One of the most awaited court decisions in the PPE procurement litigation saga in the UK was handed down yesterday—see R (Good Law Project and EveryDoctor) v Secretary of State for Health and Social Care [2022] EWHC 46 (TCC). The case concerned, among other things, the interpretation of the authorisation to use a negotiated procedure without prior publication on grounds of extreme urgency, and its limits, under reg.32(2)(c) and 32(4) of the Public Contracts Regulations 2015 (‘PCR2015’), which transpose Art 32(2)(c) of Directive 2014/14/EU verbatim.
The case required an EU law conforming interpretation due to the procurement predating the end of the Brexit transition period (see para [308]). The High Court thus engaged in an analysis of CJEU case law and a functional interpretation of reg.32(2)(c) and 32(4) PCR2015 that is directly of interest regarding the interpretation of Art 32(2)(c) Dir 2014/14/EU (on which see P Bogdanowicz, ‘Article 32’ in R Caranta and A Sanchez-Graells, European Public Procurement. Commentary on Directive 2014/24/EU (Edward Elgar, 2021) 350-362]. There are two points worth highlighting in the Judgment (see also Pedro Telles’ hot take yesterday).
First, the High Court confirmed the ‘blanket approach’ interpretation that the pandemic, in its early stages, was itself sufficient justification to ‘deactivate’ procurement rules through the exception to competitive requirements in reg.32(2)(c) and 32(4) PCR2015 / Art 32(2)(c) Dir 2014/24’EU (paras [329]-[331]). This has been the position of the UK Cabinet Office and the European Commission in their ‘pandemic procurement’ guidelines of March and April 2020, respectively, and one that I share (see A Sanchez-Graells, ‘Procurement in the time of Covid-19’ (2020) 71(1) NILQ 81-87, at 83; see also Bogdanowicz, above, at 32.23, contra Telles, above).
Second, and more interesting, the High Court considered whether the authorisation to carry out a negotiated procedure without prior publication is still subject to some of the requirements of the PCR2015 (and, by analogy, Directive 2014/24/EU). The High Court found that, under certain circumstances, extremely urgent procurement is still bound to respect the equal treatment requirement of reg.18 PCR2015 / Art 18 Dir 2014/24/EU. The High Court’s reasoning was that
It is … necessary to consider whether there are any constraints on the permissible approach by a contracting authority when acting under regulation 32; in particular, whether there is an irreducible minimum standard of objective fairness that applies to such procurements, even in the absence of open competition (at [334], emphasis added).
and that
Regulation 18 provides that contracting authorities shall treat economic operators equally and without discrimination and shall act in a transparent and proportionate manner. Regulation 32 does not expressly disapply the obligations set out in regulation 18. … the question that arises is whether there is any implicit exclusion, or modification, of this provision arising from operation of the negotiated procedure without notice (at [340], emphasis added).
Within this framework, and taking into account the peculiar circumstances of the case — ie the fact that the UK Government ‘operated a high priority lane (“the High Priority Lane”, also referred to as … “the VIP Lane”), whereby suppliers who had been referred by Ministers, [Members of Parliament] and senior officials were afforded more favourable treatment, significantly increasing their prospects of being awarded a contract or contracts’ (at [4]) — the High Court established that
It is reasonably clear that where there is only one economic operator who can provide the works, supplies or services, the principle of equal treatment can have no application. Where there is no alternative source, there will be no comparative exercise carried out and no question of any discrimination arises. However, where the contracting authority considers bids from more than one economic operator, whether at the same or at different times, there is no obvious rationale for disregarding the principle of equal treatment in terms of the criteria used to decide which bidders should be awarded a contract. Dispensing with a competition does not justify arbitrary or unfair selection criteria where more than one economic operator could satisfy the demand (at [341]).
I have two comments here. The first one is that the analysis at para [341] is partially flawed when it initially refers to the existence of a single supply source, as that is covered by the grounds in reg.32(2)(b) PCR2015 / Art 32(2)(b) Dir 2014/24/EU. A proper analysis under ground (c) on extreme urgency should have triggered a different logic, as the presence of extreme urgency allows contracting authorities to simply choose a provider regardless of the existence of alternative providers, precisely because the supply, works or services are so urgent that there is no time to consider alternatives. The choice of the specific supplier to which the contract will be awarded is discretionary, and subject only to documentary requirements primarily concerned with the concurrence of the circumstances justifying the use of the negotiated procedure without prior publication (see Sanchez-Graells, above, 83).
If this premise is correct, on the basis of a maiore ad minus logic, the argument is difficult to extend to a situation where the contracting authority makes repeated choices for the direct award of contracts. That does not mean that unequal treatment is allowed, but rather that the source of the requirement for equal treatment can hardly be found in reg.18 PCR2015 / Art 18 Dir 2014/24/EU in relation to reg.32(2)(c) PCR2015 / Art 32(2)(c) Dir 2014/24/EU because its exclusion is implicit in the authorisation to directly and discretionarily choose the economic operator to be tasked with the extremely urgent supply, service provision or works—regardless of whether there is only one possible source or not, as that is covered in ground (b) of those rules instead.
