Procurement Update – July 2013

This Update contains brief details of recent key developments relevant to those involved in procurement work.


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Emily Heard


This Update contains brief details of recent key developments relevant to those involved in procurement work.

If you have been forwarded this update by a colleague and would like to receive it direct please email Claire Booth.

All links are correct at the date of publication.

In this update:

Policy and guidance

MoJ: Reform of judicial review – new 30 day time limit for procurement cases
From 1 July 2013 the time limit for bringing a judicial review claim in procurement cases has been reduced to 30 days. This is one of a number of more general changes to the judicial review process introduced from 1 July 2013 by the by the Civil Procedure (Amendment No.4) Rules 2013 (SI 2013/1412).
For further information see Bevan Brittan's Update on Judicial Review reform and also theearlier article on the reforms at the proposal stage: Government plans to reform judicial review procedure

Welsh Government: Construction Procurement Strategy - Executive summary and action plan
The Welsh Government's Construction Procurement Strategy Steering Group has published a guide as to how public construction projects should be procured, and clarifies where possible some of the concepts involved in order to give consistent, cohesive direction to the public sector in Wales. The Strategy is a statement of intent to work with public clients and industry to incorporate agreed Welsh procurement policy into construction projects in Wales. It includes a new Charter with a set of commitments that both public sector clients and the construction industry will adopt to support delivery of construction projects. (15 July 2013) 

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DfT: Franchise competition process guide
Guidance for DfT staff and advisers on how the department procures passenger rail franchises and how the competition process is governed. (25 June 2013)

DfT: Government response to the Brown review of the rail franchising programme
This formal response broadly accepts the recommendations in in Richard Brown’s review of the rail franchising programme that was published in January 2013. It reports on the progress made in implementing the recommendations, and sets out the high-level principles that it will be applying in future. It states that the DfT will continue to implement its recommendations through the successful roll out of its franchising programme and publication of further guidance. (11 July 2013)

HM Treasury: Code of Conduct for operational PFI/PPP contracts
This voluntary Code of Conduct sets out the basis on which public and private sector partners agree to work together to make savings in operational Public Private Partnership (PPP) contracts, including PFI contracts, PF2 and other variants of PPP contracts. The Code sets out eight key commitments for private sector parties and eight commitments for public bodies to encourage better working between the public and private sector. It also contains a number of new guidelines on transparency. Around 50 organisations, including investors, lenders, construction contractors and facilities management providers have already signed up to the code - see the list on the DCLG website. (14 June 2013)

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HM Treasury: Spending Round 2013
Sets out plans for government spending, including departmental settlements, for the year 2015 to 2016. The measures include a further 10% cut in DCLG's budget, coupled with a continuing freeze on Council Tax. It states that a key objective for this Spending Round is better cooperation between services at local level, and the Chancellor has announced funding to support and reward integrated health and social care working in 2015-16, following the example of the Whole Place Community Budget pilots, and also funding to support increased collaboration between the emergency services. (26 June 2013)
See also the DCLG press release: Eric Pickles hails Council Tax ‘5 year freeze’ and £3.8 billion for social care.
Bevan Brittan's Alert highlights the key points for local authorities of the Chancellor's announcement: Spending Round 2013 sets out local authority funding for 2015-16.

HM Treasury: Investing in Britain's Future
Sets out the Government's plans for investment in infrastructure from 2015. The funding includes over £70bn of investment in transport, over £20bn in schools, and £10bn in science, housing and flood defences. Local Enterprise Partnerships are to get greater power and influence, bringing the resources under their strategic influence to at least £20bn in the years to 2021, with a £2bn Single Local Growth Fund to drive forward job creation and investment in their areas, responsibility for how €6.2bn (£5.3bn) of EU Structural and Investment Funds is spent, £50m for the Local Infrastructure Fund and a grant fund of £100m in 2014-2015 for enterprise zones. (27 June 2013)

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Cabinet Office: Procurement for Growth
This leaflet gives public sector procurement practitioners tips and advice on how they can maximise economic growth through the way they approach buying goods and services. (21 May 2013)

