The parties to procurement challenges are required to act quickly and in accordance with a strict timetable.
When a losing bidder issues a claim, it must serve the claim form on the defendant within seven days after the date of issue. Pursuant to CPR 7.4(2), the particulars of claim are to be served no later than the latest time for serving the claim form. That is, they must also be served within seven days after the date of issue.
The difficulties faced by a losing bidder in complying with this timetable are compounded by the fact that it is in a uniquely difficult position because the reasons for its failure are within the peculiar knowledge of the public authority. Losing bidders must therefore often plead their claims in broad terms without sight of key documents that the defendant may disclose later in the proceedings.
However, these difficulties are not an excuse for non-compliance with the timetable. In Cemex UK Operations Ltd v Network Rail Infrastructure Ltd, the TCC re-emphasised the importance of complying with the timetable and the risks associated with non-compliance.
Application for an extension of time
In Cemex v Network Rail, Cemex sought to challenge Network Rail’s decision dated 27 June 2017 to award a contract concerning the manufacture and supply of railway sleepers to PCM RAIL.ONE AG (“Rail One”). Cemex issued proceedings and served its claim form on 18 July 2017, the final day of the extended standstill period. Therefore, it was required to serve its particulars of claim by 25 July 2017 and stated in correspondence that it would do so.
On 25 July 2017, Cemex appeared to change its mind and issued an application for an extension of time for service of its particulars. The application alleged that, until Network Rail “provides specific disclosure of evidence relating to its alleged breaches and/or manifest errors of assessment”, Cemex could not properly plead its case.
In deciding whether to grant the application for an extension of time, Coulson J considered the importance of the tight timetable in procurement disputes. In summary:
- He described Cemex’s position of refusing to provide its particulars of claim until after the provision of documents to be “extremely unusual”. Although parallels were drawn by Cemex between its situation and that of Alstom in Eurostar v Alstom, it was noted that Alstom had provided its particulars of claim at the appropriate time and the issue as to documents in that dispute went to Alstom’s desire to plead a fuller case.
- He noted that, in Jobsin Co UK plc v Department of Health, Dyson LJ (as he then was) had emphasised the importance of complying with the very tight timetable from first to last, stating that “it is in the public interest that challenge to the tender process of a public service contract should be made promptly so as to cause as little disruption and delay as possible”.
Upon considering the information available to Cemex at that time, Coulson J concluded that it had always had sufficient information to plead particulars of claim and that no extension of time had been justified. However, the court allowed Cemex three days from the date of the hearing to serve its particulars because of three factors:
- Network Rail had previously offered through correspondence that Cemex could have three days to produce the particulars of claim.
- Following the conclusion of its oral submissions at the hearing, Cemex had changed its position and indicated it could provide its particulars of claim within three days.
- Network Rail did not resile from its offer at the hearing.
In reaching this decision, Coulson J emphasised that applications to extend time for the service of the particulars of claim in procurement disputes are rare and should not be encouraged. Cemex had embarked upon a risky course in its approach.
The other applications
Two other applications were dealt with at the hearing, namely Rail One’s application to be named as an interested party and Cemex’s application for specific disclosure.
Rail One as an interested party
Rail One wished to be named as an interested party in the proceedings for the purposes of this hearing and the hearing of Network Rail’s application to lift the automatic suspension.
The new TCC guide for public procurement disputes makes plain that a party in the position of Rail One can become an interested party.
In light of the highly confidential nature of the documents sought by Cemex in its application for specific disclosure, which comprised significant parts of Rail One’s technical bid, Coulson J granted Rail One’s application.
As set out above, Cemex sought disclosure of documents that it had previously said were essential for it to be able to properly plead its claim (although, during the hearing, Cemex admitted that it did not need the documents for the purposes of producing its particulars).
Network Rail had previously offered disclosure of some categories of documents sought into a lawyer-only confidentiality ring. Cemex had refused to accept disclosure of those documents because it did not agree that the confidentiality ring should be limited to the parties’ lawyers.
Cemex argued that the conventional approach to early specific disclosure applications in procurement cases is no longer applicable in light of the Supreme Court’s decision in Energy Solutions. In that case, the Supreme Court said that damages would only be available in a procurement case if an entitlement was established in accordance with the Francovich principles (that is, the breach was sufficiently serious). Cemex submitted that, because of this decision, the issues at the suspension hearing as to whether there is a serious issue to be tried would require a much more detailed and thorough review than has previously been conducted which, in turn, required much more extensive disclosure at the outset.
In rejecting Cemex’s application for specific disclosure, Coulson J stated the following:
- Cemex had acted unreasonably in refusing to accept the documents offered by Network Rail into a confidentiality ring. Its stance was “inexplicable” and “smack[ed] of arrogance”.
- As Cemex had admitted at the hearing that it did not require disclosure of the documents in order to produce its particulars of claim, its principle justification for the application had collapsed.
- The documents sought were highly confidential and disclosure of them at that stage would be disproportionate and unjustified.
- Several of the categories of documents sought seemed to bear no relation to Cemex’s sole allegation in the proceedings that Rail One’s bid appeared to be abnormally low.
- Cemex’s position as to the documents that formed the subject matter of its application varied before and during the hearing. To the extent that it was seeking different categories of documents from those stated in its application notice and supporting witness statement, no application had been made and the court could not fairly deal with a new application on an ad hoc basis.
- The confidentiality ring should not be widened to include two experts proposed by Cemex, particularly in circumstances where neither had yet been prepared to give the usual undertaking in relation to future non-involvement in related or similar procurements.
Cemex’s approach caused significant delay to the proceedings and was unjustified. The limited scope of the documents available to it to assess whether it had a cause of action against Network Rail was not an excuse for non-compliance with the procedural timetable. Its approach was heavily discouraged by Coulson J and is unlikely to be met with sympathy in the future, if adopted by other unsuccessful tenderers. The usual step of providing particulars of claim within the seven day timeframe and amending those particulars if and when necessary upon receipt of further documents is to be encouraged.
Cemex was not assisted by the fact that its specific disclosure application was broadly framed, it concerned Rail One’s highly confidential documents, and it had refused to accept receipt of documents offered into a confidentiality ring. This case serves as a useful reminder of the importance of drafting a narrow and justified application for specific disclosure, and carefully considering the balance between the need to see those documents and confidentiality.
Emma appeared as junior counsel for Network Rail. Cemex has subsequently discontinued its claim.