The High Court dismissed this argument as follows:
The Defendant submits that, as he was not constrained to implement any competitive tender process, it was lawful for the Defendant to elect to approach an economic operator of his choice and negotiate directly with such economic operator for the purposes of awarding any individual public contract. In those circumstances, it is submitted, the principle of equal treatment did not apply. In my judgment that submission goes too far. It would be open to the Defendant to justify the selection of one economic operator but only: (i) where he could bring himself within the conditions set out in regulation 32(2)(b), for example where only one economic operator could source the required PPE; or (ii) where he could justify the extent of such derogation from the principles in regulation 18 under regulation 32(2)(c), for example where only one economic operator could source the PPE within the required timescale. That interpretation is consistent with the guidance issued by the European Commission on 1 April 2020 [at [346]).
I submit that the legal analysis of the High Court in this point is incorrect, simply because there is no single source requirement in reg.32(2)(c) PCR2015 (or in Art 32(2)(c) Dir 2014/24), even if this can be a matter of policy, as reflected in the European Commission’s guidance (at 1 and 2.3). And the absence of a sole source requirement is entirely justified on operational grounds. Imagine a situation where the contracting authority with the extremely urgent need identifies a potential provider and successfully and quickly reaches an agreement to get its urgent need satisfied. It would defy all logic to require the contracting authority to then check whether ‘only [that] undertaking is able to deliver within the technical and time constraints imposed by the extreme urgency‘ (in terms of the Commission’s guidance) and, if not, then engage with additional negotiations with the other/s, which would only generate further delay in getting the extremely urgent (public) need satisfied. Sole source requirements simply make no sense in this setting. In fact, the Commission’s guidance was (contradictorily?) clear that ‘as set out in Art. 32 of Directive 2014/24/EU (the ‘Directive’), public buyers may negotiate directly with potential contractor(s) and there are no publication requirements, no time limits, no minimum number of candidates to be consulted, or other procedural requirements. No procedural steps are regulated at EU level. In practice, this means that authorities can act as quickly as is technically/physically feasible – and the procedure may constitute a de facto direct award only subject to physical/technical constraints related to the actual availability and speed of delivery‘ (emphasis added), with this requirement logically only meaning that the awardee of the contract needs to be able to actually deliver at speed (which was the flaw with eg the ventilator challenge, see here).
Conflating both requirements constitutes an improper interpretation that runs contrary to the CJEU case law on extreme urgency grounds for the use of the negotiated procedure without prior publication. This may seem like a technical point, but I think it is important. It is also a rather unnecessary point for the High Court to have made, as the Judgment does not rest on it. At paras [348] and [350], the Court is clear that the equal treatment requirement emerged from the way in which the discretion was exercised, because the VIP Lane created a procedure that was structurally and unavoidably discriminatory.
Linked to that, my second comment is that the exclusion of reg.18 by reg.32(2)(c) PCR2015 (and EU equivalents) should not have pre-empted the finding of an ‘irreducible minimum standard of objective fairness’ in the organisation of a system to make repeated or multiple direct awards in the context of an extremely urgent need (the VIP Lane). However, such requirements should derive from general administrative law rules or principles and, in particular in the context of procurement covered (and authorised to be carried out via a negotiated procedure without prior publication) by EU law, from the duty of good administration in Article 41 of the Charter of Fundamental Rights of the EU (‘Charter’) — although, admittedly, the relevance of Art 41 Charter to procurement carried out by the Member States is controversial (in favour, AG Sharpston, Opinion in Varec, C-450/06, EU:C:2007:643, at 43; cfr. AG Bobek, Opinion in HUNGEOD, C‑496/18 and C‑497/18, EU:C:2019:1002, at 50).
And, although I am not an expert in UK public law, I would also have thought that general requirements of administrative decision-making should apply to that effect, such as the requirement for decision-makers to consider all issues which are relevant to a decision and not to consider any issues which are not [for discussion in the context of automated decision-making, and with references to case law, see J Cobbe, ‘Administrative law and the machines of government: judicial review of automated public-sector decision-making’ (2019) 39 Legal Studies 636-655, at 650]. However, the High Court also dismissed this argument, although seemingly on the specific factual circumstances of the case (at [456]-[459]).
So it could be that the stringency of the English case law’s approach to the control of objectivity in administrative decision-making provides an explanation for the, in my view, improper interpretation of the requirements that can be attached to procurement via a negotiated procedure without prior publication on grounds of extreme urgency. Whether the CJEU is likely to follow a similar approach to the imposition of equal treatment requirements in the interpretation of Art 32(2)(c) Dir 2014/24/EU in the future is thus difficult to assess.
