Extending the time limit for starting procurement challenge proceedings – two recent cases illustrate contrasting developments

Colin Ricciardiello, Sharpe Pritchard

A breach of duty owed to an economic operator under the Public Contracts Regulations 2015 (Regulations) is enforceable by proceedings commenced in the High Court.

The time limit for starting such procurement challenge proceedings (and serving them) are of special note because the rules are different to ordinary claims and are also especially important because:

  • The time limits are short [1].
  • A number of cases have decided that the time limit for starting proceedings should be strictly observed.
  • The limited jurisdiction to extend time has proven to be very sparingly exercised [2].

There are public interest-based policy reasons for having such a short “limitation” period and the case which is often cited in this regard is the Court of Appeal’s judgement in Jobsin Co UK Plc v Department of Health [3].

In addition it was noted in Sita UK Limited v Greater Manchester Waste Disposal Authority [4] that extensions are not to be lightly given, bearing in mind the purpose of the time limits in the first place.

Two cases decided in July 2018 have considered the time limits and the principles governing applications to extend time, namely SRCL Limited v National Health Service Commissioning Board [5] (“SRCL”) and Amey Highways Limited v West Sussex Council [6] (“Amey”).

SRCL very much followed the established line of authorities whereas Amey was quite different in its approach to extending time with the result that opposite decisions were made.

SRCL decision:

The challenge here concerned the award of a contract for healthcare waste services.

SRCL commenced proceedings on 30 June 2017.On the facts the judge concluded that the date of issue was outside of the 30 days limitation period. Indeed, in respect of one head of claim the time limit expired more than 3 months before the date of issue so the Court had no jurisdiction to extend time in respect of that aspect in any event.  Nevertheless, in case the judge was wrong on that finding of fact he still considered whether there was a good reason to extend time for that head of claim as well.

Accordingly, given the findings on limitation the issue was whether there was a ‘good reason’ to extend time.

What would constitute a ‘good reason’ for extending time was considered in Mermec UK Limited v. Network Infrastructure Limited [7].  Unlike in SRCL the time bar point was dealt with at a summary judgment application and not at full trial.  In Mermec the relevant Regulations in force at that time provided that proceedings were only deemed issued once they were served and there was a 6 or 7 day delay in service.  There was no explanation from Mermec as to why there was late service.  The judge in Mermec (Akenhead J) decided that it was unhelpful to give an exhaustive list of grounds when an extension should be granted but they should include facts which were beyond the control of the Claimant such as illness or detention of the relevant personnel.  When it came to arguing that the delay was short Akenhead J was quite clear that “…there is no point in having a three month period, if what it means is three months plus a further relatively random short period”.

The questions of extension of time was also considered in Matrix-SCM Limited v London Borough of Newham [8] and dismissed the idea that extensions should be granted because to do so caused no prejudice:-

“Public Procurement authorities are entitled and need to know as soon as possible whether a procurement is being challenged. As Mann J points out in Sita time bars are mechanical and absolute and are not based on ad hoc prejudice consideration.  The fact that no additional prejudice is sustained a week, two weeks or a month after the lapse of the period is not, itself, a good ground for extending the period”

A case not cited in SRCL but adopted a very similar line to the one taken in Mermec was Turning Point Limited v Norfolk County Council [9] and was governed by the current 30 day time limit.  The application to extend was refused because it was held that there was no good reason for doing so because when Turning Point submitted their tender the complaint, which formed the basis of their claim, was known to them at that time so they could have issued in time which ran, at the latest, from the date of submission.

The argument that a short period of an extension was reasonable and proportionate was also held not to be a good reason because the 30 day period was clearly defined and if it was intended that it was 30 days plus reasonable and proportionate short period then that is what the legislators would have said.  Again, a “good reason” was held to be something which was beyond the control of the Claimant including significant illness or detention of relevant members of the tendering team.

SRCL decided that the following were not good reasons to extend time: under the threat of proceedings the contracting authority agreed to review the winner’s tender; exhorting that proceedings were not justified and should not be issued.

Paragraph 154 of the judgment in SRCL sets out the principles which apply where an extension of time is sought under Regulation 92(4). Those principles are very much in keeping with the line taken in Mermec, Matrix and Turning Point.  Prominent amongst that list is the necessity for there being a good reason not to issue in time – such as an illness or something outside of the Claimant’s control which prevented it from doing so and the lack of prejudice to the Defendant is not a determinative factor.  In this regard, the Judge considered that on the facts, prejudice to SRCL which may be caused by granting an extension was not at all relevant.

In SRCL reference was made to Perinatal Institute v Healthcare Quality Improvement Partnership [10].  At first blush this case might appear to be a softening of the line on extending time but in that case proceedings were issued in time and the time bar point arose because the Claimant wanted to introduce a fresh claim by amendment and whilst the application to amend was issued well before the 30 days from the date of the relevant knowledge of that fresh claim, it was heard well after that period had expired but before the 3 month power to extend period had lapsed.

