1. Public procurement litigation – a comparative view
Andrew Denny
30 March 2012

2. Procurement litigation – the perfect storm?
Major public sector cost cutting
Banks increasingly nervous about lending
Major de-scoping or abandonment of existing and proposed projects
Significant pressure to favour bidders who will create/protect local jobs
New legal regime/changing legal landscape
Major risk of planning challenge (particularly on EU environmental grounds)

3. Challenges under the procurement regulations 2009-2011
No. of claims proceeding to judgment in England and Wales
2009: 4 claims
2010: 13 claims
2011: claims
2012 (so far): 2 claims
Note that:
only includes reported cases (do not reflect settlements prior to judgments etc)
spate of JR challenges to Legal Services Commission
disproportionate number of cases in Northern Ireland
What is the position in other European jurisdictions?

4. Belgium
Challenges against contracting authorities for suspension or annulment considered in summary proceedings in Council of State
Damages can only be obtained in the civil courts
Legal fees usually between €15,000 and €40,000.
Estimated number of procurement challenges against public authorities: more than 137 challenges a year
Public authorities win more than 70% of the cases.
Strong litigation culture regarding procurement cases.
Not seen as “hostile” to challenge - usually no fear of blacklisting
Seen as showing that you are eager and serious about the contract and as a signal that the authority is being watched
A number of challenges are strategic and lead to out of court settlements (and the claim being withdrawn) prior to judgment
All public procurement challenges to obtain suspension or annulment of the award are considered in summary proceedings in the Council of State (against decisions by authorities) or in the civil courts (against decisions by entities that are not authorities).
Damages can only be obtained in the civil courts (regardless of the nature of the awarding entity).
The costs (legal fees) of pursuing a challenge are usually between € 15,000 and 40,000.
The number of procurement challenges per year is high. We don’t have precise statistics but estimate there are more than 200 challenges a year.
Public authorities win more than 70% of the cases.
There is a strong litigation culture regarding procurement cases. It is not seen as “hostile” to challenge and companies usually do not worry about being blacklisted, on the contrary it is seen as “showing that you are eager and serious about the contract” and as a signal that the authority is “being watched” for future tenders. A number of challenges are strategic and lead to out of court settlements (and the claim being withdrawn) prior to judgement.

5. The Netherlands
More than 90% of public procurement challenges are considered in summary proceedings (kort geding) in the civil courts.
The costs (legal fees) of pursuing a challenge are usually between €20,000 and €40,000.
The number of procurement challenges per year is around 130
On average, public authorities win 65% of the cases, bidders 32% and in 3% no clear winner.
Relatively many public procurement challenge as summary proceedings are relatively fast (1-2 months) and not too expensive.

6. France Procedures available for unsuccessful bidders:
summary proceedings - duration: one month, no appeal before the Conseil d’Etat
Proceedings on the merits: around one year to get a judgment
Legal fees: from €5.000 for summary proceedings to more than € for more complex cases (without appeal)
Since 2008, French caselaw has become more strict:
claimants must prove that alleged irregularity reduced, at least potentially, chances to win the bid (SMIRGEOMES - Conseil d'Etat, 2008)
decisions tend to favour the preservation of contractual relations in case of minor irregularities (Commune de Béziers, Conseil d'Etat in 2008 and 2010)
Challenges against public procurement procedures for small to mid-size tenders more frequent - more rare that large companies, especially in construction sector, bring challenges

7. Italy
Public procurement litigation consists of challenging of (i) calls for tenders (bandi di gara); (ii) decisions to exclude a company from a bid or (iii) the award of a contract
Claims must be filed with Regional Administrative Tribunal within 30 days from knowledge of measure to be challenged
: (i) 48.5% of tenders higher than 15,000k in value and (ii) 35.2% of tenders from 5,000k-15,000k in value resulted in litigation (National Surveillance Authority for Public Contracts)
During 2011 number of claims has decreased, possibly due to the increase in taxes to be paid when filing the claim

8. Poland tribunal-like body fixed fee of PLN 15,000 (approx. €3,500)
First instance - appeal to the National Chamber of Appeal
tribunal-like body
fixed fee of PLN 15,000 (approx. €3,500)
proceedings suspend the award of a public contract
Second instance - petition to a state court
fee of 5% of tender value, max of PLN 5 million (approx. €1.25 million)
2010: out of 19,000 public tenders, 13% were subject to challenges filed with the Chamber (approx. 2,500)
approx. 26% of the challenges were successful
High number of challenges at first instance due to:
Poor quality of tender documents
Too-restrictive tender conditions
Low fee and fast proceedings (12 days on average)
Second instance - high fee limits usefulness. Challenge process is usually restricted to first instance

9. Why is the UK different? Higher costs
Formality of procedure (c.f. administrative tribunal)
Fear of backlash?
Lack of challenge “culture” – if challenges are regular then claimants will not be singled out
Traditional judicial review approach is deference to decision-maker - may affect judge’s thinking and claimants’ perception of chances of success

10. Conclusion
UK unlikely to see same levels of litigation as rest of Europe due to higher costs
But does seem to be an increase, perhaps due to change in law and economic conditions
Increase may be self-perpetuating – may lead to a more litigation-friendly tendering culture

11. Questions?
These are presentation slides only. The information within these slides does not constitute definitive advice and should not be used as the basis for giving definitive advice without checking the primary sources.
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