QUEEN'S BENCH DIVISION
Strand, London, WC2A 2LL
B e f o r e :
| M. Holleran Limited
|- and -
|Severn Trent Water Limited
Stephen Smith QC and Hugh Mercer (instructed by Fisher Scoggins) for the Defendant
Hearing dates: 27th & 28th October 2004
Crown Copyright ©
Insert Judge title and name here :
"Is the Claimant's claim barred by the operation of Regulation 32(4) of the Utilities Contracts Regulations 1996?"
It is accepted by both parties that this issue involves both a determination of the operation of the bar provided by that regulation and the question whether any extension should be granted in accordance with its terms.
"Proceedings under this regulation may not be brought unless-
(a) the provider bringing the proceeding has informed the utility of the breach or apprehended breach of the duty owed to him pursuant to paragraph (1) [or paragraph (1A)] above by that utility 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 3 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."
"15 Call for competition
(1) Subject to regulation 16, for the purposes of seeking offers in relation to a proposed contract a utility shall make a call for competition.
(2) The requirement under paragraph (1) above to make a call for competition shall be satisfied
(a) In the case of a contract to be awarded using the restricted or negotiated procedure
(ii) if a notice indicating the existence of a qualification system for providers has been sent to the Official Journal in accordance with regulation 18(12) and the requirement referred to in paragraph (4) below is satisfied; or .
(4) The requirement referred to in paragraph (2)(a)(ii) above is that the providers selected to tender for or to negotiate the contract are selected from the candidates who qualify in accordance with the system.
18 Qualification system for providers
(1) A utility may establish and operate a system of qualification of providers if that system complies with the following paragraphs of this regulation.
[(1A) The utility shall permit providers to apply for qualification under the system at any time.]
(2) The system may involve different stages of qualification and shall be based on objective rules and criteria as determined from time to time by the utility using European standards (within the meaning of regulation 12(1)) as a reference when they are appropriate.
(3) The rules and criteria shall be made available on request to providers and any amendment of those rules and criteria shall be sent to them as the amendment is incorporated into the system.
(4) A utility may establish a system of qualification pursuant to which a provider may qualify under the system of, or be certified by, another person, and in those circumstances the utility shall inform providers who apply to qualify of the name of that other person.
(6) In determining what rules and criteria are to be met by applicants to qualify under the system and in determining whether a particular applicant does qualify under the system a utility shall not impose conditions of an administrative, technical or financial nature on some providers which are not imposed upon others and shall not require tests or the submission of evidence which duplicates objective evidence already available.
(8) An application may only be refused if the applicant fails to meet the requirements for qualification laid down in accordance with paragraph (2) above.
(12) The utility shall send a notice [in the form of the qualification system notice in Annex XIII to the Utilities Directive] and containing the information relating to the qualification system therein specified to the Official Journal when the system is first established and, if the utility expects to operate the system for more than three years, or if it has operated the system for more than three years, it shall send additional notices annually.
19 Selection of providers in the restricted or negotiated procedures
(1) A utility using the restricted or negotiated procedure, with or without a call for competition, shall make the selection of the providers to be invited to tender for or to negotiate the contract on the basis of objective criteria and rules which it determines and which it makes available to providers who request them.
20 Consortia and Corporations
(2) A utility shall not treat the tender of a consortium as ineligible nor decide not to include a consortium amongst those persons from whom it will make the selection of persons to be invited to tender for or to negotiate a contract on the grounds that the consortium has not formed a legal entity for the purpose of tendering for or negotiating the contract; but where a utility awards a contract to a consortium it may, if to do so is justified for the satisfactory performance of the contract, require the consortium to form a legal entity before entering into, or as a term of, the contract.
21 Criteria for the award of a contract
(1) Subject to regulation 22, a utility shall award a contract on the basis of the offer which
(a) Is the most economically advantageous to the utility; or
(b) Offers the lowest price.
