Is There a Place for Judicial Review in Procurement Challenges?

Colin Ricciardiello, Sharpe Pritchard

Colin Ricciardiello is a Partner with Sharpe Pritchard and recently acted for Waverley Borough Council regarding a procurement dispute. Here, he examines how the Waverley judgment could affect future legal challenges:

Introduction and Background

Procurement law and the Public Contracts Regulations (“the Regulations”) impose duties on contracting authorities owed to economic operators and providing remedies for breaches of those duties. As things stand there is, however, scope for non-economic operators to bring procurement challenges in very restricted circumstances. In a recent judgment in R (Wylde) & Others v. Waverley Borough Council the standing of non-economic operators to bring procurement challenges by judicial review was again considered by the Administrative Court.

The Waverley case was similar in background to an earlier decision in R (Gottlieb) –v- Winchester City Council) which caused quite a good deal of controversy as the claimant was Councillor Gottlieb, a member of Winchester City Council. As a councillor from the majority political group, he was personally funding a judicial review challenge against his own Council’s decision to vary a development agreement. Mr Gottlieb successfully established standing and that the proposed changes were not permitted by procurement law.

In Waverley two of the claimants were Waverley councillors; the others were members of Farnham civic societies. All were Waverley Council tax payers. They challenged Waverley’s decision to vary a development agreement which would extensively develop part of the town centre in Farnham, Surrey. They alleged that the proposed variations to the development agreement could not be lawfully effected without a fresh procurement. The question of whether the Claimants had sufficient standing was determined as a preliminary issue.

Dove J. found for Waverley on the preliminary issue and held the claimants did not have standing.

The “sufficient standing” question in Gottlieb was considered after the judge heard the whole of the procurement law based challenge as to the lawfulness of the proposed modifications and found some of the modifications were unlawful. However, in Waverley a different procedural approach was taken and (by consent) the court decided on the claimants’ standing as a threshold question by a trial of a preliminary issue.

Legal background to the Waverley Judgment

In R (Chandler) v Secretary of State for Children, Schools and Families, the Court of Appeal suggested that a narrowly defined class of non-economic operators might be able to rely on a breach of the Regulations to found a claim for judicial review. The court held she was not within that class of non-economic operators.

So far as using the public procurement regime to stop the object of procurement was concerned, the court in Chandler endorsed the judgment of Richards J. at paragraph 77 in Kathro.

The Court of Appeal was not saying in Chandler that it was enough for a non-economic operator to pass the normal judicial review standing test – there had to be something more which directly affected them.

At paragraph 10 of the judgment, the judge suggested that the kind of persons who might pass the Chandler test would be those who were themselves significantly affected by the grant or withholding of a particular contract e.g. a supplier to an economic operator, or a trade association representing economic operators.

The Judgment in Waverley

Waverley’s case on insufficient standing was that: (1) under existing case law the claimants were unable to establish standing; (2) the remedy of judicial review for infringement of procurement law is not available to non–economic operators.

The judge found for Waverley on the first argument so there was no need for him to consider the much wider second principle. That will have to wait for another day (and perhaps it is only for the Court of Appeal to say that its own dicta in Chandler should not be followed and resolve the conflict between Gottleib and Wylde).

The judge held that in assessing standing it is necessary to look at the purpose of the legal framework in which the decision complained of was made. The purpose of the framework here was to provide transparent and fair competitions between economic operators when they sought the award of obtain public contracts.

With regard to the motive of the claimants, the judge decided:

(a) There was an unnecessary emphasis on the motives (although there was a lot of evidence showing that their opposition to the development pre-dated the proposed modification of the development agreement)

(b) Kathro and Chandler were not about ulterior motives for bringing the claim but rather showed the “gulf” between the claimants’ interests and the policy and purpose of the procurement legislation. As a result, the judge held that judicial review was only available to non-economic operators who could show that compliance with procurement law might have led to a different outcome and that would have direct impact on them.

As for “impact” the judge followed the Unison approach and held that bodies akin to a trade association could be directly affected. That conclusion is at odds with Gottlieb (and it is noteworthy that Unison was not referred to in Gottlieb) where, in order to hold that there was sufficient standing, it was necessary to distinguish Chandler. In Waverley, the Gottlieb basis to distinguish Chandler was rejected as it did not “engage” with the restricted Chandler test for standing – “It appears clear that had the Chandler test been applied in Gottlieb the claimant in that case would not have established that he had standing to bring the claim”.

Conclusions from Waverley:

  • The class of non-economic operators who can challenge a procurement decision by judicial review has been reduced. That has to be good news for the contracting authority side of the fence.
  • To have standing, a non–economic operator claimant has to: (a) be directly affected in the capacity of someone akin to an economic operator like a trade association; and (b) show that the outcome of the procurement process could have been different were it not for the alleged infringement of procurement law.
  • The judge in Waverley did not consider that a claimant’s motive for challenging a procurement matter was a decisive factor but it is suggested that in the light of how motive featured in the Kathro and Chandler reasoning, evidence of motive will still be useful. Even in Waverley it did have some relevance.
  • Procedurally, any defendant who has a standing point to take would be well advised to do so as a threshold issue as in Unison and Waverley.

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.