposal to dispose of RDF at a site at Bredbury. However, it also contained an uncosted alternative proposal to dispose of it at a site at Runcorn run by a chemical company called Ineos Chlor. The proposal involved making the fuel and using it at Ineos Chlor to create heat and power in a new plant, for the benefit of Ineos Chlor's activities. In June 2007 GMWDA resolved to pursue this proposal. The minutes of the relevant meeting record that bald fact. It was also announced in a press release dated 29th June 2007:
- As part of its assessment exercise GMWDA produced a lengthy report and assessment of the position as at June 2007, and in particular of the worked-up Ineos Chlor proposal. The detailed report was not seen by Sita at the time. It was disclosed to them some months after these proceedings were commenced. Some of its detail is said by Sita to be significant:
- Sita says that it is apparent from this document that there are material changes to the VL bid of which Sita were ignorant. These changes do not, on this material, demonstrate a breach of procedures at this stage, but the indications that VL might be allowed to charge more would be indicative of a possible breach of obligations of transparency and equal treatment, and a potential breach of an obligation to allow Sita to rebid. In order to understand whether there is a case for alleging this one would have to know what underlay these changes (according to Mr Bowsher).
- On 2nd July 2007 GMWDA wrote to Sita enclosing its June press release and pointed out that they were continuing to pursue an "integrated solution" with VL. While there was no immediate prospect of having to revert to Sita as a reserve bidder, the writer recommended an update of Sita's proposals which could be brought forward if GMWDA did indeed have to turn to Sita.
- The next day (3rd July), Sita wrote to GMWDA saying it had revisited its strategy, tactics and pricing. It had concentrated on its MSB3 offer, though could revisit its MSB1 offering if GMWDA wished. The letter stated that its revised offering could provide a reduction of £60m in the previous operating (unitary) charge, or an estimated reduction of £115m on its MSB1 offering. The timing of this letter was said to be coincidental.
- A website news page of 3rd July (exhibited by Sita, so it is reasonable to assume that it knew of its contents) refers to the likelihood of the use of Ineos Chlor and refers to a £320 million PFI contract for which [VL is] the preferred bidder." Working out the impact of the Ineos Chlor element is suggested to be one of the reasons for the apparent delay in finalising the overall project.
- A GMWDA press release of 23rd November 2007 reports that a report on progress to date went to GMWDA's Authority meeting on that day. It gives no detail of the content of the report but refers again to the Ineos Chlor outlet. An aspiration to complete the negotiations by the end of December is set out. In one sentence it says:
- The effect of that sentence is an implicit statement that the cost is not yet known, or finalised – not a surprising statement in the circumstances. This press release is referred to in Sita's evidence and it is not stated that it did not know of its contents. I find that it did, for what that is worth.
- Ernst & Young ("EY") had carried out the evaluation of the original bids in January 2007. They were asked to evaluate the new VL offering in December 2007, and produced a detailed review or report. It was not seen by Sita at that time, or at any time up to the date on which it was voluntarily disclosed in these proceedings three months after they were commenced. Sita says that this document reveals much significant material which it cannot have known until receipt of this report, and which goes to the question of infringements of the procurement procedure and Sita's knowledge of those infringements (and their potential effect on the bidding process). Although this report does not evidence Sita's knowledge of infringements prior to the date of its receipt, it will be convenient to refer to relevant parts of its content at this stage of the narrative.
- The relevant parts are said to be as follows:
- Negotiations continued and the scheme developed. By April 2008 GMWDA's officers were in a position to prepare a report and lay a recommendation before the Authority. It set out a large amount of detail about the developing and developed plan, and in section 2 contained a recommendation that the Authority enter into the negotiated arrangements with VL. The arrangements included the Ineos Chlor aspect of the structure. It, or its supporting documentation, contained the following elements which Sita says are significant for present purposes, because they involved changes in the VL bid of which Sita knew nothing but which were capable of affecting an assessment of whether the VL bid was any longer the MEAT. They included:
- The proposals were approved and GMWDA decided to contract with VL. It issued a short press release on 11th April to that effect, stating that it anticipated signing a contract on 29th April.
- There now ensued a number of more detailed dealings between Sita and GMWDA which are the most important dealings in the case when it comes to an assessment of what Sita did and did not know about any alleged infringements. Miss Rose's case really turned on these dealings. They are written, and detailed, and that detail is important. I shall have to set out much of it.
- The press release prompted a response from Sita, who had obviously been keeping an eye on the situation. On 16th April 2008 they wrote, saying:
- GMWDA responded on 18th April, politely rejecting that offer.
- An Alcatel notice is a notice which is required pursuant to an EC decision of that name (Case C-81/98) and which (putting the matter shortly) requires that there should be a procedure which enables a contracting authority's decision to contract to be reviewed before the actual contract is entered into. That procedure is satisfied by giving notice of an intention to contract (the Alcatel notice) and allowing a period of time to elapse so as to permit the review if the unsuccessful bidder (Sita) thinks fit to challenge it. The obligation to notify of the intention to award a contract is now enshrined in various regulations – see e.g. Regulation 23(3A) of the 1993 Regulations. The government position is that a 10 day period is the appropriate one. There is no material dispute about the existence of this obligation.
- The Alcatel notice came, as promised, on 18th April. It read:
- It should be noted that the contract scoring referred to in that letter was the original scoring of which Sita had been informed back in 2007. It did not reflect the updated scoring of the new VL bid. Mr Bowsher submits that the paragraph was technically true but did not actually reflect the true complete position.
- The response to that came on the same day. In a letter of 18th April Sita wrote:
- The underlining of the word "now" appears in the original. Miss Rose relied on that as demonstrating that Sita knew that the successful tender was materially different from that which was originally submitted. I think that that is right. The numbered paragraphs demonstrate that at that stage Sita strongly suspected that here were material changes to the original tender. That is not surprising. One change that was apparent was the introduction of Ineos Chlor into the project, of which Sita had been aware.
- GMWDA's response to Sita's letter of 18th April 2008 notice was given by a letter dated 9th May 2008. The previous letter of 26th January 2007, with the original scoring detail, was annexed to the response. The approach of the letter was to say:
- Miss Rose relies on that letter as making it quite clear that the Ineos Chlor alternative had been adopted, and that Sita was told at this stage that the Viridor Laing (Greater Manchester) Limited bid had been re-evaluated. It was told that the original decision was "not undermined". For his part, Mr Bowsher submits that that statement was either untrue or was barely true – it was not a fair reflection of the December EY report and the earlier report. In particular, it did not reflect the closeness of the apparent point-scoring, at least on the methodology adopted. Miss Rose also submits that Sita ought to have inferred that there was a costs variation bearing in mind that the project was now different. It is said to be unreal for Sita to say (if it says) that it had no idea that there was a costs re-assessment, and she also points out that Sita's own attempts to re-tender suggested that it knew there had been an increase in costs.
- Sita expressed its disappointment in a letter of 14th May and asserted that it really thought that it was entitled to the information that had been declined. It said that it hoped any redactions from the contract would be limited. Miss Rose said that the letter indicated that Sita would wait until the contract was published; I do not think that that is a fair interpretation of that letter. It does not go that far. It merely indicates a hope that information would be supplied.
- The contract was not entered into by 20th April as envisaged; indeed it took another year for the contract to be signed. The reason for that was the intervention of the "credit crunch". The credit crunch created problems for the funding of PFI ventures, and the evidence of Sita in these proceedings was that it was aware of that. Funding issues were described as being a source of the delay in various website articles over the ensuing months, and I find that Sita was aware that the credit crunch was potentially affecting the project. Miss Rose relied on the public material as demonstrating that it affected the risk profile and therefore the costs of the project, of which Sita would have been aware. I am not convinced that that is a particular inference I should draw on this application. What is more important is what passed later on between the parties.
- Sita's awareness that things might have changed is demonstrated by the fact that on 19th November 2008 it wrote a letter to GMWDA stating that "in light of recent market updates on GMWDA's PFI procurement process, I thought this may be an ideal opportunity to introduce myself and re-iterate our commitment as Reserve Bidder." The letter went on to refresh its previous offer to re-submit, and it pointed out that it was "backed by its very strong parent, Suez Environment", so that it was "both willing and able to formulate robust and deliverable proposals in a very short timescale should this be of interest to the Authority". GMWDA replied on 8th December stating that it hoped to sign the PFI contract in the course of that month, and given its intentions it did not think it would be appropriate to invite Sita to refresh its offer at that time. Miss Rose relied on this exchange as demonstrating that Sita knew that the VL proposal must be different and that circumstances had changed. I think she is right. The fact that there had been important changes was also apparent from a press release of 1st December in which GMWDA referred to the "current upheavals" in economic markets which had impacted directly on the project. It went on:
- On 22nd December Mr David Palmer-Jones of Sita wrote to GMWDA indicating that he understood from press releases that the closure of the process was expected soon and said that he was unsure as to whether a further formal notification would be sent out by way of an Alcatel letter. He presumed that any previous notice would be re-confirmed in the light of the time that had passed since the last one. He invited GMWDA to let him know. He stated his policy to satisfy himself that each award had been carried out fully in accordance with the relevant public services procurement rules: "Please note that I will therefore be contacting you at the relevant time to request the information I legitimately require in order to do this".
- On 13th January 2009 GMWDA responded to say that it was its intention to reach closure as soon as possible, but GMWDA did not propose to issue any further formal notifications "at this time". He noted the steps that Mr Palmer-Jones thought he should take, and that he would be in touch with GMWDA in the future.
- A fuller letter was sent on 27th January 2009. It confirmed clearly that "in today's circumstances" GMWDA did not consider it appropriate for any further Alcatel letter to be sent. It noted that Sita would be contacting the authority at the relevant time to request further information. In fact, Sita did not request any more information at that time. Nor did it commence proceedings complaining that an Alcatel letter ought to have been provided. In its evidence on this application, Sita, through its solicitors, sought to explain at the hearing before me that it did not issue "speculative proceedings" on the basis of a failure to provide information because the substance of the decision was unknown and it was one in respect of which GMWDA might still choose to take the "safest course" and provide advance notice. It was concerned that it might have to provide a cross-undertaking in damages if an injunction was to be obtained and that ultimately a debrief might find that there were no grounds for complaint. This is not a particularly good explanation of why the absence of an Alcatel letter was not challenged, and is pretty implausible. I do not believe, even on this application, that Sita thought that GMWDA might have a change of heart and provide advance notice. GMWDA had been ostensibly steadfast on this point.
- The contract was actually signed on 8th April and announced in a press release on the same date. The press release stated:
- The release was much longer than that, but those are the material points. Miss Rose said that it would have been apparent from that that capital expenditure was greater than under the originally announced proposals, and that the operating costs (the contract worth) was greater (£3.8bn compared with £3bn). It will also have been apparent to Sita that £3.8bn was higher than Sita's original bid of £3.3 billion. She said that not only was this apparent from the face of the press release, it was apparent from what happened next that Sita knew about that. She is right about the former. In its written statement in opposition to these applications Sita expressly acknowledged that it understood from the press release that the project would trigger a £640m construction programme compared with earlier figures of £300m to £330m and that the contract would be worth £3.8bn to VL, compared with earlier figures of around £3bn. However, Sita also said that the press release sought to imply that the increases had resulted from the financial crisis. Whether or not that is true, it is irrelevant for reasons that will appear hereafter.
- On 16th April 2009 GMWDA wrote to Sita further to Sita's letter of 22nd December. GMWDA confirmed that the contract had been entered into on 8th April and went on:
- That letter seems to me plainly to have only a limited effect. Mr Bowsher thought to give it a much greater one. He said that the reference back to the letter of 9th May involved a reassertion of the fact that the rescoring of the VL bids did not undermine the Preferred Bidder decision, and confirmed that the original scoring was still being relied on. Even on an application such as this I can safely conclude that that is a wholly unrealistic and excessive reading of that letter. The letter does no more than it says it does – it refers back to the previous intention to publish the contract. It does not amount in any meaningful sense to a republication of the whole of that earlier letter. Mr Bowsher's interpretation reads far too much into it.
- On 21st April Sita wrote to GMWDA noting the announcement of April and formally asking for a copy of the contract and the various legislative provisions. On the same date (21st April) Sita wrote for the first time suggesting that there had been a breach of the procurement regulations. This is one of a series of very important letters, because all those letters provide the clearest possible indication (for the purposes of this application) of the state of Sita's knowledge and belief.
- The material parts read:
- Contract signature was ten calendar days short of one year since the start of the "standstill period" and it seems the standstill period commenced at a time prior to all matters material to the contract award decision being resolved;
- Over two years of Preferred Bidder negotiations;
- The reported additional capital expenditure (circa £230m);
- The reported additional £0.5bn cost to the taxpayer;
- The reported additional 85 employees;
- Market reports and rumours strongly indicating a significant transfer of risk back to GMWDA during the Preferred Bidder negotiations;
- The Sita bid was more expensive than the Viridor bid in economic and affordability terms before any adjustments were made under the Authority's evaluation methodology; and
- The tender price offered by Sita in economic terms scored lower than Viridor and this accounted for the largest element of the difference in terms of the scores or Funding and Commercial Issues."
- The letter then went on to seek an explanation for each change in the project documentation which had, or which might reasonably be expected to have, led to any change in the value of the contract (whether in capital expenditure, financing costs or otherwise) compared to Sita's bid, and the allocation of risk between the parties to the contract. It also asked for details of all drafting changes, certain documents and explanations of changes as to the technical solution. It ended:
- Miss Rose relies on this letter as demonstrating a knowledge of the increase and expenditure in straight terms, the increase to the burden of the project of the addition of employees and the significance of transfer of risk. It actually says in terms that there was a prima facie infringement of the regulations. I agree that it shows those things.
- GMWDA responded on 18th May. It denied unfair treatment and declined to participate in what it regarded as a fishing expedition, based on "so it seems, rumours, untruths and spin." An assurance was given that the processes were "an absolute model of their kind" and that the legislation was completely complied with. It went on:
- Mr Bowsher relied on this paragraph as being an assertion by GMWDA that the credit crunch was the reason for the delay and the price increase. This is part of his submissions to the effect that at this time Sita did not know how much of the price increase to attribute to the credit crunch and how much was attributable to the different shape of the project. In my view Mr Bowsher again overstates the effect of this paragraph. It certainly attributes delay to the credit crunch, but it says nothing about how much of the increase in price was attributable to that. It makes no suggestion about that one way or the other. The thrust of the paragraph relates to delay.
