Three’s company: the role of the successful tenderer in procurement challenges

Typically, in litigation, it is only the parties bringing, and those defending, the claim that have the ability to drive the case. However, in procurement challenges, it is often not that straightforward. 

Often, where a legal challenge is made to the award of a contract or framework agreement, there will be a successful tenderer (or indeed multiple successful tenderers) who will have an interest in its outcome. And, where a contract award is suspended for a period of time, the incumbent contractor may find that their services are required for longer than expected, until the new contract or framework can be entered into. Adding to the mix, there may be other unsuccessful tenderers watching the litigation unfold with interest, perhaps hoping for the procurement to be abandoned, reworked and readvertised – and for the chance of a second bite of the cherry. Taken together, this makes for a complex tapestry of interested parties.

Our team has worked on procurement challenges, in Scotland and in England & Wales, where the third party has played a critical role in the development of the litigation. In this blog, we consider the role of the successful tenderer and the three key moments in any procurement challenge where they may want to play a more active part:

1. Lifting the automatic suspension;
2. Disclosure of procurement documents; and
3. Addressing claims about the winning tender.

Lifting the automatic suspension

Where a challenge is raised before the expiry of the standstill period, the commencement of the action triggers the automatic suspension – a prohibition on the contracting authority from entering into the contract with the successful tenderer until the action is determined, discontinued or disposed of, or the suspension lifted by the court.

While the automatic suspension is in place, the successful tenderer’s position is ambiguous. They are the preferred bidder, but until the contract is signed, they cannot get on with the job with confidence that the authority will not abandon the procurement or that the court will not order the setting aside of the award.

Successful tenderers may be content to keep a watching brief, leaving the contracting authority to determine whether and when to apply to the court for the suspension to be lifted (perhaps, an approach that is more happily taken up by a successful tenderer that is also the incumbent, who may be benefiting from a period of extension!).  Others may take a more proactive approach and decide to join the action themselves, on an interim basis, to push for the suspension to be lifted.

This requires a successful tenderer to strike the right balance. They will not want abandonment of the procurement to be seen by the contracting authority as an easy (or, least-worse) option to bring the dispute to an end and may need to bring a certain amount of pressure to bear, to avoid that materialising. Of course, the end of a procurement is, hopefully, the start of a new commercial relationship and the successful tenderer will not want to be regarded as heavy-handed in seeking to steer the contracting authority’s steps.

Successful tenderers facing such a scenario should seek legal advice as soon as possible, to develop a strategy that aligns with short- and long-term objectives.

Disclosure of procurement documents

Parties to an action are expected to give upfront and frank disclosure. In a procurement challenge, that inevitably involves disclosure of documents relating to the contracting authority’s decision-making and – sometimes – the successful tenderer’s own bid. Disclosure of such documents is a complex issue for the court to navigate where it intersects with issues of confidentiality and legal privilege. Keeping tender documents confidential is a general duty imposed on contracting authorities and balancing this against the need for proper disclosure is particularly difficult where the contents of a successful tenderer’s bid are central to the grounds of challenge.

The successful tenderer will be interested in preventing any sensitive commercial information contained in its bid, or even reflected in evaluators’ notes, being disclosed and falling into the hands of its competitor. Successful tenderers often see merit in formally entering the litigation, in order to make the necessary representations.

Timely intervention is crucially important if successful tenderers are to have an opportunity to influence the extent of disclosure, including raising issues of relevancy and giving their views on the establishment of confidentiality rings (or equivalent arrangements).

Addressing claims about the winning tender

Where the grounds of a challenge relate to the solution or the price offered by the successful tenderer, it is natural for that party to be concerned that the outcome of the action will have ripples in the market. So much so, that the successful tenderer may wish to formally join the action.

We previously wrote about some of the challenges for third parties. A party with an interest in the outcome of a litigation should be notified of an action by way of intimation (in Scotland) or service of the claim (in England & Wales), which opens up an opportunity to become a party to the litigation. The courts recognise the interest that an affected tenderer may have in an action; but will also balance their interest against the inevitable impact on the litigation. As an alternative to formally entering the action, it may be appropriate, at certain points of the litigation, to offer support to the contracting authority by way of affidavit or witness statements.  

To get help managing procurement, from tendering to litigation, get in touch with our cross-border procurement team for tailored advice at the earliest stage.

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