Public Procurement

EU

New Contract Thresholds

New contract thresholds apply under public procurement law from 1 January 2024, summarised here.

Multi-jurisdictional Procurement

C-480/22 concerned a procedure for a framework agreement for electrical and construction works in Bulgaria. The contracting entity was a Bulgarian company with its head office in Bulgaria. The central purchasing body was an Austrian company with its head office in Austria. Both were owned by an entity that was part owned by the Province of Lower Austria.

Tender documents stated that Austrian law applied to the contract award procedure and Bulgarian law applied to the performance of the contract. They designated the Lower Austria Regional Administrative Court as the body responsible for review procedures.

Article 57(3) of the Utilities Directive states that the provision of centralised purchasing activities by a central purchasing body located in another Member State shall be conducted in accordance with the national provisions of the Member State where the central purchasing body is located.

Two Bulgarian undertakings challenged decisions not to accept their tenders. The Lower Austria Regional Administrative Court decided it lacked jurisdiction and did not want to encroach on Bulgarian sovereignty. The Bulgarian undertakings appealed, submitting that Article 57(3) and Austrian law do not encompass solely the contract award procedure, but also any review procedure following contract award.

Preliminary questions were referred to the CJEU. In answering them, the Court confirmed that the conflict of law rule in Article 57(3) extends to review procedures in so far as the central purchasing body is responsible for the conduct of the contract award procedure.

UK

Public Procurement Act 2023: Guidance

The Cabinet Office published guidance to explain the objectives and flexibilities of the new procurement regime in the UK.

Welsh Notice

WPPN 03/20 updates guidance in Wales on publication of notices relating to transitional and EU funded procurements.

Court Decision in Complex Procurement

Siemens Mobility Ltd v High Speed Two (HS2) Ltd [2023] EWHC 2768 involves the award of a manufacture and supply agreement and train maintenance services agreement for a large UK infrastructure project.

Out of two final bidders, the contracts went to a JV. The other bidder, Siemens, unsuccessfully challenged the award on several grounds, and the resulting judgment provides a lengthy analysis of a large and complex procurement process.

One of the grounds of challenge was that HS2 wrongly exercised its discretion in permitting the JV to continue to Stage 5 of the procurement, despite submitting a ‘Shortfall Tender’. This related to the structure of the process whereby scored elements in components in Stages 2 to 4 were used to calculate an overall rating for each bidder. To proceed to Stage 5, bidders had to meet a defined evaluation threshold for each component. A tender failing to meet the threshold (a Shortfall Tender) could still be deemed to meet the threshold at HS2’s discretion.

The Court found that Siemens failed to establish that the Shortfall Tender decision was in breach of the Utilities Regulation or amounted to a manifest error. It was an exercise of absolute discretion on the part of HS2. The decision was careful, rational and based on relevant evidence. Each of the individuals involved in the decision was aware of the JV’s failure to meet the evaluation threshold for one component, considered the relevant provisions in the Instructions for Tenderers, and reached a conclusion that could not be said to be irrational. Oversight and review of the decision by review panels reached the same conclusion.

Another ground of challenge related to change of control. During the procurement, the JV underwent a change of control when one of its partners (Bombardier) was acquired by Alstom, which itself had pre-qualified and been invited to tender stage. Siemens argued that HS2 wrongly consented to a change of control of the JV, permitting a change of circumstances, sharing of confidential and commercially sensitive information with Alstom and the JV, and giving them an unfair advantage.

HS2’s defence was that, following the acquisition, Alstom and the JV were obliged to notify HS2 of the change in circumstances, including which tenderer would continue in the procurement exercise, and that there was no improper sharing of information. The Court found that HS2 had set out in detail its reasons for approving the change of circumstances in a file note. Siemens had not identified any manifest error or irrationality in the careful assessment carried out by HS2 for the purposes of determining whether to consent to the proposed change of circumstances.

Another ground was that a conflict of interest arose because two HS2 personnel involved in tender assessment were members of a Bombardier pension scheme. This was rejected by the Court following a detailed analysis of conduct and communications during the procurement process, including the HS2 compliance department’s protocols and recommendations made in relation to the process.