Case review: Aquila Heywood Ltd v Local Pensions Partnership Administration Ltd

In the case of Aquila Heywood Ltd v Local Pensions Partnership Administration Ltd  the High Court considers whether the automatic suspension triggered by Regulation 95 of the Public Contracts Regulations 2015 remains in place where the contract decision has been rescinded.

Case overview

Local Pensions Partnership Administration Ltd (LPPA) issued an invitation to tender to rationalise its IT system and establish a core administration system. The Claimant, Aquila Heywood Limited (Aquila), submitted a tender.  In September 2020 LPPA informed Aquila that they had been unsuccessful and that the contract had been awarded to another bidder, Civica Limited (Civica) (“the First Decision”). Aquila challenged the authority’s pricing methodology and subsequently issued proceedings; Aquila alleged that LPPA had acted in breach of the Public Contracts Regulations 2015 (PCR) and the applicable principles of EU law in its evaluation of tenders and the First Decision.

In October 2020, LPPA conceded that errors had been made in the tender evaluation process and that proper records had not been made.  It therefore decided to “rewind” the procurement, withdraw the initial notice of intention to award the contract to Civica and re-evaluate the tenders submitted.

In December 2020, LPPA issued its second award decision.   It again intended to award the contract to Civica ("the Second Decision”). LPPA then sought Aquila’s consent to lift the automatic suspension it believed to still be in place.  Aquila offered to discontinue its claim if LPPA agreed to pay its costs.

On 18 December 2020, LPPA issued an application seeking an order pursuant to regulation 96(1)(a) PCR, namely that the court make an interim order to bring the automatic suspension imposed under regulation 95(1) PCR to an end. The parties agreed that there was no difficulty with such order but Aquila contended that the application was unnecessary.

The question to be resolved was a question of costs; LPPA argued that the application to lift the automatic suspension had been successful and therefore Aquila should pay LPPA’s costs. Conversely, Aquila contended that the application was entirely unnecessary since no automatic suspension ever arose or, alternatively, the automatic suspension only applied to the First Decision which was withdrawn and since there was no pleaded case challenging the Second Decision, no suspension ever bit upon the Second Decision. Aquila therefore also sought their costs.

The Judgment

The Honourable Mr Justice Pepperall (Pepperall J) awarded Aquila half of its costs and reasoned that:

1. There was nothing in Regulation 95(1) PCR which prevented the automatic suspension applying to cases which fell within one of the Regulation 86(1) PCR exemptions
   Subject to certain exemptions, Regulation 86(1) PCR requires a contracting authority to communicate its decision to award a contract to each tenderer. Aquila argued that Regulation 95 PCR was simply not engaged in which case the decision fell within an exemption under Regulation 86(5), namely that the contract had been awarded under a framework agreement.  Pepperall J noted that the automatic suspension arose where the three conditions in Regulation 95(1) PCR were met (which they had been on the LPPA becoming aware of the claim) and that there was no reason of principle or policy why Regulation 95(1) PCR should not apply in a case that is exempt from the obligations set out in Regulation 86.
   
   
2. Where the authority withdrew the First Decision, the suspension which had been triggered “served no further purpose”
   The LPPA argued that the terms of Regulation 95(2) PCR provides that an automatic suspension which has been triggered continues until either (a) the court brings it to an end by an interim order[1], or (b) the proceedings are determined, discontinued or otherwise disposed of and the court does not order that the suspension should remain in place pending appeal. Further, the LPPA asserted that there was no additional category under Regulation 95(2) PCR in which the suspension lapses without further order of the court where the contracting authority withdraws its decision to award the contract.
   
   Pepperall J stated that Regulation 95(1) PCR prevented an authority entering into a contract “pursuant to a challenged decision” and was limited so that it prevents an authority from contracting on the basis of the challenged decision.  Further, he asserted that it would serve “no sensible purpose” if the automatic suspension continued to bite after the withdrawal of the challenged decision as this could prevent an authority entering into a contract pursuant to a subsequent decision which is not the subject of any legal challenge.
   
   He therefore held that the suspension only prevented LPPA from awarding the contract to Civica pursuant to the First Decision and once that decision had been withdraw the suspension “served no further purpose”. As such, the application was held to be unnecessary and LPPA were not the successful party to the application.
   
   
3. Aquila’s conduct was relevant to considerations under CPR 44.2(4)
   CPR 44.2(4) states that in deciding what order to make about costs, the court will have regard to all the circumstances including the parties’ conduct.
   
   Pepperall J held that Aquila were the successful party. However, Aquila initially asserted that the automatic suspension prevented LPPA from entering into the contract with Civica and only changed its position that the application had not in fact been necessary after the application to lift the suspension has been issued. The Judge considered that this was conduct that the court should take into account pursuant to CPR 44.2(4) and therefore award Aquila half of its costs.

Conclusion

The overarching practical points emanating from the decision concern two substantive issues:

1. A claim issued in relation to a contract awarded under a framework agreement will trigger the automatic suspension once the authority is aware of it.
2. If a claim has been issued in relation to a contract award decision, but the authority subsequently abandons that decision and withdraws it, the automatic suspension in relation to that decision comes to an end. This means that any claimant who wishes to challenge any subsequent “second” decision would need to issue fresh proceedings in relation to any new claim.

The judgment also highlights the importance of the parties engaging in a constructive and reasonable way if they are to avoid adverse costs consequences, referencing an earlier judgement in which Waksman J reduced costs against Transport for London in connection with its conduct in relation to an application to lift the suspension in the case of Iridium Concesiones de Infraestructuras SA & Ors v Transport for London [2019] EWHC 3589 (TCC).  

[1]               Under Regulation 96(1)(a) PCR