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No time to lose: Delay and challenges to public procurement

If you want to challenge a decision to do with public procurement, time is of the essence. The Court of Appeal has reiterated this warning in one of its last decisions of the term: R (Nash) v Barnet LBC [2013] EWCA Civ 1004.

The background

Mrs Nash is a resident of Barnet in North London. When the local council took a decision to outsource some of its services to private organisations, she was far from happy.

At council meetings in November 2010 and March 2011, the Council decided to initiate a public procurement process, with the idea that a competitive tender would invite bids from private organisations interested in providing the relevant local services.

Ultimately contracts were awarded to the successful bidders in January 2013.

Mrs Nash had deep political objections to the idea of the Council outsourcing its services.  Naturally the merits of the outsourcing proposal were not something on which the Courts could adjudicate in her claim for judicial review.

Mrs Nash therefore decided to attack the Council’s scheme by arguing that the Council had failed to consult with local residents properly before pressing ahead with the outsourcing scheme. The problem facing her, however, was that she didn’t issue her claim for judicial review until January 2013.  In other words, she waited to see if the Council did ultimately decide to outsource its services and award contracts accordingly. Ultimately, however, this proved to be her downfall.

The first instance decision

When the case came before Mr Justice Underhill in the Administrative Court (now Lord Justice Underhill), he dismissed the claim on the basis that it had been brought woefully out of time. Mr Justice Underhill concluded that although Mrs Nash was purporting to challenge the award of contracts to successful bidders in December 2012 and January 2013, she was in fact seeking to challenge the decisions in November 2010 and March 2011 to initiate the procurement process, meaning that her claim had been brought many, many months outside the time limit for issuing a judicial review claim (the time limit being within three months and in any event promptly).

In the Court of Appeal

The Court of Appeal decided that Mr Justice Underhill was right: since Mrs Nash was challenging the Council on the basis that it allegedly failed in its statutory duty to consult the local community, the grounds for the claim must have arisen when a decision was first taken in respect of which such a duty applied.  In this case the first time a decision was taken in respect of which the Council should have consulted the local community was when it first decided in 2010/11 to initiate a procurement process to outsource its services. 

The Court of Appeal emphasised that a claimant cannot bide their time to see if a decision they are unhappy with ultimately materialises into a concrete action worth challenging.  Lord Justice Davis summed the position up neatly when he said:

“The choosing of the decision made on 6 December 2012 as a peg on which to hang this claim in fact seems to me to be almost adventitious.”

The consequences of the decision

Reading the judgment of the Court of Appeal, the decision is made to sound remarkably obvious and straightforward. The amount of argument needed in the case and the fact that it came from two of the leading administrative law silks, is a reminder that the case was actually much more complex. The consequences of the decision – for claimants, for public bodies and for the workload of the Administrative Court – may prove to be very significant.

When a public body kickstarts a process which a claimant believes has been started unlawfully, that claimant will understandably be reluctant to incur the costs of judicial review proceedings in circumstances where the process may not lead to any disagreeable result. That was exactly the gamble which Mrs Nash took: she knew that just because the Council had taken the decision to initiate a procurement process, that did not mean that the Council would ultimately decide to go ahead with the idea of outsourcing its services. She knew that it was open to the Council to decide along the way that outsourcing would not be a good idea after all and that the Council would therefore not proceed with a full tender process. Mrs Nash decided to bide her time and only decided to resort to the Courts once the tender process was complete and contracts were awarded.

The message which claimants will take from Mrs Nash’s case is that they need to issue judicial review proceedings at the earliest possible moment in the procurement process to avoid being too late. Inevitably this will lead to an increase in challenges to public procurement processes at their early stages, whereas previously many challenges may have never ended up being brought at all because the procurement process concerned never ended up proceeding or at least never ended up proceeding to the negative result feared by the claimant.

Thus it seems that at a time when the Government are trying hard to close the doors of the Admin Court to many claimants, the Court of Appeal is wedging them firmly open in an area of law which attracts some of the highest value judicial reviews. In a sense, the Court of Appeal could be said to be inviting claimants in public procurement cases to try their luck with the merits of their claim at an early stage even before it is clear whether the procurement process in question will lead anywhere of concern.

How the Admin Court will cope with an increased workload when the backlog it is already facing is already an issue of concern remains to be seen.

The decision can be criticised for running counter to the long-established principle that judicial review is a remedy of last resort. Encouraging litigants to bring claims which may ultimately have proven unnecessary seems to be unfortunate.

However on balance it is a decision to be welcomed. The Court of Appeal has brought some common sense and a pragmatic approach to the difficult issue of delay in procurement cases. Those of us who practice in public procurement law know only too well the cost involved and time expended by public bodies in carrying out procurement exercises. If an aspect of the exercise is unlawful, then it is unlawful from the moment it arises – it does not become unlawful only when the procurement process is complete and contracts are awarded, leaving disappointed bidders and interested parties looking for a way to unravel the entire process.

It would lead to extraordinary wasting of public money if litigants were to be allowed to sit back and allow a flawed procurement exercise to be carried out, only to step in and challenge it at the eleventh hour after large sums of money from the public purse and countless hours of manpower have been expended during the process.

Given the commercial pressures which present themselves in procurement cases, the need for cases to be brought promptly is of paramount importance – more so than in many other areas of public law. The decision in R (Nash) will require claimants to think very carefully about the merits of a potential claim before they resort to drafting their grounds.  However the legal certainty and commercial viability of procurement processes which will result from the decision is a welcome development.