- The remainder of the letter indicates an intention to comply with disclosure obligations in due course, and offers "an informal chat" as to any further questions in order to assist Sita with its "internal know-how".
- On 27th May 2009 Sita wrote a letter which subsequent correspondence demonstrates to be intended to be the statutory letter before action referred to in Regulation 32(4)(a). It starts by setting out an allegation of breach:
- The letter then went on to set out part of the historical narrative including an appreciation that GMWDA's letter of 9th May made the observation that:
- There is then a section entitled "Summary of Breaches".
- GMWDA replied in an equally long letter on 3rd June. It asserted that it had carried out the procedures properly, and that it had complied with its debriefing obligations. It referred to the VL contract and the negotiations which took place after the announcement of VL's status as preferred bidder.
- Sita's response was another long letter (eight pages) of 12th June 2009. It was apparently based on material provided by counsel:
- Miss Rose says this letter again makes it clear that Sita had enough information to enable it to commence proceedings. It threatened to do so. It also makes it clear that the earlier 27 May letter was to be treated as a notice of intention to start proceedings under the Regulation. Not only is it an assertion of future obligations, it is a re-iteration of breach of obligations. It is to be inferred that, having been to counsel, they felt they had enough so to assert. For his part, Mr Bowsher says that the letter demonstrates that Sita did not have enough information at that stage to be able to make its claim. It was making clear that it was seeking more information in order to be able to do that.
- After a letter from GMWDA about the passing of information, Sita wrote again on 24 June 2009, dealing with the details of information and proposed redactions. The letter ended:
- Miss Rose relies on that letter as demonstrating that Sita considered that it was able to issue proceedings, claiming not merely disclosure but also damages for breach, and that it was able to do so on the basis of information already known to it from information about its own bid and what had become publicly known about VL's, and in particular information that it gleaned from the press release. Mr Bowsher's interpretation of the letter is that it is reflecting Sita's ignorance of the true situation, and so far as it refers to the commencing of proceedings, it is doing that only because Sita is being given no choice – commencing proceedings was the only way in which it could find out whether it was ultimately going to be entitled to sue.
- GMWDA was, understandably, not keen to be immediately embroiled in proceedings. On 25th June it responded to Sita's letter of the previous day and said it was gathering information necessary to respond to certain requests made in the letter of 12th June and the day before. It said it would not be possible to reply substantively by 26th June 2009 but it would try to do so in the course of the following week at the latest. The letter ended:
- GMWDA provided some more information, and a lot of argument, in a letter dated 3 July 2009. It is Sita's case that this letter is the earliest date on which the limitation clock should be treated as having started to run, because it is only when this letter is received that Sita has actual or constructive knowledge of its claim. Because Sita has said that it was not concerned with the period before the announcement of intention to contract in April 2008, the letter focused on matters after that date. It provides some insight into the reasoning of GMWDA and how costs came to be increased. It undoubtedly contains a lot of information that Sita did not previously have. I do not, however, need to set out the detail of this letter because the question is not whether this letter gave them enough information to provide knowledge of the grounds of infringement; the question in these proceedings is whether Sita already had that knowledge. If it did, then the further information in this letter makes no difference to the commencement of the period (though obviously it would make a difference as to how the case is to be run); if it did not then this letter provided the knowledge and the proceedings were started within three months of this letter (and therefore in time).
- In its response dated 6 July, Sita observed as follows:
- On 8 July 2009 Messrs SJ Berwin came on the scene as solicitors for GMWDA. It took the point that GMWDA was reasonable in taking the view that Sita were interested only in the later period (after 18 April 2008) because that is what it seemed to say in correspondence. It took the point that any complaint in relation to the earlier period was time barred in any event. However, in the interests of reassuring Sita that there was no breach of the public procurement rules, it would try to provide a copy of VL's final BaFO as at 6 November 2006. That would require discussion with VL. It also said:
- By a letter dated 17 July 2009 SJ Berwin provided the information that it had indicated it would provide, apart from the VL BaFO. It asserted that pre-action correspondence required candour from both sides and claimed that Sita had consistently chose not to provide any details of how it might in reality have addressed the changes with which it would have had to have coped in the period following the selection of VL as preferred bidder. This is a recurring theme in the correspondence. I do not think that the question of candour on the part of Sita is of any relevance to the question that I have to decide in this application and I shall not deal with it further.
- On 24 July 2009 Sita responded to what it described as "startling new information" contained in the 17 July letter. It added:
- As foreshadowed earlier in this judgment, further information was voluntarily provided by GMWDA in November. I have referred to some of it above. It becomes relevant so far as Sita is entitled to base a claim on infringements disclosed by that material which are not already time barred. So far as relevant, I will consider it below.
- In order to ascertain whether these proceedings are statute barred on the basis of knowledge of the grounds of bringing proceedings, one has to look at the proceedings in order to see the claims made. The generally endorsed claim form contains Brief Details of Claims as follows:
- The claims are, of course, elaborated in the particulars of claim. Before me there is an amended form of the particulars of claim which contains amendments which are sought to be made partly as a result of the further information provided in November. There is no objection from GMWDA to my treating the particulars as if they were amended in that respect. They also contain a proposed amendment to plead an implied contract (referred to in the claim form). I am invited to ignore that last claim for present purposes and to treat the present application as though that the suggested amendment and implied contract case were not there. Since it is relevant to consider the unamended and amended forms, and since it is necessary to set out a significant number of paragraphs, the relevant paragraphs, showing amendments, are set out in Appendix 1 to this judgment.
- The key paragraphs referring to or identifying breaches of duty are paragraphs 63, 63C and 74. Mr Bowsher invited me to focus on those. (Paragraph 75, which I have not set out, contains another breach of duty, but Mr Bowsher accepted it added nothing material for these purposes. If the other claims were barred, then it did not save the proceedings. If they were not then it added a gloss which I need not consider.) Some of the other paragraphs are relevant to what the infringement was – for example paragraphs 67 to 72, which deal with knowledge.
- The pleading is not wholly clear about where it is going in the paragraphs cited, so it will be useful to extract what seem to be the infringements relied on, distinguishing where appropriate between the original pleading and the amendment.
- Paragraph 63(a) and (b) plead a failure to provide de-brief information and a failure to act with the necessary transparency. The duty is elaborated on in paragraphs 63(A) and 63(B), and then the breach is pleaded at paragraph 63C. The breach is:
- So far as the failure to provide proper information is concerned, the following material is relied on:
- Paragraphs 67 to 72A deal with Sita's knowledge (or more accurately, its alleged lack of it). In the course of those allegations averments are made as to what GMWDA was aware of, or was taking into account. To that extent I suppose that they add some more clothing to the allegation that information was not disclosed, though Mr Bowsher did not rely on it as such.
- Paragraph 72B refers to GMWDA's position. It does not add anything material for present purposes.
- Paragraph 73 gives particulars of a failure to identify the MEAT. The original paragraph started with a protestation of ignorance on the part of Sita, but went on to plead the information that was available to it. In its unamended form the following was pleaded:
- To those points some others were added by amendment – see the amendments to paragraph 73.
- Paragraph 73A pleads that GMWDA were unable to assess the MEAT. That is an allegation of breach.
- Paragraph 74 contains a further allegation (linked by the word "Accordingly") along the same lines. The original pleading was that on the information available GMWDA wrongly failed to allow Sita to rebid, and could not properly determine that VL was the most economically advantageous tender. The new pleading substitutes an allegation that the VL 2008 and 2009 bids were not the most economically advantageous tender(s), or there was no basis on which GMWDA could have concluded that they were.
- It is necessary to return to the question of the meaning of "grounds" because they have to be identified before the question of knowledge of them (whatever they are) can be addressed. In the present case the question is of some potential importance because of the level of detail which is now pleaded. The question arises: How much detail should be treated as being part of the grounds for the purposes of Regulation 32(4)(a)? It may matter because knowledge of some of the detail of what GMWDA had done as part of the process came later in 2009. Thus, for example, Sita say that the matters set out in paragraphs 73(b) to 73(d) (in the unamended pleading) give rise to a cause of action, (pleaded in paragraph 74), and Sita only knew about those in July 2009. Accordingly the clock started running only in July in respect of that cause of action at least. GMWDA's case is that the matters thus pleaded are in substance particulars of an overall ground for bringing proceedings of which Sita was aware at or shortly after 8th April 2009. It therefore becomes necessary to identify what are grounds, properly viewed, and what are not.
- In my view the expression "grounds for bringing proceedings" should be treated effectively synonymous with "infringement" in a broad sense. It should be noted that the following verb is "arose". The concept of grounds "arising" describes a state of affairs which comes to pass when the requisite events have happened and describes the effect of those events rather than those events themselves. Thus one of the "grounds" on which the current claim is based is an infringement of the obligation to identify the MEAT when Sita was not allowed to re-tender. The grounds are not the details of the evaluations which Sita says are faulty. Those assessments and their faultiness are the underlying facts, not the grounds for bringing the proceedings. That is a more natural meaning of the words. It also sits more happily with:
- It is necessary to consider this because it is plain that a lot of the detail of what was going on behind the scenes at GMWDA cannot have been known to Sita at the time, and much of the detail on which Sita would now wish to rely was only revealed as part of late voluntary disclosure on the part of GMWDA – for example, the content of the various evaluations and assessments.
- GMWDA, so far as it advanced submissions on this point, said that the answer to it lay in the Opinion of the Advocate General in Uniplex. At paragraph 42 of her Opinion she pointed out that the mere fact that a tenderer knew it had been unsuccessful did not start limitation periods running. Then in paragraph 43 she said:
- There are dangers in dealing with this question in the abstract, and prescribing something which purports to be a formulated standard for something like knowledge of the grounds of a claim. However, some sort of boundaries need to be set. It cannot sensibly be the case that a claimant has to have great detail of how any breach came about before he has knowledge for present purposes. Many claimants do not have full knowledge until after a trial, because additional facts emerge throughout a piece of litigation. Claimants start actions (and are expected to start actions, for limitation purposes) at a time when their knowledge is incomplete, and when detail is not known. I do not see why actions under the Regulations should be any different. Any attempt to require levels of detail would be likely to run counter to the principle that challenges should be indicated swiftly and mounted swiftly. The standard ought to be a knowledge of facts which apparently clearly indicate, though they need not absolutely prove, an infringement.
- As I have already indicated, the best evidence of what Sita knew comes from the correspondence between April and July 2009. Miss Rose's strongest case is that, looking at that material, against the background of what had passed, it is plain that Sita knew of an infringement (within the meaning of the Regulation) by 8th April at the latest, or very shortly thereafter, and that more than 3 months passed before it issued its claim form. If that case succeeds at this stage, it is unnecessary to consider what knowledge had been acquired at an earlier stage. If it fails on the basis of that material at this stage, then it is in my view unlikely to be made any better by going back in history. Accordingly, my focus will be on the period principally relied on by Miss Rose. I shall also focus on actual knowledge and leave constructive knowledge on one side (apart from potentially drawing one or two obvious inferences).
- I can dispose of one point at this stage. So far as Sita claims that a fresh Alcatel letter should have been given in April 2009, and relies on that as an infringement, then Sita knew about the failure to supply one when it was told it was not getting one. Mr Bowsher accepted that that infringement was statute-barred (if there is a 3 month limit) because once the contract was announced Sita knew it had not got an Alcatel letter, and three months elapsed since acquisition of that knowledge. So that point no longer arises. However, it only disposes of a very small part of this case.
- The first important letter is Sita's letter of 21st April. It establishes that Sita had understood the matters referred to in the bullet points contained in it. It must have drawn those inferences from the public announcements. Their significance is set out two paragraphs later on – Sita wants to satisfy itself that it has not been treated unfairly or discriminated against. That must be because it thought that the evidence indicated that it had. The letter refers to a prima facie case. So this letter demonstrates that Sita knew that the announced deal was rather more costly, and rather different, from what had gone before. It also demonstrated that the costs were apparently greater than Sita's costs. Sita was an experienced player in this field (its evidence on the application spoke as to its great experience in public procurement contracts) and must be taken to know that the released facts, when compared with its bid, gave rise to a real suggestion that the procurement process had gone wrong. Its potential lost opportunity is reflected in the last paragraph of the letter.
- Thus even at this early stage, Sita appreciated that it had a case (to put it at its lowest) for arguing for infringement of the duties of fairness and equal treatment. It also knew that it had not been told how the final decision and contract were arrived at, so that it knew that there was a lack of transparency in relation to that, if there was a lack of transparency.
- Thus if it is right to view the relevant grounds of the proceedings as being an infringement of the obligation to treat fairly and equally, then there is a strong case for knowledge already. If it is right to treat the grounds as being more detailed complaints about the assessments which are pleaded in the Particulars of Claim, then there is at this stage no real case for knowledge of that.
- GMWDA's reponse of 18th May rejects the complaints. The significant thing about this letter is that it does not disclose any more information other than perhaps an indication that the scoring was monitored after April 2008, so when Sita comes to send its next letter it is not responding on the basis of any real new information – it is responding on the basis of information that it had as of 8th April.
- Next is the important letter of 27th May. As appears from the later June letter, this was intended to be notice of breach and intention to bring proceedings. It seems to me, and I find, that it contains the following:
- Mr Bowsher said that at this point his clients knew "pitifully little" and that the knowledge of breach has to be looked at in that context. He invites me to view this letter as one which is seeking information because his client did not know the true position, and not as one which demonstrates a knowledge of breach. Any claim form issued at this time would have been speculative and susceptible to being struck out. I think that his characterisation of the letter does not state the position accurately. This letter is a plain assertion of rights and of infringement of rights. It claims that GMWDA wrongfully failed to provide de-brief information, wrongly entered into a contract, wrongly allowed VL to improve its bid, and wrongly failed to offer the contract to, or re-negotiate with, Sita, and wrongly changed the specification of the contract and acted unfairly. That is what the summary of breaches says. These were all drawn from the publicly available information and knowledge of its own bid. This cannot be disguised by the fact that Sita offered GMWDA a chance to disabuse it of these notions (which it did). The thrust of this letter is not a communication from a party who is unsure about the position and who seeks information to render the position clear. The thrust is an assertion of breach by a party who has a keen understanding of the position and who is offering the other side the chance to head off proceedings which would otherwise ensue.
