09 October 2018 #Public Procurement
We are often consulted by clients wishing to challenge the outcome of tenders which are not governed by the Public Contracts Regulations 2015, Concession Contracts Regulations 2016 or Utilities Contracts Regulations 2016, usually because the value of the tender is not high enough to meet the financial thresholds over which the Regulations apply. It is sometimes still possible to challenge the outcome of a below-threshold tender, if it can be shown that there was, or would have been, cross-border interest in the contract. In that case, general EU Treaty principles of transparency, proportionality and non-discrimination will still apply to the conduct of the tender, and a challenge may be possible if it can be shown that the public body has breached one of these principles.
But what does cross-border interest actually mean and how can it be demonstrated? This is one of the issues the court looked at in the recent case of Ocean Outdoor UK Limited v London Borough of Hammersmith and Fulham. The claim concerned the grant of two leases of advertising space on the Hammersmith flyover. The unsuccessful bidder, having failed in its argument that the Concession Contracts Regulations 2016 applied to the contract in question, said that nonetheless general Treaty principles applied to the tender and had been breached.
The court said that the test is an objective one: would the realistic hypothetical European bidder have bid for the contract had the opportunity arisen? In this case, it found there was insufficient cross-border interest. Although advertising is a global industry and the location of the space – on a major route into London – was capable of attracting international interest, the land was located in London and the Council was an English local authority. The Council had in fact sent messages regarding the opportunity to a number of potential bidders who were located outside of the UK, and none of them expressed any interest or submitted a bid. As such, the court determined that there was no evidence that a realistic hypothetical bidder would have bid for the leases, and the tender was not subject to general EU Treaty principles.
Although the outcome of below-threshold contracts can be challenged in appropriate cases, this decision underlines the need for genuine evidence of cross-border interest in a contract before the courts will allow a challenge based on general EU principles to proceed.