As those who contract or tender with the public sector might know, the EU Remedies Directive was brought into effect in the UK around Christmas through the introduction of the Public Contracts (Amendment) Regulations 2009. 

The regulations, which only apply to procurement projects that started after the new rules came into effect on 20 December 2009, were created with the specific intention of making it easier for a tenderer who hadn’t succeeded or was concerned about, foul play to bring a challenge. 

Essentially, the changes introduce differences in the regulations that mean public authorities are now required to notify unsuccessful tenderers of the reasons for their decision in detail, including the characteristics and relevant advantages, rather than waiting for a request from a losing bidder. Guidance from the Office of Government Commerce (OGC) dictates that this should include a full breakdown of scores against each evaluation criterion and sub-criterion with a narrative explanation of why the winner scored more favourably. Unsuccessful bidders should be given a helpful indication of the way in which the winning tender was better than theirs.

Declaration of Ineffectiveness
Traditionally, companies who were unhappy that they were not awarded a contract had a difficult decision to make in terms of moving forward, ideally going to court for an injunction, which required very quick action and would typically be expensive.

While this remedy is still available, a new right is created to apply for something called a Declaration of Ineffectiveness – the effect of which is that if such a declaration is made, a contract agreed with another tenderer can become legally ineffective, even if signed, sealed and delivered.

The power to obtain a Declaration of Ineffectiveness is quite narrow and it is necessary to prove one of three particular grounds. These are: that the contract was awarded without a contract notice, which is unusual but sometimes authorities argue that they did not need to advertise a project; a breach of the standstill provisions or some other order suspending the contract; or that the contract is based on a framework arrangement but the way the contract was made breaches the provisions relating to that framework.

If any of the above grounds can be applied, getting a Declaration of Ineffectiveness is a virtually automatic right, unless the authority involved can sustain the argument that the effect of overturning the signing would be so major that there are overriding reasons that the contract signed should be allowed to go ahead. If you obtain a declaration, then the contract must stop and be retendered.

It is worth looking at the new regulations at an early point to see whether the provisions have been met and, if they have not, you should draw them to the attention of the authority as soon as possible. Unfortunately, because the new regulations only take effect with regard to procurements started after December, and some of these processes take many months, particularly in large and complex projects, the full effect of the new regulations will not be felt for some months, but we are keeping a close eye on the situation. We have recently been involved in a successful challenge where a print contract was not awarded and we are certainly seeing more businesses that are now prepared to challenge.

We are also seeing more public bodies, when faced with a challenge, stopping and deciding to run the procedure again if there is a hint that its been done incorrectly, rather than withstanding a serious challenge.

We are yet to see authorities building in longer lead times between tender and award and commencement to allow for challenges, but this may change.

Philippa Dempster is a partner and head of commercial services at law firm Freeth Cartwright