In the recent case of Dukes Bailiffs Ltd v Breckland Council, the High Court considered whether a local authority seeking to contract out enforcement of its debts (such as council tax) was governed by the Public Contracts Regulations 2015 ("PCR") or the Concession Contracts Regulations 2016 ("CCR").
After losing out on a re-tender by 2.5%, a challenge was brought by Dukes Bailiffs Limited ("Dukes") against Breckland Council ("Breckland"), criticising the scoring, reasons and alleged "apparent bias" of an evaluator. However, as the contract was below the £5.3 million threshold for a CCR claim, Dukes claimed it fell under the PCR (which regulates contracts valued at the much lower threshold of £213,477 inclusive of VAT). Dukes also claimed that, even if the PCR did not apply, the Defendant had expressly or impliedly contracted with the Claimant to award the tender as if it did, so breaches of the PCR were breaches of contract. Furthermore, Dukes brought a parallel claim for Judicial Review arguing that Breckland’s award was unlawful on grounds that included procedural unfairness, irrationality and failure to provide reasons.
What was the background?
In December 2022, in a re-tender competition for providers, Breckland issued an Invitation to Tender to provide debt enforcement services. Dukes tendered but on 27th January 2023, Dukes was informed it had lost out by 2.5% (1 mark), to a rival bidder 'Bristow & Sutor'. Dukes argued it should have been successful and criticised: Breckland's tender scoring; the reasons it gave for its decision; and 'apparent bias' of one of Breckland's four tender evaluators in favour of Bristow (owing to alleged connections between the evaluator and a manager at Bristow who had formerly worked for the Claimant and had left in difficult circumstances). Thus, Dukes brought two separate claims, firstly a claim contending that Breckland breached the PCR due to the above reasons and aimed to gain an order which required Breckland to award the contract to them. Secondly, it issued a Judicial Review claim, which did not depend on the PCR applying, due to apparent bias of the evaluator and failure to give proper reasons for the scores awarded.
In December 2022, in a re-tender competition for providers, Breckland issued an Invitation to Tender to provide debt enforcement services. Dukes tendered but on 27th January 2023, Dukes was informed it had lost out by 2.5% (1 mark), to a rival bidder 'Bristow & Sutor'. Dukes argued it should have been successful and criticised: Breckland's tender scoring; the reasons it gave for its decision; and 'apparent bias' of one of Breckland's four tender evaluators in favour of Bristow (owing to alleged connections between the evaluator and a manager at Bristow who had formerly worked for the Claimant and had left in difficult circumstances). Thus, Dukes brought two separate claims, firstly a claim contending that Breckland breached the PCR due to the above reasons and aimed to gain an order which required Breckland to award the contract to them. Secondly, it issued a Judicial Review claim, which did not depend on the PCR applying, due to apparent bias of the evaluator and failure to give proper reasons for the scores awarded.
In Breckland's defence to the first claim, it contended the PCR did not apply as the contract awarded was a 'concession contract' under the CCR and applied for the claim to be struck out. Breckland resisted the Judicial Review claim on the basis that the decisions sought to be challenged were not amenable to judicial review because they concerned commercial decisions or conduct.
What did the court decide?
The Court found the contract to be a services concession contract and, as it was below the (much higher) concessions threshold, the CCR did not apply. Furthermore, permission was refused for the Judicial Review claim. However, in this preliminary hearing, the Court did not rule on Dukes' claim that the tender documents created a contract obliging the procurement procedure to be conducted "as if" the PCR applied. This question may proceed to trial if Dukes decides to pursue it, but any remedy will be limited to damages since the PCR (and its statutory remedy to set aside the contract award) does not apply.
What are the practical implications of this case?
This judgment provides useful guidance on what a concession contract is for the purposes of the CCR, and how this differs from a contract for services under the PCR. The Court clarified that a concession is based on the definition of "concession" in the 2004 Public Sector Directive, as further amplified by a specific requirement of transferring a substantial operating risk as elaborated in Art.5(1) of the Concessions Directive 2014. This is a welcome clarification on the definition of concession, following a swathe of divergent EU case law.
Furthermore, the judgment provides a post-Brexit example of where the TCC will still adopt a purposive approach in interpreting both the PCR and CCR, in accordance with the Public Contracts Directive 2014 and Concessions Directive 2014.
The case emphasises the need to ensure that tender documents clearly set out the procurement rules that will apply to the contract. This will be even more important going forward when adopting the new procedures under the Procurement Bill. It also highlights the benefit of ensuring that procurements should be "subject to contract" so that a contractual relationship will not be created in relation to the procurement procedure itself.
Why this is significant?
Correct categorisation of a contract as either a concession or services contracts is significant particularly given the different thresholds at which the obligations and remedies of either Regulations apply are very different. The PCR applies to a contract value of £213,477 (inclusive of VAT) for 'public service contracts', whereas the CCR does not apply to a services concession contract below a threshold of £5,336,937 (inclusive of VAT). Therefore, for contracts less than £5.3m in value, there is a real 'cliff-edge' between the two types of contract, as if the PCR applies, there are strong statutory remedies. However, if it does not, as the CCR does not apply either, there are no statutory remedies – hence Dukes parallel application for Judicial Review. Moreover, whilst the Claimant can still pursue a common law contract claim (if the procurement documents inadvertently create a contract that said the procedure will be run "as if the PCR apply"), this is limited to damages for loss of opportunity and cannot reverse any contract award.
