Procurement in a nutshell – the question of standing in judicial review claims
5th May, 2017
A recent decision by the High Court has provided further guidance on the ability of non-economic operators to bring procurement challenges by way of judicial review.
This update provides a summary of the decision in Wylde and others v Waverley Borough Council [2017] EWHC 466, as well as considerations for contracting authorities (CAs) following the judgment.
Background: judicial review
The statutory cause of action under the Public Contracts Regulations (PCR) 2015 is only provided to “economic operators” – contractors, suppliers or service providers (i.e. disappointed or potential tenderers). However, public procurement decisions taken by most CAs may also be subject to judicial review.
To bring an application for judicial review, a party need not be an economic operator but must have “sufficient interest” in that matter.
Standing is a question of fact and degree. The court will have regard to the relationship between the claimant and the matter to which the claim relates and all other circumstances of the case.
The facts
The case concerned a development agreement between Waverley Borough Council and an interested party, which was entered into following a competitive process in 2003.
A “viability condition” in the contract established minimum financial thresholds for the profit level to be achieved by the interested party and for the land value to be generated by the Council.
In May 2016, the parties agreed to reduce the financial targets in order to enable the viability condition to be met. In November 2016, a voluntary ex-ante transparency (VEAT) notice was published by the Council giving notice of the variation. The notice received no responses from economic operators.
A challenge was brought by a group of five claimants – all taxpayers – which comprised two councillors from Waverley Borough Council and three members of local civic societies.
None of the claimants were economic operators and none had bid for the original contract. They challenged the contract variation of May 2016 on the grounds that it constituted a new contract which required a fresh procurement procedure.
The decision
It was held that the claimants did not have standing to bring the claim. The question considered by the High Court was whether the claimants had “sufficient interest” in the matter.
The claimants argued that they met this requirement by virtue of being council tax payers, members of relevant local authorities and people concerned in relation to the impact of the proposed development agreement.
The court focused the conventional assessment on standing on the purpose and policy of the PCR 2015, which was expressed as twofold:
- to provide for an open and transparent system for the competition for public contracts, in the interests of securing a fair and efficient market for those contracts; and
- to provide a bespoke system of remedies for parties directly involved in competing for such contracts and participating in the market for them.
It was therefore considered consistent with the purpose of the Regulations to confine standing to those economic operators who could show “that performance of the competitive tendering procedure…might have led to a different outcome that would have had a direct impact on them”.
Accordingly, the court held that the claimants in this case did not have standing for the following reasons:
- the publication of the VEAT notice demonstrated that there was no competing interest; and
- the claimants could not show that a competitive tendering exercise for the varied contract would produce a different outcome.
Why is this important?
This case represents a shift in the High Court’s approach to the question of standing in judicial review claims relating to procurement.
The decision differs to that which might have been expected given the High Court’s ruling in Gottlieb v Winchester City Council [2015] EWHC 231.
Gottlieb had very similar facts – the claim related to a development agreement, was contended on the grounds of a breach of the procurement regulations and was brought by a non-economic operator claimant – yet in that case the claimant was deemed to have standing to bring the claim.
The divergent approaches create scope for the matter to be decisively determined and it is likely that there will be further judicial input (and hopefully clarification) on this issue in the future.
Assuming that it is followed, the approach taken by the High Court in Wylde provides some reassurance to CAs in that it restricts the ability of interested parties to bring judicial review challenges based on breaches of the procurement regulations.
Nevertheless, this does not remove the need for CAs to ensure that full compliance with the procurement regulations is achieved, in order to ward off the potential risk of challenges from both aggrieved economic operators and any interested parties who might have standing to bring a claim.
How can I find out more?
If you have any queries on the issues raised or on any aspect of procurement, please contact us via our procurement hotline on 0191 204 4464.
Please note that this briefing is designed to be informative, not advisory and represents our understanding of English law and practice as at the date indicated. We would always recommend that you should seek specific guidance on any particular legal issue.
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