Procurement in the Pandemic and the Rise of Challenges by Judicial Review

The future of public procurement in light of Good Law Project’s recent victories in the High Court

Questions regarding the conduct of government ministers carrying out pandemic-related procurements have captured the public’s attention. Reports suggested that emergency procurements at the height of the COVID-19 crisis, which resulted in the award of six-figure contracts, were conducted without compliance with proper procedure.

Enter Good Law Project (GLP), a not-for-profit organisation that has now succeeded on two separate occasions in persuading the High Court that government ministers acted unlawfully in pandemic-related procurements. Underlying GLP’s challenges, and of relevance, is the critical preliminary question of whether non-economic operators have the standing to bring judicial review claims for infractions of procurement law[1]. Considering each GLP case in turn, this article explores the court’s latest words on non-economic operators challenging procurement decisions through judicial review and the implications for contracting authorities.

Good Law Project v Secretary of State for Health and Social Care

In February 2021 the High Court held that, when awarding contracts during the COVID-19 pandemic, the Secretary of State for Health and Social Care failed to comply with obligations under both Regulation 50 of the Public Contracts Regulations 2015 (PCR) and the Government’s Transparency Policy.

A preliminary issue for the court was whether the claimants had standing to bring the claim. The court applied the (obiter) principles set out by the Court of Appeal in Chandler [2] to determine that GLP did have standing to bring the challenge.  Having the requisite standing ordinarily arises in cases where the applicant is affected in some identifiable way by the challenged decision. However, in some instances the “gravity of departure from public law obligations[3] will justify a finding that an applicant has sufficient interest in the matter to which the claim relates. Put simply, where there is no economic operator who would be well placed to bring the claim, the question of standing becomes: is the alleged departure from public law obligations so serious that it is in the public interest to determine that a challenger has standing?  In the absence of an economic operator who could realistically bring the challenge – and given both the value of the contracts and GLP’s expertise in this area – the court held there was a powerful public interest in granting GLP standing to bring the challenge.

Good Law Project v Minister for the Cabinet Office  

In June, the High Court declared that the decision of the Minister for the Cabinet Office to award a £560,000 contract for the provision of communications services during the pandemic gave rise to apparent bias and was unlawful.

The main issues for the court to decide were:

  • whether GLP had standing to bring the claim by way of judicial review;
  • whether the requirements for making a direct award under Regulation 32(2)(c) PCR had been satisfied; and
  • whether the decision to award the contract to Public First gave rise to apparent bias (actual bias was not alleged).

The court held that GLP did have sufficient standing to bring the challenge. Adopting the reasoning of the judge in the first claim, the court held that the claim was not one that an economic operator could realistically be relied on to bring: the contract was awarded without competition so there was no disgruntled bidder that might challenge the procurement process, and any other economic operator would struggle to establish financial loss (without which no claim would be actionable). The court also considered that GLP had a sincere interest in promoting good public administration, and that the gravity of the issues justified the scrutiny of the court.

In relation to the substantive issues, the court held that:

  • the conditions for making a direct award under Regulation 32(2)(c) were satisfied; but
  • the decision to award the contract to Public First gave rise to apparent bias and was, therefore, unlawful.

The court found that the “fair minded and informed observer” could conclude that there was a real possibility that the decision-maker was biased. This was because the decision-maker’s personal connection to Public First might be seen to compromise their impartiality and give rise to concerns of favourable treatment. In such circumstances, there needed to be a clear record that the decision was made using objective criteria. Additionally, while the departure from usual procedure was not a circumstance giving rise to apparent bias, it nonetheless meant that there needed to be evidence that the decision was reached fairly.

On the PCR issue, the court held that the defendant could rely on Regulation 32(2)(c) due to the urgent and extreme circumstances of the pandemic. The court accepted that services had to be procured quickly and a conventional procurement would have taken too long. However, the court’s decision on the issue of apparent bias demonstrates that even if an emergency justifies the abandonment of a competitive process, there is no justification for conduct which may be perceived as compromising a contracting authority’s impartiality.

Implications for contracting authorities

Following GLP’s success, questions regarding the availability of judicial review as a means of challenging procurement decisions by non-economic operators have become less clear cut than the position post Waverley[4]. However, the latest interpretation of Chandler expressed in the first case, having been reaffirmed in the second case, should hopefully clarify the correct position on the standing of non-economic operators; namely, that these claimants will have standing to challenge procurements when:

  • they have a sufficient interest in compliance with the public procurement regime, in that they are affected in some identifiable way by the challenged decision; and/or
  • the gravity of a departure from public law obligations justifies a public law remedy, even if they are not personally affected.