- If one compares these averred breaches with the matters relied on in the pleaded case one finds an averment and demonstration of knowledge, to a certain level, of all the four matters pleaded generally in paragraph 63 of the Particulars of Claim. Because of the nature of the breach, there is a knowledge of a failure to provide an Alcatel letter or debrief in April 2009. There is also a demonstration of knowledge and averment of an inability to identify the VL final bid as the MEAT. That is plainly implicit in the complaints that Sita was not allowed back into the process. The same applies to a failure to treat Sita and GMWDA equally. What that letter does not demonstrate is knowledge of the way in which the assessments worked, some of the detail of which is pleaded.
- So far as it is said that a claim form could not have been properly issued, I am afraid I do not understand the point. I do not see why a claim form could not have been issued in the form in which it was ultimately issued. It would have made the generalised claims that that claim form made. If it became necessary to plead the matter out without further information, the material in the letter could been turned into a pleading, though it would have been one of the "Pending disclosure, the best particulars the claimant can give are…" variety. I fail to see why it would have been an abuse of process. It would have been issued on available material, and with an intention to pursue it. It would not have been a claim in the same abusive class as the claim in Nomura.
- GMWDA's response was its letter of 3rd June. While it does add some material probably not hitherto known to Sita, it does not add any material evidencing breaches, as already observed and as accepted by Mr Bowsher. Mr Bowsher pointed out some of the things that it did not say about the scoring that went on, and which became more apparent later on. However, Sita is not entitled to say that this letter told it something about breaches which it did not know before. All it can say (rightly or wrongly – I do not need to decide it) is that it did not make clear some of the underlying facts which are said to underpin, or give rise to, the breaches.
- So when Sita's 12th June letter came to be written it was not written on the basis of any more information which had come to light since the last letter, and indeed since 8th April. So far as it demonstrates knowledge, it therefore demonstrates the knowledge that Sita had as at 8th April. By now (according to the letter) Sita has been to counsel who puts forward the analysis in that letter. What is important for these purposes is the following:
- Mr Bowsher submitted that this letter sought information (which it did) and that it demonstrated that Sita did not have enough information to start proceedings. I disagree. Yet again, the request for information was ostensibly in order to provide an opportunity to head off proceedings. The commencement of proceedings was a clear threat if that information was not forthcoming. Unless the letter was disingenuous in this respect (threatening proceedings which Sita actually did not consider it was in a position to bring) it should be treated as meaning what it said. Not surprisingly, it was not suggested by Sita that it was being disingenuous, and I do not consider that it was. It had enough information to work out that there seemed to have been a breach, and it asserted the breach with some vigour.
- The letter of 26th June is significant as demonstrating that Sita thought it was in a position to commence proceedings. While it is true that it had been suggested that proceedings might be for disclosure only, it is also true that substantive proceedings for infringement and for damages had also been suggested.
- The next letter is GMWDA's letter of 3rd July. Sita's case is that it is this letter which started the limitation clock running. It is said to have provided a lot more information which Sita analysed, and which ultimately led to the present proceedings. The principal matter relied on by Sita as triggering this evaluation is an alleged revelation that there had been changes in VL's bid prior to the announcement of an intention to contract in April 2008 and which might have meant that even before April 2008 VL's bid might not have been the best bid when compared with an offering from Sita, so that for that reason GMWDA had not achieved the MEAT. It is said that until that time Sita had been concentrating on the period after April 2008 in order to ascertain whether or not the factors which had led to a price increase by the time that the contracts were entered into were factors arising out of the credit crunch and which might have been thought to affect all parties equally (and therefore not affect the relative merits of the Sita and VL bids). The possibility of changes pre-April 2008 was said to have been raised in this letter for the first time. It is said that no significant details of the pre-April 2008 changes were given until GMWDA's even later letter of 17th July. Until this time Sita says it was operating on suspicion only.
- Miss Rose's riposte to that is twofold. First, she says it is not right as a matter of fact that Sita was unaware of substantial changes to the contract prior to April 2008. She points to the letter of 16th April 2008 in which Sita offered to re-submit a bid. It made no sense unless Sita was aware of an increase in costs, and indeed it does itself refer to "the changes to the scope of the Works and Services". In addition, a realistic reading of the letter of 9th May 2008 from GMWDA would have revealed that the costs will have changed. It revealed (as was already foreshadowed) that the alternative Runcorn bid had been worked up and the VL bid re-evaluated. Sita was not told that the scores had remained the same. Anyone as experienced as Sita would have realised from that letter that the costs would have changed, if not gone up.
- I have some sympathy with Miss Rose's submissions on this factual point. The 9th May letter does make clear that a materially different project (involving Ineos Chlor) had been costed, evaluated and agreed. Sita knew it had not been invited to re-tender, and the 18th April letter looks like one which was seeking to get back into the game in the light of the fact that the game had apparently changed. Sita therefore knew that it had been kept out of a potentially new game. However, I am not satisfied that, on the present application, it would be right to infer clear knowledge that the costs had gone up in a manner which required Sita to be let back in, or (more importantly) that there had been an infringement of the procurement procedures where cost increases have happened without inviting Sita to renew its participation. These letters might well found a constructive knowledge case, but again I am not prepared to infer that on this application for summary judgment, where the point has not even been focussed on in the evidence (which it has not).
- Miss Rose's second riposte is to say that changes before April 2008 are not a necessary element of Sita's claim as pleaded. The claim that there is an infringement of the Regulations in failing to identify the MEAT is the same whether it relates to the whole period or the period from 2008. Sita knew it had a claim based on a contract with GMWDA which is said to be not the most advantageous, because costs have increased and Sita was not allowed back in to bid, and it is irrelevant whether or not it knew that there were increased costs as at April 2008. As a matter of pleading, Miss Rose's submission is not wholly correct. Paragraph 74 as amended sets out 2 alternatives – either the VL offer in April 2008, and/or the offer culminating in the later contract, was not the most economically advantageous. There was therefore a pleading relating to an infringement in April 2008. It is true that there is not, in terms, a pleading that there had been costs increases at that time which demonstrated infringement, but there are references to historical assessments (pre-April 2008) which would still be operating in April 2008 and which are criticised. One certainly cannot see a clear pleading of cost increases as at April 2008, but there is some sort of reference to the point. However, I do not think that the absence of a pleading of the precise way Mr Bowsher now puts the case is determinative of the matter. I think that the important thing is to identify what should be treated as the grounds for bringing these proceedings for the purposes of the Regulation, and assessing knowledge in relation to those. I deal with this below.
- I do not need to consider the remaining correspondence in this context.
- I have already expressed my conclusion that the grounds for bringing proceedings refers to the general basis of overall breach rather than the particular blow by blow errors which led up to the infringement. Applying that analysis to the claims as brought, in my view the grounds in this case are:
- Ground (i) arose in April 2009, and Mr Bowsher conceded that his client would have known of it when it arose. The proceedings were started more than three months after that ground arose, so as a separate ground it is time barred; again, Mr Bowsher did not contend otherwise.
- If Ground (ii) is a separate ground, it arose in April/May 2008. While the letter of 9th May 2008 refers to a re-assessment, if this debrief was inadequate because it was based on (and therefore transmitted) out of date information, then this was not, as such, known until information about it started emerging in June and July 2009.
- As to Ground (iii), this first arguably arose (assuming the facts relied on by Sita) at some time before the intention to contract was announced, when negotiations moved to a point at which (assuming Sita's case to be correct) Sita ought to have been allowed back into the process. The end of the process was when the contract was entered into on 8th April 2009. I find that on the basis of the April, May and June correspondence Sita knew of this last breach (if it falls to be treated as a separate breach) on or shortly after 8th April, and well before the letter of 27th May. By "shortly after" I mean a day or two to give Sita a chance to think about the position. For the reasons given above, Sita knew enough about the facts to conclude that there had been a prima facie infringement of the Regulation. It said as much more than once, and provided its reasoning. The attempts to present the correspondence as requests for further information in the face of an uncertain position fail.
- What Sita did not know (or has not been demonstrated to know) at that point was that the facts were such that it could validly claim that it was entitled to be brought back in prior to or in April 2008. The correspondence shows that its focus (until July 2009) was on events post-April 2008. It may be that further investigation will demonstrate it had knowledge of infringements in and before April 2008, or that it ought to have known, but that has not been demonstrated with the clarity required for the current applications to succeed on the basis of them.
- So the position is that on the evidence, Sita knew in April 2009 that the contract had been awarded in breach of the Regulation, but did not know that there were breaches at the announcement of intention to contract stage. It also did not know of shortcomings at the April/May 2008 debriefing stage. I therefore have to determine what the effect of that is on the current proceedings. Does it mean that the proceedings would fail as being too late (subject to their being saved on some other basis); does it mean that they survive as a whole; or does it mean the proceedings fall to be struck out so far as they rely on infringements between April 2008 and April 2009, but otherwise survive?
- The answer to this point does not lie purely in the strict construction of the Regulation, because (for the reasons appearing above) the Regulation is not to be applied in accordance with its strict construction. What is in issue is how the discretion should be applied, and what the starting point for the calculation of time under the discretion should be.
- One approach would be to start with the wording of the Regulation, which uses the words "when grounds for the bringing of the proceedings first arose". That, on Sita's analysis, would be at some stage prior to April 2008. One then applies the question of knowledge to that, via the discretion - when did Sita know of that first arising? The answer (for present purposes) would be July 2009. On my analysis of the facts, Sita knew it had a claim earlier than that, but did not know when it had first arisen, or of the earlier genesis of the claim, until July. One then adds the 3 month period to that, and that makes the proceedings in time.
- That approach seems to me to be unattractive as a general approach. It leads to an illogical result. Assume a case in which there can be said to be two phases at which a breach occurs, but the breach is in essence the same breach - a failure to deal with services providers in a way which gives them a fair chance to tender. Let it be supposed that the services provider clearly discovers the second phase and not the first, and is plainly out of time because it lets 3 months go by without starting proceedings. After, say, 6 months it discovers the first phase - it realises that the infringements have roots much earlier than it thought. On the approach I am testing the provider would now have a further opportunity to start proceedings because it now knows when the grounds first arose. I can see no ground in logic or common sense why, on those facts, the provider should have a second chance. It knew it had a right to sue, and did not use it. All it did not know was how historically rooted the right was. The latter is really an irrelevant fact for these purposes. What is important is the knowledge of the existence of a cause of action. This approach would also be inconsistent with the objective of rapidity.
- I do not think that I am compelled to reach such a conclusion. After and in accordance with Uniplex, the exercise which I am conducting is the exercise of a discretion. It does not seem appropriate to exercise the discretion so as to produce a result which is inconsistent with logic and the objective of the limitation provision (and the Directive). Since the court is exercising a discretion, it seems to me that, on the facts of the hypothetical case identified above, the discretion should be exercised so as to start the clock running from the date when the provider first knew it had the cause of action in question, irrespective of whether it knew when it first arose, or the circumstances of its first arising. There is no basis in logic or principle from starting it from the later date when, on analysis, what the claimant found out at the later date is further details of what he knew about anyway.
- This approach is also consistent with the analysis of the majority of the Court of Appeal in Brent. In that Court's analysis there is one cause of action, not two or more. So what the provider discovers when he discovers the later events is the existence of the cause of action. He does not (in the example given) discover the later of two causes of action. It would be anomalous to allow him an extended limitation period because he discovers later that his cause of action arose earlier than he originally thought when he had enough to sue on as a result of his original discovery.
- I do not go so far as to say that it will never be appropriate to allow the period to start at a later date when there is discovery of earlier events going to the same point. One can, for example, imagine circumstances in which it might be said that a decision not to sue on the basis of later events was justifiably changed on discovery of some earlier events, so as to make it right to allow proceedings to be started later. That can be done either by way of a general exercise of the discretion, or formally starting the 3 month clock running later. I do not need to decide which, but the point is that the provisions are flexible enough to allow the primary provision to be operated in a logical manner consistent with the policy of requiring prompt proceedings, and still allow for justice in individual cases.
- I turn, therefore, to apply that approach to the facts of the present case. The discovery that Sita says it made as a result of the July correspondence does not, in my view, add anything material (for limitation purposes) to what it already knew. Sita can be shown to know of the infringements it identified in its correspondence in April to June 2009. Those infringements were such as to allow Sita to make the complaint it ultimately made, and its later acquired knowledge of details of earlier infringements adds nothing material, for present purposes. What it discovered in July was, in effect, more of the same, albeit that it demonstrated (on Sita's case) that the breaches had started earlier than it thought. Although the facts were different, they were merely manifestations of the same infringement. On its own correspondence, and in the light of my finding, it knew enough to threaten and commence proceedings on 8th April 2009 (or shortly thereafter). What it subsequently found out is not a fundamental addition which somehow changes the picture that Sita had. If it did anything, it confirmed the picture it had, and which it had already decided demonstrated an infringement.
- In those circumstances the objective of Regulation 32(4)(b) is achieved by applying the discretion so as to start the clock running from its knowledge of the later infringements. In my view that 3 month clock should be treated as starting to run on or shortly after (to give time for consideration) 8th April 2009. The three months therefore expired on or shortly after 7th July 2009. The proceedings were not commenced until a significant time afterwards (27th August), and should be treated as being out of time, unless there are reasons for extending that time.
- The potential reasons for extending time fall into two categories – agreed extensions, and further discretionary factors. I therefore turn to those.
- The above narrative demonstrates that GMWDA agreed extensions of the limitation period in the context of its provision of further information. It is necessary to consider whether any of those agreements extend the normal period of 3 months from the date of knowledge.
- The first extension arose by virtue of GMWDA's email of 29th June. It agreed an extension corresponding to the length of time for GMWDA's reply after 26th June, provided proceedings were commenced within 5 days of the receipt of the date of the response. The response was provided on 3rd July. In terms of the agreed extension, proceedings would have had to have been started by 8th July (which was only one day over the period that was running anyway). They were not so started, so that period becomes academic. It is to be noted that Sita seemed to be aware of this 8th July deadline, judging by the last paragraph of its letter dated 6th July.
- In its letter of 8th July, Sita invited a further extension while it obtained and considered further information. That extension was given by S J Berwin in their response of the same date – no limitation point would be taken in respect of the time it took to provide the information and VL's final BaFO, provided that proceedings were brought no later than "five days after our provision of this information". I construe those as being working days. The information, but without the BaFO, was provided in S J Berwin's letter of 17th July. If proceedings had been started by 24th July, they would undoubtedly have been within the extended time which was offered. They were not started, so subject to one point that extension does not avail Sita either.
