Public procurement processes must be conducted fairly and transparently but, at the same time, administrative paralysis that can arise from delays in awarding important contracts is certainly not in the public interest. A High Court ruling provided a textbook example of how judges go about addressing that dichotomy.
Following a tendering process, a company failed, by a very narrow margin, to win a three-year contract for the supply of equipment to a government department. In challenging that outcome, it asserted, amongst other things, that it had put in the most economically advantageous bid and that the contract was awarded to a trade rival because of a mathematical quirk in the department’s pricing model.
When the company launched proceedings, the contract’s award to the rival was automatically suspended by operation of the Public Contracts Regulations 2015. The company resisted the department’s application to have that suspension lifted.
Ruling on the matter, the Court noted the department’s plea that the challenge had been lodged too late. That argument was based on apparently formidable legal authority, but the matter was not so clear-cut as to enable a conclusion that the company had failed to raise a serious issue to be tried.
However, the Court found that, if the company succeeded in its claim, it could be adequately compensated by an award of damages. Its own financial losses arising from the failure to win the contract were relatively modest when measured against its turnover and, following a trial, it should be possible accurately to calculate the extent of such losses.
On the other hand, damages would not adequately compensate the department for difficulties arising from a delay of several months in awarding the contract. Such a hiatus would, amongst other things, place time-sensitive funding for the equipment in jeopardy and stall the realisation of important public benefits that the contract was intended to promote.
The Court acknowledged that there were public interest arguments pulling in both directions. However, in lifting the suspension, it found that such a course carried the least risk of injustice. The balance of convenience came down decisively in the department’s favour. The department undertook to pay the company damages if it succeeded in establishing that breaches of the Regulations had occurred but for which it would have been awarded the contract.