Suspension on DIT campus contract lifted

About this case:

• Judgment:
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The automatic suspension had resulted from judicial review proceedings brought by BAM PPP PGGM Infrastructure Cooperatie U.A., who sought an order setting aside the decision of the respondents to accept a late tender submitted by a consortium called Eriugena.

The challenge had been brought under the European Communities (Public Authorities’ Contracts) (Review Procedures) Regulations 2010, as amended by the European Communities (Public Authorities’ Contracts) (Review Procedures) (Amendment) Regulations 2015.

These combined Regulations allow for the automatic suspension on the conclusion of a public authorities’ contract in cases of a challenge.

The Regulations also allow for a challenge of that suspension to be brought before the High Court. It was such a challenge that was now before the High Court.

BAM had contended that the combined Regulations should be disapplied as incompatible with the EU Directive 2007/66/EC of the European Parliament and of the Council of 11 December 2007, as this Directive required the suspension on concluding a contract to stay in place until the determination of proceedings.

However, the Court found that such a submission was incorrect, as the 2007 Directive was not concerned with the review of an interim decision, as was the subject of the current case.

In fact, it found that by providing for an automatic suspension to arise upon review of an interim decision, Ireland had “gilded the European lily”, introducing a benefit that EU did not require.

Thus, allowing for the lifting of automatic suspension in such cases was well within Irish “territory”, and was entirely compatible with the EU Directive.

The Court then outlined the relevant provisions for a consideration of whether to lift the suspension as those contained within Regulation 8 of the amended Regulations.

These provisions required the Court to consider whether, if no automatic suspension had been applied, it would be appropriate to grant an injunction restraining the contracting authority from concluding the contract.

If such an action would not have been appropriate, the Regulation allowed the Court, upon application being made to it by a contracting authority, to lift the automatic suspension, and specify any additional conditions as appropriate.

Delivering the judgment, Mr Justice Max Barrett then applied these provisions to the facts, first considering whether, if no automatic suspension had been in place, it would have been appropriate to grant an injunction.

He noted that the relevant principles when determining whether an injunction would be appropriate are those contained within Campus Oil v. Minister for Industry (No. 2) I.R. 88.

These were identified as three main questions: “(1) Is there a fair question to be tried? (2) If so, would damages be an adequate remedy for either party? (3) If not, where does the balance of convenience lie?”

With regards to the first question, it was found that BAM had raised a fair question to be tried: namely, that the decision of the National Treasury Management Agency to accept a late tender was unlawful and in breach of fundamental principles.

With regards to the provision of damages, following Glencar Exploration plc v. Mayo County Council (No. 2) 1 I.R. 84, it was found that the situation could potentially yield a liability in damages, as the case concerned a “significant decision taken by a contracting authority in the course of a procurement process, which decision has direct, predictable and perhaps adverse consequences for a very small number of tenderers relying on the contracting authority to discharge properly its obligations under the procurement law regime”.

BAM had submitted that damages were not generally seen as an appropriate remedy for disappointed tenderers, as such a remedy may not have the desired corrective effect, it may be difficult to prove that the disappointed tenderer had a real chance of winning the tender, and the cost of bringing proceedings if a tenderer loses them and the potential cost to its relationship with the contracting authority if it wins, are potentially significant costs for a tenderer to hazard.

BAM also submitted that it had been “deprived of the reputational benefits and strengthened market position that winning a project of such scale and prestige would confer”, which could not be quantified for damages.

However, the Court remarked that “you win some, you lose some” when it came to tendering. Moreover, it did not seem to the Court that the losses outlined were incapable of being quantified.

Thus, the Court found that “damages are an available and suitable remedy for BAM, albeit not, from its perspective, the most desired of remedies”.

With regards to the balance of convenience, the Court noted a number of factors that had been regarded by UK courts as weighing in favour of lifting a suspension.

These included the need to avoid closure of an educational campus, as contained within Indigo Services (UK) Ltd. v. The Colchester Institute Corporate EWHC 3237 (QB). This was relevant in the present case, if the new DIT campus did not proceed according to schedule, this would upset an efficient move to the new campus and generate cost increases.

Other factors included the fact that a contract would deliver services to vulnerable and socially disadvantaged members of society, as included within Rutledge Recruitment and Training Limited v. Department for Employment and Learning, Department of Finance and Personnel NIQB 61; Glasgow Rent Deposit & Support Scheme v. Glasgow City Council CSOH 1999.

This was also relevant in the present case, as many DIT students were schooled in buildings in need of reinvestment, and the new DIT campus would sit in a part of Dublin City that would benefit from the campus being there, in terms of on-site jobs and off-site benefits to business.

The Court also noted the need to protect the welfare of specific communities, as contained within Shetland Line (194) v. Scottish Ministers CSOH 99, and the imperative of allowing badly needed public projects to proceed, as contained within Lowry Brothers Ltd v. Northern Ireland Water Ltd NIQB 23 (QBD (NI)) as relevant, due to the benefits that the DIT campus would bring to the area.

Finally, the Court noted the importance of preserving public funds and having regard to market conditions, as contained within Exel Europe Ltd v. University Hospitals Coventry and Warwickshire NHS Trust EWHC 3332 (TCC) as relevant, due to the extra costs that would result from delay in completing the contract.

The Court therefore found that it was satisfied that on the balance of convenience, an order should be made permitting the contracting authority to conclude the contract.

However, it also found it just that “the order permitting the respondents to conclude the contract should become operative only upon one or other of the respondents giving that form of undertaking as to damages as is so often ordered when injunctive relief is sought and granted”.