In public contract tendering disputes, judges are often called upon to strike a delicate balance between commercial interests and the benefits of awarding important public service contracts promptly. A High Court ruling provided a classic illustration of how such countervailing factors are placed on the scales.
The case concerned a contract for the supply of equipment to vulnerable people to enable them to live independently in the community. The contract, which was the largest agreement of its kind in the UK and possibly in Europe, was put out to tender on behalf of a consortium of local authorities.
After a company that had for some years been the incumbent provider of the relevant equipment lost out to a trade rival in the procurement exercise, it launched proceedings, alleging numerous flaws in the tendering process. By operation of the Public Contracts Regulations 2015, the award of the contract was automatically suspended. The consortium, however, applied for the suspension to be lifted.
Ruling on the matter, the Court noted that it was, at this stage, impossible to reach any concluded view as to the strength or weakness of the company's claim. It was satisfied, by the narrowest of margins, that the company was at risk of sustaining irremediable harm, in the sense that it could not be adequately compensated by damages, if the contract were wrongfully awarded to its rival.
That risk was modest, however, and the impact on the company, save in terms of lost profits, had been markedly overstated. Although the loss of the contract would decrease the scale of its business and result in the loss of some specialist staff, it would remain a significant participant in what was a growing market.
If the suspension were maintained, the consortium would, pending judicial resolution of the dispute, be prevented from awarding the contract for more than a year. During that period, it would be unable to put in place what it viewed as an improved service. The lengthy delay in awarding the contract would also put the rival to considerable inconvenience and expense.
The company genuinely believed that the rival's tender was unrealistically priced and that it would not be able to perform the contract as well as the company would have done. The rival was, however, a substantial business with considerable experience in the field and there was no basis for finding that the new arrangements would break down. Overall, the Court found that the balance of convenience came down in favour of lifting the suspension.
Our expert lawyers can advise you on any contractual matter. On contract wording please contact Ian Sheppard i.sheppard@sydneymitchell.co.uk on dispute resolution and litigation matters on 08081668827..
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