- That one point is one arising out of the non-provision of the BaFO. Mr Bowsher submitted that on its true construction, the proffered extension operated until the BaFO was provided. Since it was never provided, the extension continued to operate and has never been brought to an end. I reject that submission. S J Berwin's letter of 17th July is an apparently full response to the preceding request for further information. It makes reference to VL's BaFO, but does not provide it. A proper reading of that letter makes it clear enough that it is not going to be provided, because there is no suggestion that there is anything else to come. A reasonable reading of this letter would have led the reader to believe that this was the answer within 5 working days of which Sita was expected to start proceedings if it was going to. I infer that Sita took this view, because its next letter of 24th July (which was arguably on the last day of those 5 working days) did not ask for the BaFO, did ask for further information (not including the actual BaFO), threatened proceedings if it were not provided, and asked for confirmation by the end of 27th July that it would be. It also asked for a further 5 working day extension following receipt of the information. S J Berwin's letter of 27th July expressed itself as being GMWDA's response to the letter of 24th July and refused a further extension. If it was not apparent before this letter, this letter made it plain that nothing else was coming from GMWDA. So if the 5 day period had not already expired, it is in my view plain that the agreed extension ran from the date of this letter. It expired on 3rd August without the proceedings having been commenced.
- It follows, therefore, that there was no agreed extension period within which these proceedings were started. The latest time at which the period expired was 3rd August, assuming in Sita's favour for these purposes that Sita had the benefit of the last 5 day extension.
- Regulation 32(4)(b) as strictly construed, and as operated before Uniplex, provided for the court to exercise a discretion to extend the time bar if circumstances justified it. If the Regulation had directly imposed a 3 month time limit then there would be a discretion to extend it if the circumstances warranted it. I have held that the discretion should be used to give effect to a different 3 month time limit. That does not, in my view, deprive this court of the more extended discretion that seemed to exist anyway. The true analysis is that the discretion must be exercised so as to allow 3 months from the date of knowledge of the grounds for the proceedings, and may be exercised to extend it further.
- In its Particulars of Claim (in paragraph 77) Sita asks the court, in general terms, to exercise that discretion so far as necessary. No grounds are pleaded in support of that claim. However, in her witness statement in opposition to the present striking out application Ms Wolfenden of Osborne Clarke has a section headed "In any event there is good reason to grant an extension of time if required". She lists in particular 4 matters:
- There is no formal application before me to exercise the discretion. The point arises because GMWDA's application is based on the premise that the claim is bound to fail on limitation grounds, and that there is no good reason to extend time. In other words, part of its premise is that a claim to extend time is bound to fail. Ms Wolfenden's evidence (identified above) is in terms intended to meet averments by GMWDA's deponent that an extension is not justified. Mr Bowsher said that I could not treat there as being an application for the exercise of the discretion before me and that the matter should go to trial. There was, he said, material on which the discretion might be exercised and it could not be said at this stage that it should not be.
- In the parallel field of the discretion under section 33 of the Limitation Act 1980 the point can be dealt with at various stages – on an application to strike out, at a trial or on a trial of the point as a preliminary issue (see Dale v British Coal Corporation [1992] 1 WLR 964). In my view the same applies to the discretion that I have to consider. The essence of GMWDA's case is that there is no material on which the discretion can be sensibly exercised, so I should determine that and strike the case out. Sita's case is that there is material, but it does not invite the exercise of the discretion at this stage, so (in accordance with this way of looking at it) I cannot decide positively to exercise it. In my view, in those circumstances the question for me is not whether I should exercise the discretion, but whether it is plain enough at this stage that it cannot be exercised. That is a high hurdle, though not an insurmountable one.
- The authorities support Miss Rose's submission that a strict approach should be taken to this sort of discretionary extension. Extensions are not to be lightly given, bearing in mind the purpose of the time limits in the first place. In Jobsin v Department of Health [2002] 1 CMLR 1258 the Court of Appeal considered a first instance decision to exercise the discretion to extend the period under the same regulation as that which I am considering. This was obviously pre-Uniplex, so the court was considering extending a period which had started running from the date of the infringement, rather than the date of knowledge of the infringement. However, it still contains remarks which are relevant to the exercise of the discretion generally. Dyson LJ held that ignorance of the legal significance of facts which are of themselves known to the claimant is not usually a good reason for extending time. He observed that the Regulation specified a short limitation period.
- I therefore turn to the facts with that point in mind, and consider the strength of the case in favour of the discretion. I will do so primarily by reference to the points made by Ms Wolfenden and identified above, but I shall also include any extra points made by Mr Bowsher.
- The public interest in scrutiny of GMWDA's conduct.
- GMWDA's lack of openness and conduct generally between January 2007 and 2009
- This is a more troubling point, but in the end it is no reason for exercising the discretion to extend the time bar. Although (on the facts which I assume for the purposes of this application) Sita did not know what it found out in July 2009 about how changes in the project were reflected in scoring, and other matters, it did know on or shortly after 8th April that a claim could be made for infringement of the procurement procedures. This factor boils down to a complaint that Sita had been kept out of information necessary to start an action. If good, it would be true in relation to an action based on those facts, but the present action is not based just on those facts. It is based on later facts and the award of the contract, and by 8th April or shortly thereafter Sita knew it had a claim anyway based on later facts. The fact that it discovered late in the time period that there were yet further alleged breaches does not justify any delay in commencing proceedings based on the matters of which it was already aware and which went to the same breach. Sita's point effectively says this: We knew GMWDA had behaved improperly in the latter stages of the procedure, and we believed that we had a claim based on that, but, because of GMWDA's previous non-disclosure, we did not know quite how badly they behaved until about 3 months later, and that justifies the extension. When put like that, the poverty of the argument can be discerned. Any lack of disclosure was not causative of the delay, and since it did not deprive Sita of the opportunity of commencing proceedings on what it knew from 8th April 2009 it seems to me to be irrelevant or of little weight in deciding whether to exercise a discretion in favour of Sita to allow proceedings to be commenced beyond the 3 month time bar.
- Absence of prejudice to GMWDA arising from the delay
- Sita issued promptly after the letters of 3rd, 17th and 27th July
- Ms Wolfenden sought to justify part of this period of delay by reference to the fact that the issuing of proceedings required the approval of the boards of both Sita itself and of its holding company. The chief executive of Sita was on holiday until 10th August, and it was not possible to arrange a conference call with the holding company until 17th August. Apparently solicitors were instructed the following day and on 25th August the "UK Directors" (presumably of the holding company) considered and approved the "course of action proposed" (presumably the issuing of proceedings). The letter before action was sent on 26th August and proceedings were issued on 27th August.
- This is not impressive conduct in these circumstances. In its evidence Sita makes much play of its great substance in the public procurement world, and of its expertise. That was not challenged by GMWDA. The correspondence demonstrates that expertise and knowledge. The correspondence from April 2009 demonstrates that its knowledge extended to limitation periods (it must be remembered that those letters were not written by solicitors). It had plainly felt able to threaten proceedings, and presumably intended that GMWDA should believe it. It therefore plainly knew of the urgency of the situation. It went to counsel in June. In those circumstances, and in the face of a time limit of which it professed itself to be aware, it seems rather extraordinary that further deliberations with an absent chief executive were necessary, and that he was not contactable. The further delay in getting the view, or consent, of the holding company is equally odd in the circumstances. None of this smacks of promptness at all. It smacks of casualness or a failure to appreciate the real urgency of the situation.
- In the light of that analysis there is, in my view, no reason on the facts for extending the time period beyond that which already operated. Any delays in starting the proceedings were attributable to the delays of Sita itself in addressing the situation. I do not exercise my discretion in its favour.
- I therefore conclude that Sita's claim has been brought out of time and there is no good reason to exercise any discretion to extend it. I have, as previously explained, considered the extent to which it is right to reach decisions on the various points dealt with above, on an application of the kind before me. I consider that they are all sufficiently clearly established and that a trial would not produce a different result. The appropriate course is therefore to strike out these proceedings.
see: Appendix 1
Mr Justice Mann:
Introduction
The legislative provisions
"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 work contracts."
The recital sets the background:
"Whereas [certain directives relating to the co-ordination of procedures for the award of public supply contracts] … do not contain any specific provisions ensuring their effective application…
Whereas the opening up of public procurement to Community competition necessitates a substantial increase in the guarantees of transparency and non-discrimination; whereas, for it to have tangible effects, effective and rapid remedies must be available in the case of infringements of Community Law in the field of public procurement or national rules implementing that law…
Whereas, since procedures for the award of public contracts are of such short duration, competent review bodies must, among other things, be authorised to take interim measures aimed at suspending such a procedure or the implementation of any decisions which may be taken by the contracting authorities; whereas the short duration of the procedures means that the aforementioned infringements need to be dealt with urgently;
Whereas it is necessary to ensure that adequate procedures exist in all the Member States to permit the setting aside of decisions taken unlawfully and compensation of persons harmed by an infringement…
Article 1:
(1) The Member States shall take the measures necessary to ensure that, as regards contract award procedures falling with the scope of [certain directives] decisions taken by the contracting authorities may be reviewed effectively and, in particular, as rapidly as possible in accordance with conditions set out in the following Articles…
….
(3) The Member States shall ensure that the review procedures are available, under detailed rules which the Member States may establish, at least to any person having or having had an interest in obtaining a particular supply or public works contract and who has been or risks being harmed by an alleged infringement. In particular, the Member States may require that the person seeking the review must have previously notified the contracting authority of the alleged infringement and of his intention to seek review."
"…means a procedure leading to the award of a contract whereby the contracting authority negotiates the terms of the contract with one or more persons selected by it."
GMWDA is the "contracting authority" for the purposes of those regulations and Sita is a "services provider".
"(1) Subject to paragraphs (5), (6) and (7) below, a contracting authority shall award a public services contract on the basis of the offer which –
(a) is the most economically advantageous to the contracting authority, or
(b) offers the lowest price.
(2) The criteria which a contracting authority may use to determine that an offer is the most economically advantageous include period for completion or delivery, quality, aesthetic and functional characteristics, technical merit, after-sales service, technical assistance and price.
(3) When a contracting authority intends to award a public services contract on the basis of the offer which is the most economically advantageous it shall state the criteria on which it intends to base its decision, where possible in descending order of importance, in the contract notice or in the contract documents."
The procedure adopted by GMWDA in this case was intended to proceed on the first of the two bases set out in Regulation 21(1), viz, to identify the most economically advantageous tender. Sita says that, in the events which happened, GMWDA failed to identify the tender which was most economically advantageous. While it purported to do so at the first stage, at which VL was identified as the preferred bidder, thereafter VL's bid changed to such an extent that, in the absence of an opportunity for Sita to re-tender (which was not offered to it) it could not be said that VL's offering was the most economically advantageous.
"23(2) Subject to paragraph (3) below, a contracting authority shall, within 15 days of the date on which it receives a request in writing from any service provider who was unsuccessful … inform that service provider of the reasons why he was unsuccessful and, if the service provider submitted an admissible tender, the contracting authority shall inform him of the characteristics and relative advantages of the successful tender as well as the name of the person awarded the contract.
(3) A contracting authority may withhold any information to be provided in accordance with paragraph (2) above where the disclosure of such information would impede law enforcement or otherwise be contrary to the public interest or would prejudice the legitimate commercial interests of any person or might prejudice fair competition between service providers."
"32. Enforcement of obligations
(1) The obligation of a contracting authority to comply with the provisions of these regulations…and with any enforceable Community Obligation in respect of a public services contract…is a duty owed to services providers.
(2) A breach of the duty owed pursuant to paragraph (1)…above shall not be a criminal offence but any breach of the duties shall be actionable by any services provider who, in consequence suffers, or risks suffering, loss or damage."
"(4) Proceedings under this regulation may not be brought unless –
(a) The services provider bringing the proceedings has informed the contracting authority of the breach or apprehended breach of the duty owed to him pursuant to paragraph (1)…by the contracting authority and of his intention to bring proceedings under this regulation in respect of it; and
(b) they are brought promptly and in any event within three months from the date when grounds for the bringing of the proceedings first arose unless the Court considers that there is good reason for extending the period within which proceedings may be brought."
Thus a form of "letter before action" is required before any proceedings can be brought, and there is an ostensibly very short window within which the proceedings can be brought.
The outline issues and the nature of this hearing
The operation of the limitation provision and new European case law
"25. By its first question, the national court asks, in essence, whether Article 1 of Directive 89/665 requires that the period for bringing proceedings seeking to have an infringement of the public procurement rules established or to obtain damages for the infringement of those rules starts to run from the date of the infringement of those rules or from the date on which the claimant knew, or ought to have known, of that infringement."
Paragraph 26 observes that the Directive leaves it for each Member State to establish time limits for bringing a review and in paragraph 27 sets certain limits on that:
"27. The detailed procedural rules governing the remedies intended to protect rights conferred by Community law on candidates and tenderers harmed by decisions of contracting authorities must not compromise the effectiveness of [the Directive]…
It is for that reason appropriate to determine whether, in the light of the purpose of [the Directive], national legislation such as that at issue in the main proceedings does not adversely affect rights conferred on individuals by Community law."
The English provisions under consideration in that case were the equivalent of regulation 32(4).
"29. In that regard, it should be recalled that Article 1(1) of [the Directive] requires Member States to guarantee that unlawful decisions of contracting authorities can be subjected to effective review which is as swift as possible…"
Thus the Court acknowledges the need for speed. It becomes apparent later on in the judgment that the speed which the court has in mind relates to, or at least includes, the speed with which proceedings must be commenced, if they are to be commenced.
"30. However, the fact that a candidate or tenderer learns that its application or tender has been rejected does not place it in a position effectively to bring proceedings. Such information is insufficient to enable the candidate or tenderer to establish whether there has been any illegality which might form the subject matter of the proceedings.
31. It is only once a concerned candidate or tenderer has been informed of the reasons for its elimination from the public procurement procedure that it may come to an informed view as to whether there has been an infringement of the applicable provisions and as to the appropriateness of bringing proceedings.