DH: NHS standards of procurement
This document sets out the standards for NHS healthcare provider organisations to assess and benchmark procurement performance and identify areas for improvement. It shows how to use the standards, and describes their development, aim and objectives.  It replaces the version published in May 2012. (18 June 2013)

Monitor: Hypothetical case scenarios – Procurement, Patient Choice and Competition Regulations
Monitor has published a collection of illustrative case studies that show how the NHS (Procurement, Patient Choice and Competition) (No.2) Regulations 2013 (SI 2013/500) might apply to six hypothetical scenarios. The scenarios are not intended to address all of the issues that might arise under the Regulations, but to highlight some of the core issues that each of the scenarios appear to raise and the key factors that are likely to be relevant to the question of whether or not the conduct is consistent with the Regulations. Whether or not conduct is consistent with the Regulations will ultimately depend on the precise facts of the case. (20 May 2013).
See Consultations (below) for further information on Monitor's consultation on the Procurement, Patient Choice and Competition Regulations.

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Legislation - EU

Council of the European Union: Public Procurement reform will lead to more efficient, simple and flexible procedures
On 26 June 2013 the European Parliament issued press releases confirming that provisional agreement had been reached with the Council of Ministers on the draft amended Public Sector and Utilities Directives and the new Concessions Directive. This followed several months of intense negotiations involving the European Parliament, Council of Ministers and European Commission. On 17 July 2013 the Lithuanian Presidency announced that the Council of Permanent Representatives have agreed the final compromise texts. The process will now move on to the translation and approval stages with adoption likely some time in the autumn. The agreed versions of the compromised texts are not yet publicly available.

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Monitor: Substantive guidance on the Procurement, Patient Choice and Competition Regulations
The consultation process has now closed on the draft guidance on how to comply with the National Health Service (Procurement, Patient Choice and Competition) (No.2) Regulations 2013 (SI 2013/500) and with certain requirements relating to patient choice in the NHS Commissioning Board and Clinical Commissioning Groups (Responsibilities and Standing Rules) Regulations 2012 (SI 2012/2996) which Monitor has the power to enforce. Bevan Brittan submitted its views as part of the consultation process.

Monitor: Enforcement guidance on the Procurement, Patient Choice and Competition Regulations
The consultation process has also closed on the draft statutory guidance, issued under s.8(1)(b) of the Health and Social Care Act 2012, on the general approach that Monitor proposes to take in using its enforcement powers under the National Health Service (Procurement, Patient Choice and Competition) (No.2) Regulations 2013 (SI 2013/500). Bevan Brittan submitted its views as part of the consultation process.
See also Bevan Brittan's Alert: Monitor consults on the National Health Service (Procurement, Patient Choice and Competition) (No.2) Regulations 2013.

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Cases - UK

R (Nash) v Barnet LBC; Capita Plc, EC Harris LLP and Capital Symonds (Interested Parties) [2013] EWHC 1067 (Admin) (Admin Ct)
Mrs Nash, a Barnet resident applied for judicial review of one decision and one impending decision by the Council relating to the outsourcing to private sector organisations of a high proportion of the Council's functions and services under its "One Barnet" programme. The contested decisions related to the award of the outsourcing contracts and were taken (or were to be taken) in December 2012 and January 2013 following lengthy procurement processes. Mrs Nash claimed that the Council had not complied with its consultation obligations in particular in relation to the general best value duty to consult under section 3(2) of the Local Government Act 1999 and had failed to have due regard to its Public Sector Equality Duty (PSED) under s.149 of the Equality Act 2010. She also contended that if the Council entered into the proposed contracts it would be in breach of its fiduciary duty to council taxpayers. The court held, dismissing Mrs Nash's application, that the claim was made out of time. The judge was not prepared to extend time - the proceedings were brought 18 months or more after they should have been.
The judge did, however, provide his view on the merit of the claims had they been made in time. He commented that he would have found that the Council was in breach of its duty to consult under section 3(2) of the Local Government Act 1999. This duty was not satisfied in these circumstances by merely carrying out annual consultation on it priorities and general expenditure. (29 April 2013).
This case is the subject of an appeal listed to be heard at the Court of Appeal on 15 & 16 July 2013. The Court of Appeal judgment is awaited.