(2) The criteria which a utility may use to determine that an offer is the most economically advantageous include delivery date or period for completion, running costs, cost effectiveness, quality, aesthetic and functional characteristics, technical merit, after sales service and technical assistance, commitments with regard to spare parts, security of supply and price."
i) One service ("UVDB Buyer") enables utility companies to interrogate the database using set parameters to shortlist contractors which they might wish to approach to take part in a tendering exercise.
ii) Another service offered to utility companies ("UVDB Verify") is the standardised verification and assessment of all potential contractors in respect of their systems and processes for health and safety, environmental and quality of work.
iii) A further service effected by Achilles is that of assisting utility companies with the object of complying with the requirements of procurement legislation including a "call for competition" which, in accordance with Regulation 15(2)(2), in the case of a qualification system, requires a notice in the Official Journal of the European Union (OJEU) that satisfies the requirements of the Regulations and follows the format of Annex XIII. This refers to Common Procurement Vocabulary Codes (CPV) but made it plain that these were not a compulsory component of such a notice. Achilles drafted a notice for STW for a qualification system which was intended to apply to AMP4. This was approved by Mr. Goddard of STW and was sent for publication in the OJEU. Although the approved draft contained various CPV codes, including particularly those for "collected and purified water and water distribution" and "construction work", for reasons which are not apparent, the OJEU did not include these particular codes amongst those which were included in the Notice.
i) A claim that, when sending a Qualification Systems Notice to the OJEU on 12th May 2003, which was published on 20th May 2003, STW failed to comply with the requirements of the Regulations inasmuch as the document did not adequately notify the existence of a Qualification System or set out a call for competition in respect of the project AMP 4 which STW was planning. No failure to comply with the express requirements of Annex XIII appears to be alleged.
ii) A claim that, in breach of the Regulations, potential contractors were not treated fairly and equally, inasmuch as some (namely previous main contractors) received a letter dated 9th June 2003 telling them of the Notice in the OJEU and inviting them to a workshop on the 19th June 2003 when presentations were made of the selection process to be employed for AMP 4.
iii) A claim that on 25th July 2003, unfair selection criteria were posted on STW's website including a requirement for a contractor to have an annual turnover of £32 M and stating that consortia could be formed to meet this requirement between entities individually registered with Achilles UVDB, but that information about any such joint ventures would have to be made known to STW in writing by 1st August 2003. Holleran maintains that the publication of these criteria and the time scale imposed were inappropriate and unreasonable and amounted to discrimination against potential consortia, including Holleran who would have wished to form such a joint venture, if it had known of the criteria with sufficient time to do so.
iv) A claim that, in response to Holleran's letters of 11th and 27th August 2003, STW breached the Regulations in confirming that Holleran, having an annual turnover of less that £32 M, was out of time in respect of any notification of a joint venture and in refusing to extend the time for doing so.
The relevant events
1.3 "The UVDB will be the first stage of qualification and will either be used as the basis for tenderer selection or may be supplemented by additional qualification criteria established by the utility in specific product or service areas. The UVDB will also be used as the first stage of qualification for contractors and engineer consultancy service providers for AMP4 (2005-10) which will also include UVDB verify process"
"Suppliers or contractors who have already registered on the UVDB need not reapply but may wish to ensure that they are entered under all relevant product service categories"
"1.2 This notice is a call for competition: yes"
"Holleran wish to express their interest in being included in the contractor selection process and look forward to being given the opportunity of completing your pre-qualification questionnaire.
We note that Holleran's name has been placed under Specialist Sewerage for which we are indeed listed in UVBD. We are also listed under code 3.72.02 & 3.72.03, and also wish to be considered under the heading Infrastructure for which we would consider a joint venture relationship to achieve the £32 M turnover required. I also note on your web page that JV's should have been notified to STW by 1st August. Is it now too late to do so? I unfortunately did not pick up this information at the time it was posted and I seem to have missed out on your selection briefings."
