03/02/2022
The Minister for the Cabinet Office has successfully appealed the decision of O’Farrell J to allow (in part) a claim for judicial review of his decision to award a contract to Public First Limited (“Public First”). The contract was for the provision of focus group and communications support services relating to government public messaging around the Covid-19 pandemic. It was alleged by the Good Law Project that the award of the contract, without prior contract notice or competition, was in breach of the Public Contracts Regulations 2015 (“PCR”) and gave rise to apparent bias. The first instance decision by O’Farrell J had found a real possibility of bias, but the Court of Appeal judgment disagreed with this conclusion. Interestingly, the Court of Appeal judgment appears to cast some doubt on the applicability of public law principles such as bias to a regulatory regime, and also to question the recent trend of interest groups having standing to challenge tender award processes.
Background
Public First was established by Rachel Wolf and James Frayne. Through work connections, both Ms Wolf and Mr Frayne became personal friends of Dominic Cummings. Following strong recommendations from Mr Cummings, Public First were appointed in February 2020 to conduct focus groups to gather information on public opinion and behaviour. On 16 March 2020, at the request of Mr Cummings, a Public First employee was seconded to the Covid-19 communications hub. The Crown Commercial Service (“CCS”) was asked to put in place a formal agreement for this secondment. The contract was agreed in June 2020 with an effective date of 3 March 2020 and included focus group and reporting services as well as an on-site resource to support Number 10 communications (“the Contract”). The services under the Contract were later extended to cover qualitative research into EU exit, re-building the economy and attitudes to the UK union.
The first instance decision
The Minister had relied on Regulation 32(2)(c)[1] of the PCR to justify the direct award of the Contract. Regulation 32(2)(c) permits the award of contracts without prior publication in circumstances of extreme urgency brought about by unforeseeable events. The Minister argued that the Covid-19 pandemic was unforeseeable and necessitated additional qualitative research to be carried out immediately to inform policy and strategy on public communications. Whilst O’Farrell J accepted that the Minister could rely on Regulation 32(2)(c), she found that the contract award gave rise to apparent bias contrary to common public law principles. In summary, she found that:
- The personal connection between the Minister and Mr Cummings and the individuals at Public First was insufficient to establish apparent bias. The existence of personal connections might however be perceived to compromise independence, and it was therefore incumbent on the decision-maker to have a “clear record of the objective criteria used to select Public First over other research agencies”.
- The permitted departure from the usual rules on tendering meant that the Minister should have ensured that he could produce that objective evidence to demonstrate that the decision to appoint Public First was fair and impartial.
- The failure to consider any other research agency would lead a fair minded and informed observer to conclude that there was a real possibility, or a real danger, that the decision-maker was biased.
Standing
Of importance to authorities, suppliers, and practitioners generally, at first instance O’Farrell J had found that the Good Law Project had standing to bring a challenge under the PCR 2015, despite not being an economic operator. This was in line with previous authorities such as R (Chandler) v. Secretary of State for Children, Schools and Families.[2] The Minister had not appealed that part of the first instance decision, but the Court of Appeal said that:
“The question of standing for complete strangers to the procurement process with no commercial interest both under the Regulations and on public law grounds is a question ripe for review when it next arises.”[3]
Whilst the Good Law Project has applied for permission to appeal to the Supreme Court, the issue of standing will not be determined as standing was not an issue before the Court of Appeal. We will therefore need to wait for another case before having more definitive authority on the issue of standing to challenge an award under the PCR 2015 (or the regime that replaces it). This will be important to authorities, suppliers and action groups, not least because the new procurement regime envisaged under the anticipated Procurement Bill will introduce wider “principles and objectives” based duties and obligations (such as the obligation to take social value, carbon efficiency and wider policy objectives into account). Is the Court of Appeal’s comment intended to mean that a public interest group would have no standing to challenge a failure to take those objectives into account? It will be interesting to see how the Government articulates these duties when it publishes its Procurement Bill.
The Grounds of Appeal
The Minister’s appeal was advanced on three grounds:
- O’Farrell J had been wrong to find that the failure to keep a clear record of the objective criteria used to select Public First over other research agencies and the failure to undertake a comparative procurement exercise amounted to apparent bias.
- The second ground (not advanced before O’Farrell J at first instance) contended that the concept of apparent bias at common law was irrelevant because the provisions of Regulation 24 of the PCR concerning conflicts of interest are a complete code for these purposes.
- The third ground of appeal was that if, as O’Farrell J found, this was a situation of extreme urgency covered by Regulation 32(2)(c), the rules relating to bias had no further application.
