Reviewed by PLC Public Sector in July 2011
What to do if you receive a challenge to a public procurement process
A checklist setting out the recommended actions to take if a contracting authority receives a challenge to a procurement process.
This checklist sets out the key actions public authorities should take when a bidder claims that the authority has not acted in accordance with the procurement regime. Following these steps may assist in:
Resolving the bidder's grievances.
Avoiding costly and time-consuming legal proceedings.
Mitigating the impact of the challenge on the procurement timetable.
Train staff to identify challenges
A potential challenge to a procurement process will not always be delivered by registered post to the legal department, labelled "challenge". It is far more likely to originate in an e-mail to an officer at the contracting authority who has been working on the procurement. Officers need to be trained to identify when correspondence from a bidder is alleging, or likely to lead to an allegation, that a procurement process has been flawed and to alert the legal department at this stage.
The earlier that a potential challenge can be identified:
The more prepared the authority can be to deal with the challenge.
The more likely it is that the authority can address the complaint as part of the procurement process.
Do not ignore a challenge
It can be easy, especially for an officer that has been involved in the procurement process, to ignore a challenge on the basis that:
The bidder is bluffing and that the challenge is without merit.
The bidder is alleging that the officer concerned is the cause of the problem and the officer wants to cover it up or will not accept he has done anything wrong.
The officer does not understand the basis for the challenge.
However, ignoring a challenge is unlikely to make it go away and any delay in responding can:
Lead to valuable information being lost.
Mean that the contracting authority will not be as prepared as it could be if the challenge is pursued.
Lead to adverse treatment by a court if the challenge goes that far (including the possibility that any contract entered into is declared ineffective (for more information, see Practice note, Remedies Directive: the new regime (www.practicallaw.com/0-500-9991))).
React quickly and communicate clearly
The quicker the authority responds the more likely it is that a challenge can be resolved quickly, whether by an adjustment to the procurement process or as a result of a response allaying the concerns of the relevant bidder.
It is also sensible to inform the complaining bidder that no contract will be let pending the outcome of a review of their complaint. This will reduce the risk of having to attend a hearing for an injunction on short notice.
The bidder should also be given a single point of contact at the authority for dealing with the complaint.
Provide assistance but don't be too helpful
Challenges will often be resolved by providing a bidder with the necessary information. Contracting authorities should provide bidders with the information that is relevant to them and if necessary help the bidder in interpreting this information, so that they are able to understand the decisions that have been taken.
In particular, the authority must comply with the Alcatel standstill (www.practicallaw.com/9-385-1366) and debrief provisions set out in regulation 32 of the Public Contracts Regulations (SI 2006/5) (Regulations) (for more information, see Practice note, Remedies Directive: the new regime (www.practicallaw.com/0-500-9991)). However, once the contracting authority has complied with these obligations it is for a bidder to make out its challenge. There can be a danger of an authority trying to be too helpful and in doing so actively supporting a legal challenge being made against it.
Collate all relevant information
In responding to a challenge it is important that a contracting authority is aware of all the relevant facts. Therefore, all of the available information relating to the challenge, including e-mail correspondence if any exists, should be collated together and reviewed by the legal department. This should not be difficult if the procurement has been well managed as a clear audit trail should always be kept.
Don't destroy any information
A contracting authority should never deliberately destroy any information relating to a procurement process about which a challenge has been made.
Liaise with FOIA teams
A bidder making a challenge is also likely to make a request for information about the procurement process under the Freedom of Information Act 2000 (FOIA). Such a request may be made to the procurement officer (in which case internal policies are likely to require that it is forwarded to the department responsible for FOIA requests) or straight to the relevant department.
In either case it is important that the FOIA team are:
Trained about the particular risk of disclosing information about ongoing procurements.
Aware of guidance issued by the Office of Government Commerce (OGC) about what information relating to a procurement may be exempt from disclosure under FOIA and for how long (see FOI (Civil Procurement) Policy and Guidance (November 2008) (www.practicallaw.com/0-518-1514)).
Made aware of the specific circumstances of the particular procurement and any challenge made.
Any response to a request under FOIA should be co-ordinated with a response to the procurement challenge. An authority generally has 20 working days to respond to a request for information under FOIA and it is recommended that information is not released under FOIA in advance of this requirement where it relates to a procurement challenge. Wherever possible, information about the procurement should be managed through the debrief requirements under the Regulations.