32. It follows that the objective laid down in Article 1(1) of [the Directive] of guaranteeing effective procedures for review of infringements of the provisions applicable in the field of public procurement can be realised only if the period laid down for bringing such proceedings start to run only from the date on which the claimant knew, or ought to have known, of the alleged infringement of those provisions…
33. This conclusion is supported by the fact that [two other provisions of another directive] which was in force at the time of the facts in the main proceedings, requires contracting authorities to notify unsuccessful candidates and tenderers of the reason for the decision concerning them. Such provisions are consistent with a system of limitation periods under which those periods start to run from the date on which the claimant knew, or ought to have known, of the alleged infringement of the provisions applicable in the field of public procurement.
….
34. The answer to the first question accordingly is that Article (1) of [the Directive] requires that the period for bringing proceedings seeking to have an infringement of the public procurement rules or to obtain damages for the infringement of those rules should start to run from the date on which the claimant knew, or ought to have known, of the infringement."
"45. Merely for the sake of completeness, it may be mentioned that the time when the period starts running for bringing a claim for compensation must not be made to depend on the fact that the applicant knew or ought to have known of the damage incurred by him. The damage that follows from a breach of duty sometimes comes to light only after some delay. Waiting for knowledge of the damage would thus run counter to the principle of review 'as rapidly as possible' within the meaning of Article 1(1) of [the Directive]. In return, however, it must be made possible for the tenderer or candidate concerned if necessary, first to make an application for a declaration of a breach of procurement law and then to quantify the damage and claim compensation in subsequent proceedings."
The Court does not explicitly approve that paragraph or the substance of its contents, but the whole tenor of the judgment is such that I find that the Court meant what it said and that its absence of any reference to damage was because it considered it to be irrelevant. It has to be acknowledged that the question that was addressed to the Court by the English court did not raise the distinction at all. It asked in terms whether time should start running:
"from the date when the tenderer knew or ought to have known that the procurement procedure and award infringed EC public procurement law or as from the date of breach of the applicable public procurement provisions".
That doubtless moulded the decision. Nevertheless, its terms are clear, and the absence of any reference to knowing about damage, in the light of the express reference to the point in the Advocate General's Opinion, indicates strongly that the Court did not think that the Directive required that there be knowledge of the damage too.
"37…whether [the Directive] is to be interpreted as precluding a provision…which requires that proceedings be brought promptly.
38…Articles 1(1) of [the Directive] requires Member States to guarantee that decisions of contracting authorities can be subjected to effective review which is as swift as possible. In order to attain the objective of rapidity pursued by that Directive, Member States may impose limitation periods for actions in order to require traders to challenge promptly preliminary measures or interim decisions taken in public procurement procedures…
39…The objective of rapidity pursued by [the Directive] must be achieved in national law in compliance with the requirements of legal certainty…
…43. It follows that the answer to the first part of the second question is that Article 1(1) of [the Directive] precludes a national provision, such as that at issue in the main proceedings, which allows a national court to dismiss, as being out of time, proceedings…on the basis of the criterion, appraised in a discretionary manner, that such proceedings must be brought promptly."
"44. By the second part of the second question, the national court asks, in essence, which effects follow from [the Directive] in respect of the discretion conferred on the national courts to extend periods within which proceedings must be brought.
45. In the case of national provisions transposing a directive, national courts are bound to interpret national law, so far as possible, in the light of the wording and purpose of the directive concerned in order to achieve the results sought by that directive…
…..
46. In the present case, it is for the national court, as far as is at all possible, to interpret the domestic provisions establishing the limitation period in a manner which accords with the objective of [the Directive]…
47. In order to satisfy the requirements of the answer given to the first question, the national court dealing with the case must, as far as is at all possible, interpret the national provisions governing the limitation period in such a way as to ensure that that period begins to run only from the date on which the claimant knew, or ought to have known, of the infringement of the rules applicable to the public procurement procedure in question.
48. If the national provisions at issue do not lend themselves to such an interpretation, that court is bound, in exercise of the discretion conferred on it, to extend the period for bringing proceedings in such a manner as to ensure that the claimant has a period equivalent to that which it would have had if the period provided for by the applicable national legislation had run from the date on which the claimant knew, or ought to have known, of the infringement of the public procurement rule.
49. In any event, if the national provisions do not lend themselves to an interpretation which accords with [the Directive] the national court must refrain from applying those provisions, in order to apply Community law fully and to protect the rights conferred thereby on individuals."
i) It is for this court to interpret the English legislation, but it should do so in the light of the wording and purpose of the Directive.
ii) The interpretation should, if possible, ensure that the limitation period runs from the date of knowledge or constructive knowledge (which is the term I will use to describe the "ought to have known" elements).
iii) If that is possible, then the national provision is compliant and can be given effect to.
iv) If such an interpretation is not possible, then any discretion available must be exercised so as to allow a limitation period equivalent to that provided by the legislation but starting from the date of knowledge or constructive knowledge.
v) If neither of those steps is possible, the actual national provision cannot be brought into line with the Directive and it must be disregarded.
I shall therefore in due course apply that approach to Regulation 32(4).
The meaning of "grounds" – infringement only or infringement plus apparent damage?
"149 Before March 2007 [which is when the contract was finally entered into] the respondents had not sustained the damage which is the basis of their claim for damages. It may be that they could earlier have made an application for interim relief but that did not start time running on the claim actually made. There is no dispute that a declaration should be made, if one is required, and the proceedings claiming damages, the relevant proceedings, are conceptually different from proceedings for quia timet relief which the regulation permits and regulates."
I do not think that Pill LJ was necessarily addressing the point raised by Mr Bowsher in these proceedings. He was dealing with two different sorts of claims – a claim in anticipation of a breach, and a claim once the breach had occurred. The latter was held to be a different claim, and so time had not started running on that claim by virtue of the fact that there had been a previous right to sue on the anticipatory claim.
"250 …The contrast with a claim under the Regulations is clear: the latter is an action to vindicate private rights in the context of a procedure that in many cases will still be progress. Moreover, as I have already observed, a failure to comply with the procedure at any stage inevitably undermines the integrity of all that follows. Accordingly, the right of action is complete immediately and cannot be improved by allowing the procedure to continue to a conclusion. Where there has been a failure to comply with the proper procedure the later award of the contract does not constitute a separate breach of duty; it is merely the final step in what has already become a flawed process. For these reasons I do not think that the approach adopted in Burkett can simply be transposed to a claim under the Regulations.
251. Nonetheless, I am not persuaded that in a case such as the present grounds for the proceedings first arise as soon as a breach of the prescribed procedure can be apprehended. The proposition that time for bringing proceedings in respect of a breach of the Regulations runs from the date when a breach can be apprehended strikes me as rather bizarre and is in my view the result of a failure to recognise the difference between proceedings based on an apprehended breach and proceedings based on a breach that has been committed.
252 It is clear from regulation 47(7) and (8) that the court not only has an express power to intervene in the procurement procedure before it has reached a conclusion, but that, subject to paragraph (9), it retains its ordinary powers of granting relief, including relief in the form of a quia timet injunction. There is a fundamental distinction between what might be called 'anticipatory' proceedings based on an apprehended breach of duty and proceedings based on a breach already committed and the grounds on which they may be brought are conceptually different. Grounds for bringing anticipatory proceedings arise when there is sufficient evidence of an intention on the part of the contracting authority not to comply with the prescribed procedure. In all other cases grounds for bringing proceedings arise only when the contracting authority fails to comply with that procedure. This distinction is important, because regulation 47(7)(b) speaks of grounds for the bringing of the proceedings and thereby directs attention to the particular proceedings before the court. For these reasons I do not think that the mere existence of grounds that will support anticipatory proceedings is sufficient to start time running against a claimant who seeks relief in respect of an accrued breach of duty. It follows that in my view grounds for bringing the proceedings did not arise before 7th March 2007 and the claim was brought in time."
"(x) time did not run against RMP in respect of its claim founded on actual breach (as distinct from any earlier claim which there might have been for quia timet relief in respect of an apprehended breach) until the first actual breach which in this case was March 2007; note however that any failure by a contacting authority to comply with any step in the required procedure involves an actual breach and it is accordingly not open to a putative claimant to await until the last in a series of actual breaches and to contend that time runs only from then".
Thus there was not a series of causes of action, in respect of a series of breaches. There were, she said, potentially two – one for apprehended breach (one which has not yet occurred), and one for a breach once it had occurred, which thereafter flawed the rest of the process. This analysis was said to be inconsistent with the requirement that damages be an ingredient of the cause of action, and part of "grounds".
"27. It must be recalled at the outset that, in accordance with settled case law, the statement of the reasons on which a decision adversely affecting a person is based must allow the Community Court to exercise its power of review as to its legality and must provide the person concerned with the information necessary to enable him to decide whether or not the decision is well founded …
…..
42. It is undeniable that this last provision requires every contracting authority to give a tenderer the true reasons for the rejection of its bid. Moreover, the reasons given must reflect the actual conduct of the evaluation procedure. In that connection it must be recalled that the reasons given for a decision which has adverse effect must be logically compatible with the decision as adopted …
43. A statement of reasons which does not identify the true basis upon which a decision rejecting a bid has been taken and does not reflect faithfully the manner in which the rejected a bid has been evaluated is not transparent and does not fulfil the obligation to state reasons in Article 100(2) of the Financial Regulation."
"149. If such a defect [in the provision of information] is established, the Court will then examine whether, but for that defect, the procedure could have had a different outcome. From that point of view, such a defect can constitute an infringement of the equality of opportunity of tenderers only insofar as the explanations provided by the applicant demonstrate, in a plausible and sufficiently detailed manner, that the procedure could have had a different outcome as far as it was concerned."
The effect of Uniplex on the English regulation thus construed
"The issue is not one of statutory interpretation, for which the court must accept responsibility. There is a gap in the legislation which is unfilled."
That does not describe the situation in the case before me. There is a statutory provision which needs to be interpreted and implemented in line with European jurisprudence. The provision is not somehow void – the CJEU suggested no such thing. It is a provision which as a matter of language and procedure can be applied in accordance with what the CJEU have said. In doing that I am not legislating; I am applying the provision in the light of binding pronouncements of a higher court.
The factual history, the claim and the case for knowledge
" Greater Manchester backs combined heat & power solution.
The Greater Manchester Waste Disposal Authority ... today confirmed its intention to supply Solid Recovered Fuel to a Combined Heat and Power facility as part of its future municipal waste solution for 1.4 million tonnes of municipal waste that is created in the conurbation each year.
The Authority announced that it had agreed a proposal that this supply should be by rail transport to a facility that is planned at the Ineos Chlor Petro-Chemical plant in Runcorn. ...
A £320 million investment in new infrastructure is planned and the Authority and Viridor/Laing (the preferred bidder for the contract) are partway through local consultations on new facilities.
Annually 600,000 tonnes of material that cannot be recycled will be taken to 5 new Mechanical & Biological Treatment/Anaerobic Digestion plants located in Salford, North & South Manchester, Oldham and Stockport. These plants will create around 275,000 tonnes of a stabilised fuel produced to a high specification. This fuel will be transported by rail to a new power generation facility that will supply both steam and electricity for use at the Ineos Chlor site and as a replacement for imported fossil fuel. "
From this material Sita would have understood that the project had materially changed its shape, but would not have known the financial consequences of that.
i) The scoring for Runcorn and Bredbury showed them to be close. It was "a statistical dead heat", so the authority could reasonably look beyond the raw evaluation score.
ii) It observed that: "Six (6) and seven (7) point margins existed between the two Sita consortium bids and the Viridor Laing MSB1 bid at BaFO evaluation. The current updated Runcorn MSB1 evaluation score remains very comfortably above that of either of the Sita MSB1 bids."
iii) Operating costs were likely to increase by some £1.3m because of a gate fee.
iv) Capital expenditure was £45m greater for Runcorn compared with Bredbury, and so far as Runcorn was concerned the costs were a forecast as opposed to Bredbury's "guaranteed".
v) There were proposals to change the structure of the deal, with two special purpose vehicle companies ("SPVs") as opposed to the original one.
"The reason for delay in financial close is due to ensuring the right technological solution at the refuse derived fuel (RDF) outlet at a known cost and agreeing the contractual arrangements."
i) Paragraph 1.1 says: "This report reviews the financial and commercial scores attributable to VL, at the present time, to assist the Authority in its assessment of whether a full re-evaluation of VL'sPreferred Bidder status is required, with Sita being invited to resubmit its proposals, or whether there is sufficient evidence to warrant continuing negotiations with VL as Preferred Bidder."
ii) The Introduction observes that Sita's model remains as submitted and unadjusted so it did not reflect changes arising from indexation on capital or operating costs since the time of its submission. Mr Bowsher accepted that that probably operated in favour of Sita in any comparison.
iii) The conclusion of the report on financial and commercial scoring was that, comparing the original Sita bid with the current VL bid, the former attracted three more points. However, the Sita bid had, of course, not been updated and was no longer truly equivalent, as the report from time to time observed. It said that the combined total technical, financial and legal scores for each bidder's MSB1 solution would have been very similar based on the current financial score and technical and legal scores from June 2007.
iv) A section headed "Cost Changes since November 2007" showed significant increases in costs, in particular in relation to capital expenditure. Mr Bowsher points out that this information was not communicated to Sita at this time, or at any time until well after the contract with VL was concluded (i.e. in November 2009).
i) Various issues which "have both extended the process to financial close and impacted on cost" (para 4.2). One element was foreign exchange risk on capital works which had a "significant monetary value on the capital cost of the project c£20m".
ii) Certain changes in the project shown at paragraph 6.1 whose overall effect on the contract could not currently be determined (numbers were going up and down).
iii) A statement at paragraph 7.1.8 that the December 2007 EY review showed the points scoring of Sita (based on its original bid) and VL to similar levels. On that basis VL remained the preferred bidder and officers had determined that it was appropriate to continue to negotiate with VL towards "a financial close".
iv) Some finalised financial models were still awaited. "Once we have those and subject to [certain comments], we will have certainty of VL's commercial position. Only at that point will the Authority be able to form a final view that the VL bid remains the Most Economically Advantageous Tender."
v) Question marks about MEAT are reflected in paragraph 7.4. It observes that Preferred Bidder status was awarded in January 2007, and there had been an unexpectedly long negotiating procedure.
"7.4.1 …However, with that has come a considerable increase in cost of some one-third at nominal value. Much of this has been triggered by external events to our contract far more related to world economies than to our specific relationship with our Preferred Bidder, but beyond that we have found during the last nine months or so particularly, that VL and Ineos Chlor, its project-on-project RDF service provider, are very risk averse and that has conditioned their behaviour.