"Thank you for your enquiry of 11th August. Unfortunately it is now too late to consider a JV for the infrastructure list as the deadline has now expired."
"If you are not in a position to rectify the position by extending the deadline, please advise us of the relevant details of the adverts placed etc. as we shall certainly be taking legal advice. It is our preliminary assessment that this work falls within the European Procurement Directives and therefore must be let in compliance with them."
"The information we previously supplied to you regarding request to be considered as a Joint Venture still stands. It will be inequitable to reopen the selection process for yourselves alone. For further information on our selection process please refer to our company website."
"This work was high risk and was only suitable for companies with a full backup organisation in the area. Had we prospects in a share of the clean water work as anticipated when we took over the Eade organisation, I would have applied for this work as part of a wider service. Without such local resources, the dirty water work was too risky and too small to warrant importation of labour from other areas. Regretfully I had to decline the invitation. But I did think or at least hoped that the fact that Ian (Elliott) personally wrote to me represented at least a first move by STW towards rehabilitating us. I was conscious that the selection process was very leisurely and felt that some accommodation remained possible."
The application of Regulation 32(4)
i) Mr. Webber, in the first paragraph of the 11th August e-mail, referred to the positive pre-qualification in relation to sewerage contracts and expressed interest in completing the questionnaire and in selection for that work. In the second paragraph he expressed Holleran's wish to be considered for infrastructure work for which Holleran would consider a joint venture relationship to achieve the £32 M turnover needed. He then asked if it was too late to notify a joint venture because he had discovered the 1st August deadline. The short answer, given by STW on the 12th August, was that it was too late to consider a joint venture for the infrastructure list because the deadline had expired.
ii) On the 27th August Mr. Holleran, in his letter to STW, referred to the earlier letter as a request to be permitted to make an application and then asked for an extension of the deadline. The answer received was negative.
iii) In its statement of case, Holleran maintains that the letters of 12th and 28th August from STW, in refusing an extension of time, amounted to a breach of the regulations.
iv) It is hard to see how a request for an extension of time and a refusal can give rise to a free standing breach of the Regulations if the earlier alleged breaches do not amount to such. If an adequate notice was sent to the OJEU and if there was no discrimination in the later publications, whether those setting out criteria or deadlines, it cannot be a breach to maintain those criteria and deadlines when asked to vary or modify them in the absence of some extraordinary reason for so doing. When the only reason given for doing so is a failure to ascertain the existence, or understand the terms, of what were, on this hypothesis, a compliant notice, compliant criteria and compliant deadlines, without any unfair discrimination, there can be no question of any separate breach.
v) In reality, the letter of 12th August merely confirmed the deadline in circumstances where there had not been an express request for an extension. The letter of the 28th August did refuse an extension which had been requested the previous day but in neither case is it arguable that this amounts to an independent breach of the Regulations in the absence of any earlier breach.
vi) The clear purpose of alleging a breach on the 12th or 28th August is to bring a claim within the time limit prescribed by Regulation 32(4)(b) but, since these complaints are unarguable, they do not assist the Claimant. An attempt was made to link the 25th July allegation to the 12th and 28th August "breaches" and to suggest that the alleged discrimination of the 25th July did not constitute a completed breach of the Regulations until an extension of time was refused, but not only did the statement of case plead a completed breach on 25th July but it is self-evident that, if there was a breach in notifying a consortium deadline of 1st August, that occurred on 25th July and not at some later stage when an extension was refused.
"Insofar as the applicants impugn the strict application of the promptness requirement in that it restricted their right of access to a Court, the Court observes that the requirement was a proportionate measure taken in pursuit of a legitimate aim. The applicants were not denied access to a Court ab initio. They failed to satisfy a strict procedural requirement which served a public interest purpose, namely the need to avoid prejudice being caused to third parties who may have altered their situation on the strength of administrative decisions."
Extension of time