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D&G Cars Ltd v Essex Police Authority [2013] EWCA Civ 514 (CA)
D&G appealed against the High Court's refusal to permit it to amend its Particulars of Claim in proceedings brought against the Police Authority for breach of a contract for vehicle recovery services and for damages for excluding D&G from its tender competition for an additional vehicle recovery contract. After D&G had submitted its tender but before awarding the contract, the Police Authority received an anonymous letter alleging that D&G had scrapped one of its own vehicles in place of the seized vehicle, a process known as 'ringing'. The Police Authority investigated this allegation and then terminated D&G's existing contract and excluded D&G from the tendering process for the new contract. The Police Authority refused to delay the award of contracts pending the determination of the lawfulness of that exclusion and awarded the contracts to two of the other tenderers. D&G then issued their proceedings. Following disclosure, D&G applied to amend their claim to make wide allegations against the police authority of bias, tender-rigging, bad faith, misconduct in public office and conspiracy to injure. The judge held that the amendments amounted to a new claim which was statute-barred as it was outside the three month limitation period.
The court held, dismissing the appeal, that the amendments to the pleadings constituted pleading a new cause of action under the Regulations which was statute barred. The amendments sought to divert the forensic spotlight away from D&G onto the Police Authority and its handling, over many years, of the contracts, which was not what the claims, as originally pleaded, were about. Nor should D&G be given permission to amend its Reply in a manner conforming with the requirement to limit its new case to particulars relevant to its denial of the Police Authority's "grave misconduct" defence under Reg.23(4). Any attempt to introduce these matters by way of Reply would mean that their contents become "facts as are already in issue on any claim previously made in the original action" within the meaning of s.35(5)(a) of the Limitation Act 1980. This would undermine the purpose and intent of s.35 so that phrase should be construed as excluding facts introduced solely by way of Reply. (16 May 2013)

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Farrans (Construction) Ltd v Glasgow City Council [2013] ScotSC 14
FC was an unsuccessful tenderer for a flood defence works contract with the Council. FC was in fact a dormant company and, if it had been awarded the contract, it would have carried it out as agent for its parent company N. FC had previously done work for the Council under such arrangements but the Council had not been aware of the correct legal status and that FC had been doing the work on behalf of N. FC challenged the award, alleging that the Council had breached the Public Contracts (Scotland) Regulations 2006.
The judge held, dismissing FC's claim, that FC could not bring itself under the definition of "economic operator", and could not demonstrate any risk of loss. It therefore had no relevant claim under the 2006 Regulations. It had no title or interest to sue, as it was not an economic operator, and would not suffer any loss. The council was not aware that FC was tendering as an agent. FC tendered, and acted, without accurate analysis of who was tendering or in what capacity. Further, it failed to explain or represent that it acted as agent of N and no agency agreement existed.
There was a complete lack of transparency as the tender information about FC – it referred to FC as the contractor but contained information about officers, employees, assets and other resources which can only have been those of N. Such lack of transparency was unnecessary and was induced by the wholly ambiguous and uninformative content of the PQQ and tender documentation. Had "N trading as FC" tendered for the works, no such problem would have arisen. FC did not "offer on the market work or works" – having argued forcefully that it intended to be bound only as agent, not as principal, it could not now argue that it intended the contract to be awarded to it in any beneficial sense. It could not carry out, or even administer, such a contract. Nor did FC offer to "procure" such works - "procurement" was not simply passing a contract on to another. Procurement involved the ability to enforce, and impose sanctions, and to instruct work by an alternative contractor in the event of default. None of those features was part of the pursuer's intended or actual arrangement with N. FC could enforce nothing at all. Even if FC qualified as an economic operator with a claim under Regulation 47 for damages, it had not suffered any loss for which the Council would be liable. (12 February 2013)