7.4.2.1 The significance of the increase in cost identified in 7.4.1 must be recognised. In particular, it must cause the Authority to consider whether that increased cost casts doubt upon the VL bid still being the "Most Economically Advantageous Tender" and, therefore, the status of VL as Preferred Bidder."
Mr Bowsher put specific emphasis on paragraph 7.4.2.
vi) The conclusion was that no more could be squeezed out of the deal, all aspirations could be delivered upon, it was a good financial arrangement for the Authority and that the officers involved, mindful of their statutory responsibilities, supported and endorsed the recommendations made in section 2.
"The recent press announcement has prompted me again to revisit how we, the Sita Consortium, could assist you in your high profile and prestigious Project, and, bearing in mind our continuing interest as Reserve Bidder, I wish to put forward an excellent opportunity for both the Council and the Greater Manchester taxpayer."
The letter went on to offer to submit a further financial offer based on "today's Project, including its revised scope of Works and Services".
"I have drawn the contents of your letter to the attention of both the Clerk and Treasurer to the Authority, and they have been able to consider the points you raised.
So far as the PFI Project is concerned, the Authority will later today be issuing 'Alcatel Notices' to relevant parties, including Sita UK.
That Notice will formally advise you that the successful tenderer in respect of the PFI is Viridor Laing (Greater Manchester) Limited.
In accordance with previous correspondence, I will be sending that Notice to your colleague, Paul Gavin.
As indicated above, the Authority has given consideration to the points you raise in your letter, and I would like to express the Authority's thanks for the interest you have shown.
However, the formal position is set out in the relevant Alcatel Notice, which I will be sending later today."
"GMWDA Waste PFI ("the Project") – the Alcatel Notice.
Thank you for your tender in relation to the above Project.
[GMWDA] has now completed its evaluation of all the tenders received for this Project and, on behalf of GMWDA, I am therefore required by the Public Contracts Regulations 2006 (the "Regulations") formally to inform you, again, that on this occasion your tender has not been successful.
As indicated in the notice published by the [OJEU]…the award criteria for this Project was the most economically advantageous tender evaluated against those criteria sent out with the Invitation to Tender.
Your overall score in relation to your response to the IsBafo was 63, whereas the successful tenderer's overall score was 70. The name of the successful tenderer is Viridor Laing (Greater Manchester) Limited.
It is GMWDA's intention, subject to confirmation of private finance initiative credits from DEFRA, to enter into the PFI Contract and related documentation on or after ten calendar days from the date of this letter (the "standstill period") to Viridor Laing (Greater Manchester) Limited.
You may request additional debrief information to be made available to you within ten calendar days from the day after the date of this letter, provided that such request is received by GMWDA no later than two working days after the date of this letter.
Should your request be made after this date, additional debrief information will still be available to you within 15 days of receipt a [sic] written request."
"…pursuant to Regulation 32 of the Public Contracts Regulations, please take this letter as a formal notice from Sita requesting the reasons why Sita's bid (together with its consortium members) was unsuccessful. In your response please include the characteristics and relative advantages of Viridor Laing (Greater Manchester) Limited's successful tender as it now stands. Please let us have your written response setting out these reasons, following which Sita would like to discuss this information at a meeting with GMWDA within the time limit set out in regulation 32(5).
Without limiting the foregoing, any information disclosed pursuant to this request should include the following:
(1) The Project's original evaluation criteria…
(2) Sita's evaluation score at appointment of Preferred Bidder against the Evaluation Criteria;
(3) The score obtained by the Viridor Laing consortium at appointment of Preferred Bidder against the Evaluation Criteria;
(4) The score obtained by Viridor Laing (Greater Manchester) Limited at contract award decision against the Evaluation Criteria;
(5) Confirmation that the Evaluation Criteria was applied without amendment in relation to the decision to award the contract to Viridor Laing (Greater Manchester) Limited compared to that which was applied at appointment of Preferred Bidder;
(6) All changes (if any) including any changes in weighting or required as a result of changing any scope of Works or Services to the Evaluation Criteria which were applied in relation to the decision to award….
(7) An explanation of each change made to the Project documentation and associated agreements since appointment of Preferred Bidder which has, or can reasonably be expected to have, led to any change in the:
(i) value of prices bid, capex, financing costs or otherwise;
(ii) the allocation of risk between the parties;
(iii) risk profile of the Project generally.
…..
(8) An explanation of any changes to the technical solution….including (without limitation) a detailed explanation of the financial impact of such change on the Project….
Please also treat the above requests as requests for information under the Freedom of Information Act 2000 (FoIA) and the Environmental Information Regulations 2004 (EIR)."
In the penultimate paragraph the letter asked for a copy of the contract to be entered into with VL. The letter ended by reserving the right to challenge the award.
"Without prejudice to that limitation, and in order to comply with the Authority's duties under the Alcatel principles, we respond to the requests you have enumerated in your letter to a greater extent than your entitlement, but not to the full extent of your request, which seeks more information than the 2006 Regulations and Alcatel principles would require.
(1) The Evaluation Criteria for the project were provided to you as part of the Invitation to Tender. These criteria were applied by the Authority in respect of the valuation of all tenders received in response to the ITT and in respect of the Best and Final Offers submitted by Sita and Viridor Laing (Greater Manchester) Limited.
(2) We enclose a further copy of the Authority's letter of 26th January 2007 and a note of the de-brief meeting which was held on 30th January 2007 following the selection of Viridor Laing (Greater Manchester) Limited as Preferred Bidder. These give full details of the scores achieved by the Sita consortium and Viridor Laing (Greater Manchester) Limited in respect of the various standard and varied bids submitted. We also attach a schedule showing a breakdown of such scores, which was given to you at the debrief meeting. We note that it is common ground that the Preferred Bidder approach was to be and was, in fact, adopted.
You are not legally entitled to any further information. What is provided now is without prejudice to that position. Both Viridor Laing (Greater Manchester) Limited and the Sita consortium submitted in their BaFOs alternative facilities as back-up for the EfW element of the Project. Viridor Laing (Greater Manchester) Limited offered a combined Heat and Power facility located at the Ineos Chlor Site as Runcorn. At the request of the Authority, Viridor Laing (Greater Manchester) Limited were invited to develop the solution further in the course of the negotiations following their appointment as Preferred Bidder. To satisfy itself that Viridor Laing (Greater Manchester) Limited should remain the Preferred Bidder based on the Runcorn Facility being the EfW facility for the Project, the Authority re-evaluated the Viridor Laing (Greater Manchester) Limited bid once the solution had been developed. The same Evaluation Criteria, weightings and methodology were applied as had been applied at ITT and BaFO. On the basis of this, the Preferred Bidder decision was not undermined. On the basis of this evaluation, the Authority resolved at its meeting on 29th June 2007 to proceed with the Runcorn facility as its EfW facility.
(3) See response to (2) above.
(4) The decision to appoint Viridor Laing (Greater Manchester) Limited as Preferred Bidder was made by the Authority on 26th January 2007 based upon the evaluation of the Best and Final Offers. Viridor Laing (Greater Manchester) Limited were then invited to negotiate with the Authority towards a financial close of the Project as anticipated under the competitive negotiated procedure. The details of these negotiations are confidential. However, as noted in paragraph (2) above, the Authority did re-assess the Viridor Laing (Greater Manchester) Limited score on the basis of the Runcorn Facility.
(5) See response to (1) above.
(6) See responses to (1) and (4) above.
(7) The Authority is unable to provide you with the information requested, as to do so would be likely to prejudice the legitimate commercial interests of Viridor Laing (Greater Manchester) Limited and/or otherwise prejudice fair competition between economic operators in the waste market…. Nevertheless the Authority is committed to openness and transparency and, again without prejudice, to the limits of its [duties], it proposes to publish on the Authority's website the Project Agreement [i.e. the contract] once it has been executed, with appropriate redactions. It is our view that such publication will provide you with at least as much as, if not more then, the information to which you are entitled in law.
(8) See responses to (4) and (7) above."
"The majority of the funding for the Greater Manchester world class waste solution has already been secured through strong collaborative activity, during these recent challenging economic conditions. This includes a capital contribution of £70m from the Authority in respect of additions that have been made to the works originally procured. The balance is subject to the credit committee approvals by the commercial banks."
Miss Rose said that that demonstrated that important additions at extra capital cost had been made. That was also relevant to the transfer risk, which in turn impacted on the viability of the project. It is said that all that would have been obvious to, and known to, Sita.
"Greater Manchester Waste Disposal Authority (GMWDA) today announced that it has signed a 25 year Private Finance Initiative waste and recycling contract with Viridor Laing (Greater Manchester) Limited. Today's detail will trigger a £640m construction programme, creating a network of state-of-the-art recycling facilities over the next five years. During this period, it is estimated that at least 5,000 much needed jobs in the building trade and the wider economy will be added to the 620 jobs at GMWDA based in Bolton, which are secured and upskilled to "green collar" jobs by the contract. Viridor Laing (Greater Manchester) Limited are planning to increase the permanent workforce by another 116 staff once the facilities are up and running. This contract is worth £3.8 bn to Viridor Laing (Greater Manchester) Limited and will increase costs (at today's prices) to Greater Manchester householders by £1 per week. However, this compares favourably with the cost of a "do nothing build nothing" option which would cost an extra £2 a week, mostly in landfill tax and penalties."
"In my last letter to you I referred back to an earlier letter of mine dated 9th May 2008 addressed to Paul Gavin. In that letter I gave an indication that the Authority would be publishing the Project Agreement on its website with appropriate redactions, once that agreement had been executed.
I want to give you the reassurance that the Authority will be fulfilling that promise and aims to place the project agreement, appropriately redacted, on its website in the very near future. As soon as I have a specific date for such publication, I will let you know."
"I note from announcements and press reports that the signed PFI contracts estimated costs to Greater Manchester's residents will amount to circa £3.8bn over the PFI contract's term involving £640m of capital works and employing 736 people. I need not remind you that, in comparison, Sita Consortium's BaFo bid had an overall value of circa £3.3bn, Works of £413m and employed 651 people. Bearing in mind:
we believe there is a prima facie case to answer by GMWDA in respect to its compliance with its legal obligations under Procurement Regulations.
Without prejudice to any further claims we may have, we believe that it is absolutely necessary for us to carry out a full and detailed evaluation of our BaFo bid against the final PFI Contract in order to satisfy ourselves that we have not been treated unfairly and nor have we been discriminated against.
I also remind you of the Sita Consortium BaFo feedback attached to the Authority's "Alcatel" notice of 26th January 2007 which stated:
"We reserve our rights to refer this matter to the European Commission. We also [reserve] our rights to claim damages for loss of opportunity on future profits (circa £90m NPV) and wasted bid costs (circa £2.5m)."
"All the tenders received were compared and assessed objectively. From the detailed debrief we provided, you should be able to see that. You should also be very reassured that even after the award was made in April 2008, the relative scoring was monitored to ensure fairness was being maintained as matters evolved and progressed. As a result, the Authority entered into the contract with Viridor Laing (Greater Manchester) Limited because that contract best fulfilled the criteria we had set to judge most economically advantageous tender [sic] which in turn reflected the conditions necessary to meet the Authority's needs and the needs of our citizens.
Your letter makes a number of assertions and, from these, seeks to extrapolate or infer a series of unfounded and untrue allegations, as a result of which you request a number of documents and explanation.
With respect, you are not entitled to make such requests.
When the Authority wrote to Sita on 18th April 2008 informing you of its decision to award the contract to Viridor Laing (Greater Manchester) Limited, it was envisaged – indeed, expected – that the contract would have been entered into shortly thereafter.
However, as became universally the case throughout the entire PFI market, certain financing issues then arose, euphemistically now referred to as the credit crisis. Given the unique set of economic circumstances which we have all been enduring over the last 12 months or so, and indeed are ongoing, it will come as no surprise to you that, in the event, these issues took longer to resolve than could have been anticipated. Clearly, though, they have now been, and indeed we believe we are the only major PFI scheme to have achieved this."
"I am disappointed that in your letter of 18 May you felt unable to address the questions I properly raised and to provide the requested information. As you know, the PFI Contract has continued to be of interest to Sita, not least because of our continued appointment as Reserve Bidder. Accordingly, I have included in this letter detailed reasons (which largely re-iterate my previous letters to you and Tim Date) why we believe that GMWDA has breached its obligations to Sita under procurement law (together with detailed legal corroboration. Hopefully you will be in no doubt that GMWDA must provide the information Sita has requested.
It seems to us perverse that GMWDA should think it appropriate to inform us that the contract had at last been signed, draw our attention to a Press Release which showed that the contract had been let at sums substantially higher than our own bid, but failed to provide us with any further debrief information. According to your letter of 18th May 2009 such information is readily available to you (the "relative scoring was monitored" and the contract now entered into with Viridor Laing (Greater Manchester) Limited is "the most economically advantageous"), and the delay in disclosure of the Project documents unnecessary.
According to your own press release…[VL's] headline figure is 15% more expensive than Sita's tendered bid (£3.8bn as against circa £3.3bn), the cost of capital works 55% more expensive (£640m as against £413m) and the head count 13% higher (736 as against 651). These very substantial increases raise obvious questions as to why the Sita bid was not reconsidered. I also note the statement in your letter dated 18th May 2009 that after the award was made in April 2008, "the relative scoring was monitored to ensure fairness was being maintained as matters evolved and progressed". The phrase "evolved and progressed" and your later references to "financing issues then arose" are a strong inference of renegotiation of the contract terms following appointment of preferred bidder and the issue of the Alcatel letter which, as this letter sets out, is a clear breach by GMWDA of its duties (including fairness) to unsuccessful bidders. I believe that these matters require further explanation as we have previously requested. In particular, you have not offered to provide the analysis and conclusions from subsequent monitoring of relevant scores after April 2008. I would expect that funders (particularly if not involved at BaFO stage) would have wanted to re-assess the risk allocation and that any changes to the Project documents would encompass changes in price and risk allocation.
If Viridor/Laing were unable to confirm their funding arrangements and/or contract on the terms they had offered at BaFO stage, then their bid should have been rejected, and Sita should have been offered the contract on the terms they tendered. The failure of GMWDA so to act is a breach by GMWDA of the Public Services Contract Regulations 1993….and [the 2006 regulations].