The Defendant’s time bar based defence in SRCL therefore succeeded.

The Judgment in Amey:

This was a large highways maintenance contract and Amey lost by 0.03 per cent. Amey alleged that the Contracting Authority had acted unlawfully when it issued instructions which had the effect of reducing its price score and it also made manifest errors in scoring two criteria.The claim was issued on 15 March 2018.

Two of the claims were subject to a time bar defence which were determined by way of interim application. The time limit for one ground expired on 2 March 2018 but there was a standstill agreement in force (whereby the Contracting Authority agreed not to take a time barred point) from 2 March 2018 to 15 March 2018.  The Judge had no hesitation deciding that the standstill agreement was a “good reason” to extend time to 15 March.

The second claim proved to be more problematic for Amey. The time limit in respect of that claim expired on 19 February 2018 – so before the standstill agreement came into being on 2 March 2018.  The critical period for delay, therefore, was 19 February 2018 to 2 March 2018.  It is interesting to note that at paragraph 42 of the judgment it was held that “No reason (good or otherwise) has been advanced to explain why proceedings were not issued in time”.

On that basis alone one would have thought that in the light of previous authorities the absence of a “good reason” meant that no extension would have been granted.  However, that was not the case and the application was granted.  Amey argued that the delay between 19 February and 2 March did not cause prejudice and its claim was strong.  The Judge accepted that no prejudice had been suffered by the Council and went further by saying that there had been no material prejudice to the public interest because if the time barred claims had been issued in time, in such a short period those claims would have made little procedural progress “

Accordingly, this is a case where not merely can be it be said that there is no prejudice, but the delay in relation to [the time barred claim not covered by the standstill agreement] has been of no practical consequence at all”.

As to the submission concerning not shutting out a strong claim by reason of the time bar, the Judge remarked that he would exercise restraint and caution before concluding that the strength or weakness of a claim exerts a determinative influence. The Judge held that Amey’s case was not one of the relatively rare ones where it could be said that it was overwhelmingly strong or weak.  In this regard the judgment did follow previous authority – see SITA – where it was held that extending time because the claim appeared to be good or large was not a particularly good reason for overriding the time bar, although the weakness or small size of the claim could tell against the exercise of discretion.

Conclusions

Amey is certainly contrary to earlier judgments in its outcome and approach – an approach which did not see a “good reason” to extend under Regulation 92(4) as restricted to factors beyond its control and were held by the Claimant to “excuse” its default. Rather the lack of prejudice caused by granting the extension was in effect the “good reason” for extending time.

It remains to be seen whether the line in Amey will be followed in preference to the more established application of the Jobsin principles and the Court of Appeal will not be called upon to review Amey as it is understood that the procurement was abandoned and will be re-run. That would make the proceedings redundant and that is not a particularly surprising outcome as the scores were so close. Nevertheless, any potential claimant would be well advised to treat the strictness found in SRCL as continuing instead of chancing on the latitude in Amey prevailing.

[1] Excluding the ineffectiveness remedy, the general time limit for starting proceedings is 30 days beginning with the date when the economic operator first knew or ought to have known that grounds for starting proceedings had arisen – see Regulation 92 of the Regulations.  Also where that 30 days ends on a day which is not a working day then that period is rolled over to the end of the next working day – see Regulation 2(4)(b).The time for service is 7 days after the date of issue – Regulation 94(1).

[2] Where the Court considers that there is a good reason for doing so it has the power to extend the time for commencing proceedings up to three months after the date when an economic operator first knew or ought to have known that the grounds for starting proceedings had commenced – see Regulation 92(4)(5).

[3] [2003] EWCA CIV 1241 – this case was decided when the time limit for starting a claim was three months rather than 30 days.  It  decided that: challenges to the tender process of a public service contract should be made promptly so as to cause as little disruption and delay as possible; not only is that in the interests of all those who have participated in the tender process  but there is also a wider public interest in ensuring that tenders for a  public project should be processed as quickly as possible; a balance has to be struck between two competing interests; they need to allow challenges to be made to an unlawful tender process, and they need to ensure that any such challenges are made expeditiously.  “The short time limit is therefore a result of that balancing exercise”.

[4] [2010] EWHC 680 (Ch)

[5] [2018] EWHC 1985 (TCC) – judgment handed down 27 July 2018

[6] [2018] EHHC 1976 (TCC) – judgment handed down on 30 July 2018

[7] [2011] EWHC 1847 (TCC).

[8] [2011] EWHC 2414 (CH).

[9] [2012] EWHC 2121

[10] [2017] EWHC 1867 (TCC)


This article is for general awareness only and does not constitute legal or professional advice. The law may have changed since this page was first published.