For more information on:
The debrief requirements under the Regulations, see Practice note, Remedies Directive: the new regime (www.practicallaw.com/0-500-9991), Standard document, "Alcatel" letter to be sent to unsuccessful supplier offering debrief (www.practicallaw.com/0-384-2135) and Standard document, New Remedies Directive: Standstill letter to be sent to unsuccessful supplier (www.practicallaw.com/4-501-0389).
Seek legal advice and don't waive privilege lightly
Once the information has been collated, a solicitor should be asked to provide a report on the merits of the challenge. This process should be carried out for two reasons:
It will provide details of any flaws in the process and what action may need to be taken as a result of the challenge.
As it has been carried out by a lawyer, it will be subject to legal professional privilege. This will protect it from disclosure under FOIA and during any litigation. For this reason, contracting authorities should be careful not to disclose the positive aspects of a mixed report as this could lead to privilege being waived. However, if the report is wholly dismissive of the challenge, an authority may waive privilege and disclose the contents of the report in an attempt to put an end to it. For more information on legal professional privilege, see Practice note, Privilege: an overview (www.practicallaw.com/2-205-2977).
Brief everyone who may receive a complaint
It is possible that complaints may be made to numerous people within the contracting authority, for example, a letter may be sent to the chief executive or a head of department. Therefore, if a challenge is received all people to whom a complaint may be made should be briefed. This will:
Ensure that senior personnel are not surprised or concerned by what may be a groundless challenge.
Enable the contracting authority to co-ordinate a response and provide a consistent message.
The department responsible for the authority's public relations should also be informed if there is a risk that the press may be interested and queries from the press should be referred to the public relations team.
Reiterate the importance of confidentiality
As information about the challenge is spread, it is important that all officers and members of the authority are aware of the need for confidentiality. Information should not be leaked or provided piecemeal through different sources. All responses should be provided through a central point of contact so that the contracting authority can be sure of exactly what the bidder is aware of.
If there is foundation to the complaint take appropriate action
If a review of the procurement process reveals that there have been flaws that have prejudiced the bidder making the complaint, the contracting authority will need to take action. Bidders making challenges may be seeking many different types of remedy. For example:
The authority may need to stop the procurement process and start again (whether an award decision has been made or not).
A bidder may be happy to be included on a framework panel along with the other successful bidders.
An ongoing process may be capable of amendment without stopping it.
The bidder may want damages to cover bid costs and/or loss of opportunity.
The bidder may simply want an assurance from the contracting authority that future procurements will be run in a different manner.
If necessary, emphasise and detail the potential cost of a cross undertaking
If the contracting authority and the bidder are unable to resolve the complaint, it is possible that the bidder may apply to the court for an injunction preventing the authority from awarding the contract to the bidder that it has chosen. If an injunction is granted the bidder will have to give the contracting authority an undertaking that it will meet the costs incurred as a result of the injunction if a subsequent hearing finds that the procurement process complied with the law.
Prior to any hearing for an injunction, the contracting authority should make sure that it has identified all of the relevant costs that it may incur as a result of an injunction and highlighted these to the bidder applying for the injunction. In many instances these are likely to be considerable and additional to the costs of obtaining an injunction, which may stop the bidder from pursuing such a course of action.
For more information on injunctions, see Remedies: equitable remedies: Injunctions (www.practicallaw.com/3-107-4866).
Where a public procurement was commenced on or after 20 December 2009, the Public Contracts (Amendments) Regulations 2009 (SI 2009/2992) will apply and an aggrieved bidder will no longer have to apply for an injunction. If the bidder starts proceedings the contracting authority is automatically suspended from proceeding any further with the contract award process. To lift the suspension the contracting authority must apply to court. This will make it more difficult for contracting authorities to use the potential costs involved in obtaining an injunction as a deterrent to aggrieved bidders starting proceedings.
However, contracting authorities should still make it clear that at any application to lift the automatic suspension, they will be asking the court to require a cross undertaking as to damages if the court decides to keep the injunction in place. For more information, see Practice note, Remedies Directive: the new regime: Suspending court proceedings: the automatic injunction (www.practicallaw.com/0-500-9991).