If GMWDA found that in such circumstances Sita was also unable to fulfil the terms that it had tendered, then a further round of negotiations would have been required in order to establish which of the parties could, in the new economic situation, put the most economically advantageous tender. The failure of GMWDA so to act, or set out its intention to so act, if Sita could not supply the contract on the terms it tendered, is a further or alternative breach of the Regulations referred to above.
….
It is irrelevant whether, if it is the case, GMWDA is of the view that, in the changed economic circumstances Sita could not now provide a tender that offered better value for money than Viridor/Laing. GMWDA cannot possibly know that. That is a question that must be expressly explored with us, particularly as Reserve Bidder, and one which we remain willing to consider on a competitive basis, as will have been clear from our continuing interest in the contract.
In any event, Sita's bid was clearly more robust than Viridor/Laing's in respect of any worsening economic conditions. According to GMWDA's letter of 26th January 2007 "the Sita bid scored higher with respect to the credibility of the financial assumptions used and high interest cover ratios. However this higher score was offset in part by the more expensive cost of debt". Thus GMWDA [sic] themselves had already established grounds for assuming that Sita would be likely to improve their bid relative to Viridor/Laing in the light of the change in economic circumstances.
If there has been a readjustment of the risk between GMWDA and the Contractor, then that is a further breach of the regulations, amounting to a material change in the specifications. Further facts would emerge when the Project documents are published. Such publication ought to clarify matters in favour of the Viridor/Laing bid, according to the reassurances you have sought to give, and accordingly we can see no reason for any further delay. However, we will also need to know what changes were made since the appointment of Viridor/Laing as preferred bidder and what was negotiated before.
Finally, by way of introduction, we object to your characterisation of your earlier letter as based on 'rumours, untruths and spin'. Our letter was based principally on the facts set out in your own Press Release when compared with our own tender. Insofar as allocation of risk is concerned, this is a matter on which you will be obliged to provide information through publication of the Project documents in any event."
"The delay was caused principally through Viridor's further development of the Combined Sheet and Power facility offer, at the request of GMWDA."
Then it says:
"In the present case, the PFI contract that has been entered into is clearly not the contract in respect of which Sita was debriefed in January 2007. We were aware of certain changes relating to the construction works to be provided by Laing which prompted our letter of 16th April 2008. This letter is not concerned with those changes, but the changes we now learn of through the press release of 8th April 2009 which we believe required the authority to carry out a further debrief. Accordingly, by way of a further breach, GMWDA has unlawfully entered into a 'new' contract with [VL] without providing Sita with the necessary debrief and opportunity for challenge under the 2006 Regulations (Regulation 32).
Whichever regulations apply, Sita may in any event apply to the court to have the award and contract set aside on the Alcatel principles.
(iii) The materiality of the changes.
It is well established that under all the procedures, whether open, restricted or negotiated, no post-tender negotiations are permitted. No tender is entitled to increase its price after the conclusion of the award process, and no changes to the specifications are permitted, otherwise the process is clearly and demonstrably unfair to those tenderers not offered the same opportunity.
In respect of the negotiated procedure, the OGC has made clear that negotiations are permitted until the final assessment of bids only…
(iv) The further assessment process
According to the GMWDA letter of 18th April 2008, the scores of Viridor/Laing and Sita had remained unchanged, when compared in their BaFO submissions. On that basis the financial scores were 28:30 in VL's favour. However, consistent with the application of the criterion of the "most economically advantageous tender", GMWDA was required to consider all the options according to their total scores. The order was Viridor/Laing MSB1, Viridor/Laing MSB3, Sita VB1. Thus if Viridor/Laing was unable to supply either MSB1 or MSB3 at the costs tendered, GMWDA was obliged to consider Sita's next tender, VB1.
(v) Promptness
Sita is keenly aware of the requirement to bring proceedings promptly. It sought information on 18th April 2008, following which it was assured on 9th May 2008 that a reassessment of [VL's] bid had not changed the ranking, and that the Project Agreement, giving further information, would be published in due course. On the basis of the facts then supplied, Sita had suffered no 'loss' nor 'risk of loss'.
On 16th April 2009 GMWDA drew Sita's attention to a Press Release, giving information concerning the signing of the agreement with [VL], together with the pricing information set out above. Sita subsequently sought a further Alcatel letter and further information was refused.
GMWDA has again offered further, though less clear, assurances that a proper assessment still favours [VL]. In the light of the facts supplied in GMWDA's Press Release, Sita is no longer able to rely on those assurances. Those facts provide clear evidence of material breaches of the Regulations. Sita is entitled to such information as will enable it to know whether the contract has been lawfully awarded and entered into: Rapiscan v HMRC…
In the circumstances, if GMWDA continues to refuse further information, Sita will have no choice but to bring proceedings on the basis of the information so far available; to seek from the court an order that further information be supplied, to apply for an order that the contract be set aside, alternatively that no further steps be taken to implement the contract pending further resolutions of the matters.
In the circumstances, we invite GMWDA to provide the necessary further information as a matter of urgency in order to comply with the appropriate pre-action protocol, and to avoid an application to the court, should that prove necessary. As already noted, the necessary information is, according to your letter of 18th May 2009, readily available, as is the Project Agreement.
We would normally have invited GMWDA to extend the time for bringing proceedings, but given that the application will include an application to set aside the contract (which we would expect in the circumstances, to have been entered into on a conditional basis) further delay would seem inappropriate."
"(a) Failure to provide sufficient debrief information to enable Sita to know why it remains unsuccessful and/or the characteristics and relative advantages of the contract finally awarded and entered into with [VL]….
(b) Wrongly entering into a contract with [VL] in breach of [regulations].
(c) Wrongly allowing [VL] to improve the terms of its offer, after the conclusion of the BaFO stage and award; failing to reject Viridor/Laing's bid when it was unable to offer the terms of their BaFO and wrongly failing to then offer the contract to Sita. Further, so far as may be relevant, (if Sita could no longer fulfil the terms of its offer), failing to reopen negotiations with both parties….
(d) Wrongly, if it is the case, changing the specifications with regard to the allocation of risk as between Viridor/Laing and GMWDA…
(e) Acting without regard to, and in breach of, the over-riding obligations of fairness and equal treatment in all these matters.
In the circumstances, please confirm that you will provide the information we properly requested in our letter of 21 April 2009. Due to the shortness of time, we would be happy to receive the information through a detailed de-briefing, and we note that you have already carried out relative scorings since April 2008. However, as Sita does not want to prejudice the undoubted grounds it has for legal challenge, then we must insist that such confirmation is provided within the next five working days….with the debrief to be held no later than the end of next week….Sita can then reconsider whether to issue proceedings in respect of some or all of the above breaches."
It is GMWDA's case that this letter demonstrates that Sita knew all that it needed to know in order to understand (if it were the case) that there had been an infringement of the regulations as now relied on. It sets out clearly what it knew and its sources, and none of its sources of information were later than the announcement of the final contract. Sita was busy drawing conclusions and was able to make categorical and firm allegations of breach. It even threatened proceedings. Furthermore, it was also alive to the possibility of time bars.
"The proposals in relation to the Runcorn site were in the public domain due to the planning requirements at least from the summer of 2007, and were mentioned in GMWDA's correspondence to you on 9 May 2008. Further, whilst these developed proposals and the subsequent planning permission obtained for the Ineos Chlor facility qualitatively improved the VL bid, there was no rescoring of the VL BaFO upwards….
Accordingly, there was and has been no change to the technical specifications as set out at the BaFO stage when both Sita and VL were last in competition with one another. The modifications detailed above did not alter the scope and characteristics of the PPP beyond what was contemplated in the contract notice, and nor were they so substantial, individually or collectively, as to be likely to have attracted prospective tenderers who did not consider tendering following publication of the original contract notices….
In order to confirm that the post-preferred bidder discussions did not undermine the original decision as to which tendered offered the best bid, in July 2007 GMWDA carried out a reassessment of the relative positions of the VL bid as further developed in relation to the Ineos Chlor facility and Sita's BaFO bid, which obviously concerned a different geographical location. From this reassessment, GMWDA felt confident about proceeding to award the contract to VL. Once again, such a step was in line with best practice…."
Mr Bowsher points out, correctly, that this letter does not refer to the December 2007 exercise and what was said about scoring there. This letter does not otherwise add to the knowledge that Sita already had (such as it was) of any infringements or grounds for bringing proceedings, as Mr Bowsher conceded. It ended by referring to time limits:
"GMWDA very much hopes that this letter will sufficiently address the outstanding procurement concerns which Sita had in relation to this procurement exercise. However, we must stress that if you do initiate legal proceedings against us, we will seek to strike out the proceedings (whether for an interim application, final order or both) on the basis that Sita has no genuinely good arguable case and also the claim is, in any event, out of time."
"Due to the inconsistencies and lack of clarity in the information you have provided and refusal to provide information we requested in our letter of 18th April 2008, 22nd December 2008, 21st April 2009 and 27th May 2009, we have asked Michael Bowsher QC…. to review the correspondence between GMWDA and Sita and what follows in this letter is his analysis of the law you have propounded and Sita's position in this regard.
The relevance of Alcatel and whether the 1993 or 2006 regulations apply
…
The fact that Sita did not pursue any challenge a year ago does not establish that there were no grounds for complaint then. In any event, the matters we are concerned about post-date those events and the question is therefore whether those more recent events give rise to a claim. Such a claim could not have been made a year ago, and the fact that there was a purported compliance with the Alcatel-type requirements then cannot protect GMWDA from negotiations subsequent to the Alcatel letter provide the grounds for a challenge….
Whether the changes would have affected Sita and VL equally.
Since we are not yet clear what changes have been made to VL's bid, save that the price has changed substantially (at least a 15% increase overall, including a 55% increase in capital costs being the best information we have), we are unable to comment in detail on whether the Sita bid would have been affected equally by the relevant changes, but the evidence so far is clear enough, and our further enquiries can hardly be described as 'fishing'. As to 'fishing', tenderers are entitled to such information as will enable them to pursue their rights, and a request for a proper debrief can never be regarded as mere 'fishing', even without any evidence of breach.
….
On the subject of finance, which we infer (on present information) is a major issue, it should be noted that Sita's offer comprised senior debt which was 100% underwritten by both RBS and HSBC and there is no reason to believe that Sita could not have achieved financing on better or equivalent terms to VL. Indeed, we would have expected to have obtained alternative finance, if necessary, without increasing its cost, or without increasing it as much as VL, noting that our financial position was more robust than VL's. But the point is that we should have had the opportunity of maintaining our offer, or of making an alternative offer to be compared with that of VL, given the substantial, as opposed to immaterial, changes that appear to have resulted.
….
Conclusion
We reiterate that GMWDA is in breach of its obligations under the applicable procurement regulations….and in particular the underlying obligations of equal treatment and transparency, in proposing to contract with VL on a basis which has changed materially, which was the subject of the procurement procedure and the award made in April 2007. This letter is to be treated as further formal written notice of Sita's intention to bring proceedings under both of these sets of regulations in respect of those breaches.
However, it would be more efficient, cost effective and more sensible for any legal proceedings to go forward only on a focused basis. Accordingly, we continue to seek full information on the nature and extent of the changes you have introduced into the contract with VL since we were debriefed so that we can be sure that these proceedings are properly focused.
[Further information is then sought]
We should then be able to verify whether the increase in VL's price was due to financing issues arising from the collapse in the financial market (and which any bidder would have faced) or other matters for which Sita may have been able to be more competitive.
In the absence of prompt disclosure of such information, we will either seek an order from the court for such information or, alternatively, issue proceedings and seek it through the process of disclosure. It seems likely to us that the appropriate course will be to commence proceedings on the basis of our letter of 27th May 2008, as further considered above, including for failures to provide adequate information to satisfy obligations of transparency and equal treatment. However, once the claim form is issued and served, we will immediately seek directions for early disclosure of specific documents (probably those identified above), and for deferral of the service of any Particulars of Claim until appropriate disclosure has taken place and we are able to take such disclosure into account.
….
Please respond to me within the next ten days in order to confirm we can have access to the information we have requested and the process for providing the information."
"If the requested information is not forthcoming then, in order to minimise any further delay in obtaining the information Sita is entitled to in order to assess its remedies for breach of procurement law, we have instructed Michael Bowsher QC and Jennifer Skilbeck of Monckton Chambers to issue and serve proceedings next Tuesday (30 June). The purpose of issuing proceedings will be in the first place, to request the court to order the authority to supply the required information and, secondly, to obtain damages, should the information reveal a breach of the regulations, as seems to be the case. I hope that this does not prove necessary and I await your reply on Friday.
It should be emphasised that Sita is not seeking to obtain information concerning the VL tender for any other purpose than to establish the changes to it since award and debrief are material and unlawful. That information should be capable of supply without there being any question of the disclosure of commercially sensitive information. If we do not receive this information we shall, of course, proceed initially on the basis that the information disclosed in the Press Release provides prima facie evidence of a very material and unlawful increase in price, post-award. Further, that it was negotiated in circumstances in which Sita offered to re-enter the process itself when it became clear that a contract had not been concluded with VL and that that offer was refused."
"We expect you not to issue proceedings before you have seen and considered our response, which ought to reassure you that there has been no breach of the relevant procurement regulations."
Sita responded that on the following day (26 June):
"I agree that it would be preferable not to issue proceedings until we have seen the information you are currently preparing. However, we will need to issue proceedings as a protective measure unless you are able to give us an assurance that you will not raise any limitation point against us on account of that delay.
Please confirm by the end of Monday (30 June) that you undertake not to raise a limitation point in respect of any delay in issuing proceedings until further notice, such notice to include five working days.
Upon receipt of such undertaking we will defer issuing proceedings."
That was met by an email from GMWDA on 29 June:
"For the avoidance of doubt, however, we will not take any limitation point in respect of any extra time it takes us to respond beyond 26 June 2009, provided any proceedings which you elect to bring are issued no later than five days after our substantive response to your letter – which we anticipate being with you shortly."
"I note that you have not supplied any information relating to VL's BaFO bid as requested in our letter of 24 June, nor have you explained the changes in VL's Bid between January 2000 and April 2008. Your latest letter indicates (for the first time) that there were significant and material changes in the VL's Bid (including price) between January 2007 and April 2008 which meant that even before April 2008 VL might not have been competitive with Sita's final BaFO bid submitted 5 January 2007 including…. [various matters]
Your letter seems to ignore the movement pre-April 2008 and implies that Sita's position is that we are happy with everything that happened pre-April 2008. This is not the case….
