Procurement challenges: costs awards can be made against non-parties
Preferred bidders need to protect their interests in procurement challenges. They may choose not to be a party to the claim but they may still have to pay another party's costs.
Preferred bidders in public procurement may find themselves sidelined while a losing bidder disputes the award. As disputes often deal with the technical detail of each party's bid, the preferred bidder may also find its commercially confidential information becoming relevant to the proceedings. If so, that information might have to be disclosed by the authority to the claimant who will usually be a competitor of the preferred bidder.
Preferred bidders may also consider they have a legitimate position to defend in relation to a procurement process that has been challenged and wish to participate in the proceedings as an interested party.
Whenever there is a legal challenge to a public procurement process, the preferred bidder will have to decide whether and how to protect its interests even if it is not a party to the claim. The Technology and Construction Court (TCC) guidance on procurement challenges explicitly recognises a role for preferred bidders (and others) as 'interested parties.'
We wrote last year about the publication of the TCC guidance on procurement challenges. The court has, in many cases, been prepared to hear argument and see evidence from them (usually on limited issues) and has also been prepared to consider costs awards against them and in their favour depending upon the outcome of their involvement.
Bombardier Transportation UK Ltd v Merseytravel (2018) includes an example of a preferred bidder that did not take up the formal role of interested party at a hearing but whom the court nonetheless ordered to pay the costs of the claimant's successful application to vary a confidentiality order.
Protecting a preferred bidder's confidential information in disclosure
In a procurement challenge against the authority (Merseytravel), unsuccessful bidder (Bombardier), entered into a court-sponsored confidentiality ring to view sensitive commercial information relating to the preferred bidder (Stadler)'s bid. Subsequently Bombardier applied to amend a consent order for disclosure of what were called Highly Sensitive Documentation (HSD) which contained Stadler's confidential information to allow a wider range of individuals to see the HSD.
Stadler objected to the extension and demanded Merseytravel retain confidentiality in its bid information. Merseytravel had no particular interest in the confidentiality of the information either way. Nonetheless, it was not prepared unilaterally to disclose Stadler's confidential information without Stadler's agreement so took a neutral position at the hearing. Stadler, chose not to attend the application but to rely upon Merseytravel putting its position on confidentiality for it. Bombardier largely succeeded in obtaining the wider amendment it sought.
One question for the court was whether in these circumstances, where Stadler had not attended court, a third party preferred bidder should be ordered to pay the costs for the application. The court decided that it should pay the bulk of Bombardier's costs.
Who was the real party to the application?
Coulson J found that Stadler was the real party to the application; the opposition came from them because the documents in question were theirs.
Merseytravel had remained neutral throughout and the court's time was taken up because of Stadler's opposition to the application. Stadler should have agreed the amended confidentiality provisions and released Merseytravel to accept the new confidentiality ring. Having failed to do so it was responsible for Bombardier's costs of the application.
Reasonableness of the preferred bidder's actions
Bombardier did not need to show that Stadler's actions were unreasonable or exceptional in order to obtain a costs order against Stadler. It was sufficient that Stadler should have agreed the unsuccessful bidder's request to amend the consent order for disclosure.
Preferred bidders need to consider whether and how to protect their interests in any procurement challenge. The guidance says that an interested party (which the guide gives a broad meaning to, namely a party who is not the claimant or authority) can recover or be required to pay costs.
Bombardier shows that can include where a non-party does not attend a hearing but who, through their opposition to an application, causes the applicant to incur costs. Preferred bidders need to be careful how and when they attempt to protect their interests in proceedings in case they become the real party to proceedings.
For more information, contact our public procurement specialists Ian Tucker, Chris Jackson or John Houlden.
The case referred to is Bombardier Transportation UK Ltd v Merseytravel [2018] EWHC 41 (TCC).
Ian Tucker Partner
+44 (0) 117 902 6332 ian.tucker@burges-salmon.com
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