21 August 2015 #Public Procurement
In a recent decision, the Northern Irish High Court has lifted the automatic suspension in a procurement challenge brought by Allpay against the Northern Ireland Housing Executive. This is interesting because in recent years the Northern Irish courts have appeared to adopt a more contractor-friendly approach to applications to lift the suspension, unlike the English courts where upholding the suspension is rare. However, the facts of the particular decision go some way to explain why the court decided against the contractor in this instance.
The claim concerned a tender for the provision of services for processing payments received by the Housing Executive in its role as landlord of 90,000 properties across Northern Ireland. Allpay’s grievance stemmed from a requirement in the tender documents that customers should be offered a Maximum Transaction Value (“MTV”) of no lower than £220. Allpay was only able to offer a MTV of £200, while the successful tenderer (and incidentally the incumbent) was able to provide a MTV of £300. This, amongst other reasons, led to it being awarded the contract.
Allpay brought proceedings against the Housing Executive alleging that the tender process had failed to comply with the requisite standard of transparency required under Public Contracts Regulations 2006 (now superseded by the Public Contracts Regulations 2015). In particular, Allpay complained that the tender documents failed to state that the MTV was a mandatory requirement, how a MTV of less than £220 would be marked, and that on the face of it, the MTV appeared to apply only to cash payments. Allpay also argued that the Housing Executive was in breach of the principle of equal treatment in their consideration of the successful tenderer’s bid, as the high MTV value put them at a disadvantage to the successful tenderer, who was the only tenderer able to satisfy the criteria. Finally, Allpay said that the successful tenderer’s offer was abnormally low and that the Housing Executive was under a duty to investigate this.
The issuing of proceedings led to an automatic suspension of the award of the contract, which the Housing Executive then sought to lift. When looking at applications of this type, the court asks three questions: is there a serious question to be tried? Would damages be an adequate remedy for the unsuccessful bidder? And where does the balance of convenience lie (taking into account public interest and the strengths and weaknesses of each party’s claim)?
The court decided that Allpay’s claim failed on the first question: there was no serious issue to be tried. While the tender documents could have been better drafted, their requirements were still clear to the reasonably well-informed and diligent tenderer. Allpay had sought express clarification during the tender process and knew that the MTV was a mandatory requirement. The court also found that even if there had been a serious issue to be tried, damages would be an adequate remedy for Allpay. The Housing Executive was under no obligation to investigate the successful tenderer‘s abnormally low offer, as it currently charged these prices so they were clearly sustainable. Even if there had been a reasonable suspicion that the successful tenderer‘s bids were abnormally low, the need to investigate would only have arisen had the Housing Executive contemplated rejecting the bid because they was abnormally low. The balance of risk therefore came down in favour of the Housing Executive and lifting the suspension.
What is clear from this case is that whilst the Northern Irish court has often appeared to adopt a more contractor friendly position, there is a limit to how friendly this position will be. In this instance, the decision seemed clear cut and the court described the Housing Executive’s case for lifting the suspension to be “overwhelming”.