From the information supplied in your letter of 3 July there seems to be little doubt that there were material contractual amendments between appointment of preferred bidder and the "Alcatel" letter which were not explained (and GMWDA declined to explain in its letter of 9 May 2008 and subsequently) which indicate that Sita could have been successful if it had been allowed to bid under those contractual terms. On the information before us there is no doubt in our minds that GMWDA is in breach of its obligations under the applicable procurement regulations…
Accordingly we believe that if GMWDA do not disclose full details of VL's BaFO bid as requested in our letter of 24 June and details of when and in what context VL's Unitary Charge had increased to £3,439bn by March 2008 then Sita will, in the absence of prompt disclosure of such information, either seek an order from the court for such information or, alternatively, issue proceedings and seek it through the process of disclosure.
Unless you confirm by noon on Wednesday (8 July) that GMWDA (a) will provide this information and (b) will extend its undertaking that for the period that this information is outstanding and a further five workings days for Sita to consider this information, you will not raise any limitation point against us on account of that delay, then we will defer such court proceedings. Otherwise we will commence court proceedings after Wednesday in order to obtain the information we seek."
Thus this letter shifts the focus, or perhaps broadens it, to the earlier period, claiming increases in price in that period were relevant for the purposes of a claim for infringement of the regulations. Whether that is significant is something I deal with below.
"We will by 17 July 2009 provide you with a detailed explanation of the circumstances in which VL's Unitary Charge increased between its appointment as on 26 January 2007 and the Alcatel letter.
For the avoidance of doubt, we will not take any limitation point in respect of the time it takes us to provide this information, and VL's final BaFO as requested in your 24 June 2009 letter, provided any proceedings which you elect to bring are issued no later than five days after our provision of this information."
The significance of this last paragraph is that it offers a further extension of the limitation period. VL's final BaFO was never provided. Mr Bowsher took the point of the hearing before me that that meant that the limitation period remained open and that his proceedings were brought in time.
"Whilst previous letters highlight and point to numerous potential breaches of procurement law, your new information strongly supports our concern that GMWDA does indeed have a prima face case to answer for serious deficiencies in the way it conducted the PFI Contract's procurement. There is much in your letter which we are concerned about, but it would be more constructive for us to reserve our position generally on the letter and to confine our points made below to our key concerns."
Those concerns are then set out and towards the end of the letter it set out some more information it required under "Next Steps". It went on:
"So you can be in no doubt, if GMWDA are not prepared to agree to our reasonable requests, then we will have no option but to issue proceedings to require same. Please confirm by the end of Monday 27 July that this information will be provided. Please also confirm that GMWDA will extend the date for which it will not take any limitation point for a further five working days following receipt of this information."
In its response of 27 July 2009, SJ Berwin said:
"This letter constitutes GMWDA's response to your letter of 24th July …
"We see no basis at present to justify any further extensions of time. It is clearly in the interests of all parties to have certainty and finality in respect of this procurement and to avoid incurring any further unnecessary costs."
There was no response to this letter until a letter from Messrs Osborne Clarke, solicitors for Sita, dated 26 August 2009 which set out a summary of Sita's complaints. The letter stated that they anticipated issuing and serving proceedings during the course of that week without further notice. The claim form was in fact issued on the next day (27 August) and particulars of claim followed on 11 September.
The claim as set out in these proceedings
"The Defendant, a 'contracting authority' for the purposes of the Public Services Contract Regulations 1993 and the Public Contract Regulations 2006, sought tenders for the provision of a PFI waste contract by an advertisement placed in the Official Journal of the EU on 2 February 2005. The Claimant tendered and wished to be awarded the contract. In breach of its duty to the Claimant under either or both sets of Regulations, the Defendant failed in its obligation to assess the tender so as to identify the 'most economically advantageous tender' in the manner required by Regulation 21(1)(a)(1993 Regulations) and/or Regulation 30(1)(a)(2006 Regulations) and/or acted in breach of the EU law obligations of fairness, equal treatment and transparency in its conduct of the tender process. In further breach of the Regulations and/or the same obligations of transparency, the Defendant failed to inform the Claimant of the characteristics and relative advantages of the successful bid. Alternatively, by virtue of the same facts and matters, the Defendant is in breach of a contract between the Claimant and the Defendant, which is to be implied from their relationship in this process. The Claimant seeks damages for the Defendant's failure to award the contract to the Claimant and/or for the Claimant's loss of the chance of being awarded the contract and/or the Claimant's waste of tender costs."
i) A failure to provide proper information in the Alcaltel letter and debriefing in May 2008.
ii) A failure to provide information (essentially another Alcatel letter) before contracting in April 2009
iii) Providing misleading information as set out in paragraphs 64 to 66.
i) The debrief information in May 2008 relied on assessments in January and June 2007. In fact that material was out of date because there had been further assessments in July 2007 and December 2007, and a further re-evaluation in April 2008. This is pleaded in paragraph 64 (an original, not an amended, pleading).
ii) The de-briefing was partially postponed in May 2008 by virtue of the indication that the VL contract would be published; and that element was never completed because when provided (in 2009) it was heavily redacted. This is pleaded by amendment in paragraphs 64A and 64B.
iii) GMWDA continued to rely on the de-brief information of in subsequent correspondence up to July 2009. See paragraph 65 (an original paragraph).
iv) A failure to provide a further Alcatel letter in April 2009, in the face of a request that one be provided.
i) The 8th April 2009 press release showed a very substantial increase in costs. This averment was displaced by the amendments.
ii) EY concluded that Sita's original BaFO bid scored similarly to VL's updated bid.
iii) The January assessment showed the parties' best bids. Subsequent assessments were on different assumptions.
iv) Unjustifiable assumptions were made as to the likely increase in Sita's bid (old paragraph 73(d)).
i) GMWDA had no basis on which it could have concluded in June 2007 that the BL Ineos Chlor bid scored similarly to its original bid.
ii) It is impossible to follow the assumptions of December 2007 on which it was concluded that Sita's bid and VL's current bid scored similarly.
iii) Some information is given in sub-paragraph (v), the effect of which is not clear. What is clear to me, however, is that in its last sentence that sub-paragraph misrepresents the report in question. The substance of the pleading is that EY had stated that they had insufficient evidence to draw conclusions as to MEAT. The actual paragraph, which is in evidence, is one in which EY point out to the Authority that further financial modelling is expected, and only then would the Authority be able to form a final view that the VL bid remained the most economically advantageous tender. The actual wording has a very different thrust from that suggested in the pleading.
What are the "grounds" for the bringing of these proceedings – how narrowly or widely is that to be construed?
i) Paragraph (a) and its reference to breach. The two concepts are closely allied in this context.
ii) The wording of Article 1 of the Directive, where "grounds" is clearly an overall concept synonymous with the concept of infringement rather than all the facts which gave rise to the infringement.
What degree of detail of knowledge is required for the purposes of the knowledge requirement?
"43. Only once the unsuccessful tenderer or candidate has been informed of the essential reasons of his being unsuccessful in the award procedure may it generally be presumed that he knew or in any case ought to have known of the alleged breach of procurement law. Only from then on is it possible for him sensibly to prepare a possible application for review and to estimate its chances of success. Before receiving such reasons, on the other hand, the person concerned cannot as a rule effective exercise his right to a review."
Miss Rose emphasised the word "essential" and said that that determined the level of information required. The information required is the essential reasons indicating a prima facie case. One did not necessarily need detail for this purpose, and in this case the detail provided in the 4th July letter was not necessary. Mr Bowsher did not address particular submissions to this point, but maintained that on the facts his client did not know enough to be able to plead a case before July. He relied on Letang v Cooper [1965] 1 QB 232, Nomura International plc v Granada Group Ltd [2008] Bus LR 1 and Clarke v Marlborough Fine Act (London) Ltd [2002] 1 WLR 1731 as justifying his client in waiting, if not requiring it to wait, until it had enough facts, or knew enough, to justify commencing an action. He said that until July his clients would have been able to identify facts consistent with a breach, but not facts which demonstrated breach. It is implicit in his submissions that his client required detail as to how the breaches arose before the clock started running.
Whether and when Sita knew of the infringements
i) It actually asserts a breach of obligation under procurement law.
ii) It acknowledges that the facts known to it about the increases in cost (which it knew about from the April press release, at the latest) "raise obvious questions" as to why the Sita bid was not reconsidered – the allegation that lies at the heart of the present claim.
iii) It refers to "strong evidence" of a re-negotiation, which is a "clear breach" by GMWDA of its duties.
iv) It asserts that the failure to offer Sita the contract was a "breach" by GMWDA of the Regulation.
v) There are other plain claims of breach in the passages set out above.
vi) Sita felt able to draw inferences from the facts in the press release.
vii) It was aware that the contract entered into was not the contract in respect of which Sita was de-briefed in April 2008, though it expressed itself not be concerned with that.
viii) It was aware that it had not had a further de-brief in April 2009, and asserted a right to complain about that.
ix) The facts provided "clear evidence of material breaches".
x) It actually threatened proceedings. That cannot properly be done unless the threatener believes he has a basis for that (or, in the terms of the Regulation, grounds).
xi) It demonstrates an awareness of time running. That is only a relevant thing to be aware of if there is also an awareness of the significance of that (limitation). It therefore amounts to an implicit acknowledgment that Sita is aware of grounds for bringing proceedings.
i) The reiteration of an allegation of breach. The nature of the breach is proposing a contract with VL the basis of which has changed materially since April 2007.
ii) The letter is explicitly a statutory letter before action. One cannot allege breaches without knowing of breaches, so in my view that makes the state of knowledge explicit.
iii) It threatens proceedings, to be commenced "on the basis of our letter of 27 May 2008". This further propounds that letter as a letter before action, and demonstrates knowledge as at 27th May of the existence of a claim. The claim is said to be one based on lack of transparency and failure to afford equal treatment. That, broadly, is the nature of the claims ultimately made in the current proceedings.
Knowledge of grounds – conclusions on the facts
i) Failure to provide an Alcatel letter in April 2009.
ii) An inadequate Alcatel debrief in April/May 2008 – breach of duty of transparency. The inadequacy is set out in paragraph 63 of the proposed Amended Particulars of Claim.
iii) A failure to deal fairly with Sita and in accordance with the duties to Sita as prescribed in the Regulations because the procedures intended to procure the most economically advantageous tender required, on the facts, that Sita be allowed to re-submit a bid.
Time bar – the result
Agreed extensions
A further discretionary extension
i) The public interest in proper scrutiny of GMWDA's conduct in this matter.
ii) GMWDA's own conduct, including its "notable lack of openness in relation to the increase in capital costs" for the two year period between January 2007 and April 2009.
iii) The absence of prejudice to GMWDA arising from the delay.
iv) Sita issued promptly after the letters of 3rd, 17th and 27th July.
Those points are all elaborated.
"That is no doubt for the good policy reason that it is in the public interest that challenges to the tender process of a public service contract should be made promptly so as to cause as little disruption and delay as possible. It is not merely because the interests of all those who have participated in the tender process have to be taken into account. It is also because there is a wider public interest in ensuring that tenders which public authorities have invited for a public project should be processed as quickly as possible."
Obviously the context of those remarks is different from the context of the present case, but it (and the actual decision on that case) does betoken a strict approach to the exercise of discretion. Similar remarks, albeit again in different context, were made by Buxton LJ in Matra Communications SAS v Home Office [19992] 1 WLR 1646 at pp 1657B and 1663D. Those cases support the proposition, which I find to be accurate, that a strict approach should be taken with an eye firmly on the policy reasons for prompt challenges.
Ms Wolfenden correctly points out the public interest in the integrity of public procurement procedures. It is one of the drivers underlying giving the disappointed tenderer a remedy in the first place. She also points out that this is a big contract, and that the claim is potentially big and serious. All those factors are true. They are, however, of little weight in favour of exercising the discretion. They are the reasons why the remedy is there in the first place. That remedy is subject to time bars. So the time bars in principle override even if a claim is prima facie good and big. The latter factors are not a particularly good reason for overriding the time bar. The nature and size of a claim is not always irrelevant to the discretion. One can imagine circumstances in which the weakness or small size of a claim tells against the exercise of a discretion, but as factors in favour of it the size of a claim and its merits are weak.
This is a reference to the fact that GMWDA did not make the full necessary disclosure of what had happened after VL acquired its preferred bidder status, and to the fact that what was disclosed is said to have elements of the misleading about it. GMWDA's communications were said to have been "carefully crafted" to supply very limited information. It is said that had it acted with appropriate transparency the claim would have been brought much earlier. GMWDA, which had the benefit of lawyers throughout, took the risk of a substantial damages action in making the limited and careful disclosure that it did.
At one level this is correct as a matter of fact. GMWDA has not identified any degree of prejudice which will be suffered by it if this claim is allowed to proceed which it would not have suffered had proceedings been commenced in July. The absence of prejudice would be a potentially relevant factor if there were other factors which supported the exercise of the discretion, at least in the sense that the existence of prejudice would point the other way. But as a separate factor it is of little weight. A short time period for the commencement of proceedings has been imposed in the interests of good public administration and so that public procurement authorities can know as soon as possible whether or not one of its exercises is being challenged. The existence of such a claim, let alone its being established, is capable of causing significant disruption to the public finances and the deliberations of those who have to plan budgets and recovery. The short time bar period is intended to limit the effect of that. Time bars are potentially draconian in their effect in that they are mechanical and absolute, and are not based on ad hoc prejudice considerations. The fact that no additional prejudice is sustained a week, two weeks, or a month after the lapse of the period is not, of itself, a good ground for extending the period. As a matter of fact it is likely to be the case in a large number of situations but is beside the point.
Since those letters were irrelevant to the knowledge of the cause of action which had accrued, it is irrelevant that the proceedings were issued promptly after them. In any event, I do not consider that they were. The letter of 3rd July is the watershed letter, according to Sita. It is that letter which told it what it wanted to know. Even if it were the case that it could be said that somehow Sita was justified in not issuing until that time, issuing on 27th August does not amount to promptness, in the circumstances. It is a month and a half afterwards, and anything but prompt in the circumstances. The two later letters were further requests for further information. If a litigant could claim discretionary extensions for as long as he was pursuing requests for information which might be thought to be justifiable or sensible in themselves, there would no end to it. They are in my view irrelevant to this point on any footing.
Conclusion