Judgment of the Court of Appeal
The Court of Appeal found that O’Farrell J’s conclusion that the Minister was entitled to rely on Regulation 32 was at odds with her conclusion that the failure to consider other research agencies gave rise to apparent bias, as Regulation 32 permitted the award of the contract without competition. The Court of Appeal stated that it was “unable to accept that in these circumstances the impartial and informed observer would, in effect, require the creation of a common law “procurement regime-light” in the absence of which he would think there was a real possibility of bias.”
The Court of Appeal held that O’Farrell J ought to have accepted the Minister’s evidence that:
- only two companies had the scale and expertise to provide the services;
- Public First was trusted and known to be capable of undertaking the services; and
- it was already in place conducting the research therefore it was the most efficient and effective way of obtaining urgently needed research.
Amongst other things, the Court of Appeal considered that there was nothing unlawful in the involvement of Mr Cummings in the decision-making process, and it was relevant that the contract award was also approved by the Executive Director for Government Communication.
Against this background, the Court of Appeal concluded that the fair-minded and reasonably informed observer would not have found that a failure to carry out a comparative exercise created a real possibility of bias nor would they have concluded that the absence of any formal record of the decision-making process was indicative of apparent bias. For those reasons, the appeal was allowed.
Does bias apply in the context of the PCR 2015 anyway?
The judgment raises some interesting questions. The parties and the first instance judgment had proceeded on the premise that the common law principles of apparent bias were applicable in this case. The Court of Appeal said that it was in some doubt as to whether this common assumption was correct, although that issue was not before it as part of the appeal[4]. The Court of Appeal seemed to suggest that allegations of bias would sit better under Regulation 24 (conflicts of interest) rather than as a public law allegation of bias. Although Regulation 24 (conflicts of interest) was not pleaded by Good Law Project, the Court of Appeal did say that it could conceive of a situation where a claim under Regulation 24 alleging conflicts of interest could be brought, even in the context of where exceptional urgency applied.
“We can readily accept that if the strict criteria of Regulation 32 are met it is not likely that Regulation 24 (whatever its scope) will have been breached independently. But we do not accept that there are no circumstances in which it might have some application.”[5]
Conclusion
What this case shows is that, where the Court accepts that grounds for reliance on Regulation 32(2)(c) exist, the Court may also be reluctant to impose a duty on the authority to identify and evaluate whether other suppliers in the market are capable and/or suitable. This conclusion may be consistent with the distinction between the various limbs of Regulation 32(2), whereby Regulation 32(2)(a) and (b) (no suitable tenders/only one supplier) entail an assessment of the market; whereas (c) is a test which refers to urgency, foreseeability and time limits, none of which are related to the capacity of the market.
The case also flags interesting issues about standing of public interest groups which many people will be considering with interest.
Finally, the case (perhaps the most difficult issue of all) flags the inter-relationship between public law principles and regulatory principles. What the Court of Appeal said is that it was “in some doubt” as to whether bias was applicable in the case. The Court of Appeal did not expand on this further. Did it say this because Regulation 24 (conflicts of interest) ousts the application of the bias principle? Or did the Court of Appeal mean to cast doubt on the line of authorities that suggest that public procurement decisions are amenable to judicial review in the same way that any public law decision is amenable to judicial review[6]? To use a “fair-minded observer” litmus test, does the mere fact that reliance on Regulation 32 is justified mean that an authority can then disregard other public law principles such as rationality? And if it is the case that a public body acting under a regulatory regime is always bound by public law principles, why would some public law principles be ousted and some not?
At the time of writing, the Good Law Project has applied to the Supreme Court for permission to appeal. Whilst the issues before the Court of Appeal may yet be determined by the Supreme Court, the Supreme Court will not be deciding the issues of standing or the application in general of public law principles, as there were not issues before the Court of Appeal. Perhaps we will receive further guidance on these two areas in the shape of the Procurement Bill – doubtless this would be very helpful for both authorities and suppliers alike, not least as we move into a more principles based regime under the public procurement reforms introduced by the Government Green Paper.
This article was co-written by Madeleine Nankervis, Trainee Solicitor.
Footnotes
[1] It is worth noting that Regulation 32(2) provides three general grounds for the use of the negotiated procedure without prior publication of a contract notice (i.e. a direct award): broadly (a) where no suitable tenders have been submitted (b) where there is only one supplier able to supply because of artistic, technical or exclusive right reasons, and (c) insofar as is strictly necessary where, for reasons of extreme urgency brought about by events unforeseeable by the contracting authority, the time limits for the open or restricted procedures or competitive procedures with negotiation cannot be complied with. It was Regulation 32(2)(c) upon which the Minister relied.
[2] [2009] EWCA Civ 1011. See the obiter dicta at [77] and [78].
[3] [6]
[4] [71]
[5] [49]
[6] See, for example, R v Lewisham London BC Ex p Shell UK [1988] 1 All ER 938 DC and R v Enfield London BC Ex p Unwin [1989] C.O.D. 466 DC