As government ministers have recently discovered, the availability of judicial review to claimants like GLP in the second of these circumstances highlights the fundamental importance of the obligations contracting authorities owe under public law, in addition to the duties they owe to economic operators under the PCR. With another judgment imminent and further judicial reviews in the pipeline, these developments  should serve to remind all contracting authorities of the fundamental importance of adhering to basic principles of public law.

Contracting authorities should now, therefore, be more mindful of the public law factors applicable to procurement decisions. A failure to do so may, in some cases, lead to judicial review challenges on the grounds of unlawfulness, irrationality, procedural unfairness, or legitimate expectation.

  • Unlawfulness. When the decision-maker misdirects itself in law, exercises a power wrongly, and/or acts outside of its powers (ultra vires). This would include a failure to comply with the PCR (if required) or local government legislation concerning procurement decisions (where applicable).
  • Irrationality. A decision may be challenged if it is so unreasonable that no reasonable authority could ever have come to it (Wednesbury[5] unreasonableness). Irrationality may exist where a contract is awarded to the ‘wrong’ tenderer based on published evaluation criteria. The procurement law basis of challenge of manifest error has been held to be similar to or the same as Wednesbury irrationality[6].
  • Procedural unfairness. If the decision-maker has not properly observed the relevant statutory procedures and/or there has been a failure to observe the principles of natural justice in the decision-making process (such as if the decision-maker has shown bias or has failed to hear an affected party). These requirements overlap with express obligations under the PCR.
  • Legitimate expectation. A public authority may, by its own statements and/or conduct, be required to act in a certain way, where persons have an expectation as to the way in which it will act. This ground requires a clear and unambiguous representation on the decision-maker’s part as to the way in which it will conduct itself.

There are some similarities between public law duties and duties owed in procurement law to economic operators. For instance, the avoidance of apparent bias, the ground successfully argued by GLP in the Public First case, has parallels with the duty on contracting authorities under PCR Regulation 24 to properly manage conflicts of interest. Nevertheless, these overlaps do not assist in answering the practical question of whether the duties owed to an economic operator under procurement law can be enforced by a non-economic operator whose interest in the decision is derived from some wider public law imperative of securing observance of procurement law.

With further decisions pending, a position may emerge whereby factors such as the general importance of a procurement and its wider public interest (alongside the gravity of the alleged non-compliance) will prove sufficient to have standing. These factors ought to restrict challenges being brought by non-economic operator claimants simply as a fallback way of trying to stop a project [7].

To read more about the decisions discussed in this article, please click on the links in the case names above.

Our Team

We have expertise in advising contracting authorities on a multitude of issues relating to public procurement, including procurement challenges. As public sector specialists, our experts are on hand to advise contracting authorities on how to comply with both the procurement regulations and the other public law obligations outlined above.

[1] Under S. 31 (3)of the Senior Courts Act 1981 no application for judicial review can be made unless the applicant has sufficient interest in the matter to which the application relates

[2] R (on the application of Chandler) v Secretary of State for Children, Schools and Families [2009] EWCA Civ 1011, [2010] P.T.S.R. 749, [2009] 10 WLUK 252.

[3] R (on the application of Chandler) v Secretary of State for Children, Schools and Families [2009] EWCA Civ 1011, [2010] P.T.S.R. 749, [2009] 10 WLUK 252.

[4] R. (on the application of Wylde) v Waverley BC [2017] EWHC 466 (Admin).

[5] Associated Provincial Picture Houses Ltd v Wednesbury Corporation [1947] EWCA Civ 1.

[6] See, for example, BY Development v Covent Garden Market Authority [2012] EWHC 2546 at paragraph [11].

[7] As was the case in Chandler and in R (Kathro) v Rhondda Cynon [2001] 4PLR 83 – a challenge on a number of grounds including PFI funding and the choice of procurement procedure – “The claimants have not been shown to be affected in any way by the choice of tendering procedure. They have seized on the point simply as a fall-back way of trying to stop the project” at paragraph [77].

This article is for general awareness only and does not constitute legal or professional advice. The law may have changed since this page was first published. If you would like further advice and assistance in relation to any issue raised in this article, please contact us by telephone or email enquiries@sharpepritchard.co.uk

Posted in Judicial review, Latest news and blog, Procurement, Procurement challenges.