Public Procurement - Act Promptly When Loss Suspected

A recent case shows the importance of acting promptly when a loss due to a breach of the public procurement rules is suspected.

It involved a company which had bid for a public procurement contract awarded by the Greater Manchester Waste Disposal Authority (GMWDA). The contract was awarded on 8 April 2009, although the losing tenderer was informed that it had failed to win the contract nearly a year earlier. In the time between the two events, the contract had been altered significantly by negotiation between GMWDA and the firm which won the contract under tender. The losing tenderer had not been invited to submit a further tender despite the changes.

The losing tenderer began legal action for damages against GMWDA in August 2009, arguing that it should have been allowed to resubmit its tender in the light of the significant contractual changes. It argued that it had little knowledge of these until some time after the contract was formally announced in April 2009 and did not realise that there might be grounds for making a claim for loss until some time later.

The rule in such cases is that an action for a breach of a public procurement procedure must be commenced within three months of the claimant having knowledge of the breach. In the view of the court, this occurred in April 2009, since that was when the unsuccessful tenderer must have been aware of the possibility of a loss arising.

As the claim was not brought until August 2009, it was dismissed as being out of time.

The moral of the story must therefore be that in a situation like this, the sensible thing to do is to bring the claim as soon as the potential for a loss is known and not wait to obtain the necessary evidence on which the claim can be quantified.