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Cases - EU

Piepenbrock Dinestleistungen GmbH v Kreis Düren (&  Stadt Duren) (C-386/11) – Hamburg cooperation agreements
This case related to the award of a building cleaning contract by a regional authority to a local town authority. The contract was entered into without first carrying out a public procurement process. The direct award without competition was made on the grounds that it was an agreement of a type which, under the relevant local and national laws, was not a public contract covered by the EU procurement rules. The Court of Justice of the European Union considered whether the contract was a public services contract subject to the Public Sector Directive. It was accepted by all parties that this was not a situation where the Teckal exception applied. The CJEU also considered, amongst other arguments, whether the Hamburg (public-public co-operation) exception applied. It identified a number of key elements in the arrangement which, in its view, indicated that  it was not, in reality, a public-public co-operation arrangement and it had the hallmarks of a public contract which should be subject to the EU procurement rules. (13 June 2013)

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Libert v Flemish Government (C-197/11); All Projects and Developments NV v Vlaamse Regering (C-203/11) – Social Housing development obligations and works contracts
This is a lengthy case covering issues of basic Treaty freedoms, state and also a procurement question. The Belgian Law on land and real estate includes a requirement (a "social obligation") on land owners/developers to develop social housing units or provide for social housing lots in designated areas. The designated areas are those with high land prices and high levels of internal/external migration. The aim of the measures is to ensure affordable housing  for the local population in these areas. The social obligation is triggered where authorisation or planning permission is granted for the development (or sub-division) of land a designated areas. The obligation applies automatically in these circumstances. The developer can choose to fulfil its social obligation in kind by delivering the social housing units/lots itself, by sale of the land required for social housing to a social housing organisation or by leasing the land to a social rental agency, or by a combination of these methods. Where it opts to fulfil the obligation in kind it is then obliged, again under the law, to enter an administration agreement with a social housing organisation The sale of the social housing units or lots is then subject to a statutory price cap.
The CJEU was asked to consider 11 questions.  The eleventh question asked was whether the arrangement for development of social housing units which are subsequently to be sold off at capped prices to a public social housing institution, or with the substitution of that institution for the service provider which developed those units, is a public works contract for the purposes of the Directive (2004/18).
The CJEU ruled that it was for the domestic court to consider whether the definition of a public works contract was met in these circumstances but it made number of observations in this context to assist the domestic court in its decision making. It noted that a public contract may exist even where the contract is entered into as a result of the operation of legislation – as was the case with the administration agreement. However for such  an agreement to be classified as a works contract it would need to be concluded for the purpose of determining the work/s to be undertaken by the developer and the related terms and conditions The administration agreement in this case does not regulate the relationship between the contracting authority and the developer and it is concerned with the marketing of the units not the development of them. It also pointed the domestic court towards considering the availability of the Teckal and Hamburg exceptions.  (8 May 2013)

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Bevan Brittan’s Procurement Telephone Advice Service

Our Procurement Telephone Advice Service allows local authority and public sector clients telephone access to specialist legal support on all procurement related issues. This service was initially made available to some of the firm’s existing clients and is now being more widely launched to all public bodies.

The Procurement Telephone Advice Service aims to provide you with an easy and accessible single point of contact for practical and essential procurement advice. You may make use of this service between 9am – 6pm Monday to Friday (excluding bank holidays) in a way which best suit your needs as and when you require our support, whether it is to address a procurement query or to clarify a point of law.

We have two service packages:

  • Option 1 Pay as You Go: designed to offer you essential procurement advice as and when you need it whilst giving you full control over your legal spend.
  • Option 2 Annual retainer: provides your business with the procurement advice and support you require at a fixed annual cost over a 12 month period.

For more information or to sign up to one of our service packages, please do not hesitate to email Nina Beasley.

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Government Procurement Services legal services framework agreement

The Government Procurement Services legal services framework agreement allows customers throughout the public sector to place orders with Bevan Brittan LLP under standard terms and conditions of the agreement. We are appointed to Lot 7: General Litigation and Legal Support Services and Lot 8: Major or Complex Projects.


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