The real significance of the government’s defeat over transparency in public procurement – yes, the claimants overstated their case, but reaction of the government was extraordinary

22nd February 2021

 

Last week the high court held that the government of the United Kingdom had acted unlawfully in respect of certain contracts awarded during the pandemic.

The judgment is here.

In particular, the high court held that there had been a failure by the government to publish contract award notices within the appropriate time.

It is a significant case – even though the government sought to brush off the claim as ‘academic’.

And the significance of the case is also not quite what the claimants initially made it out to be when making the claim, and the claimants lost on their more eye-catching assertions.

In particular, the claimants failed to show there was a ‘systematic’ policy put in place of widespread non-compliance with the publication obligations, and nor did the claimants show that there was a deliberate policy to ‘de-prioritise’ compliance. 

They – and you – may believe that to be the case – but they could not show this to the court.

All the claimants could demonstrate to the court was that there was non-compliance by the government with the mandatory deadlines – which the government could not and did not deny.

(The government asserted that they were only ‘technical breaches’.)

In respect of this undeniable (and not denied) non-compliance, it was a difficult case for the claimants to lose in the event that it proceeded to a court hearing.

The legal equivalent of a good shot on goal.

And as the case did proceed to a court hearing, the claimants won on the issue of non-compliance – though they did not get the remedy they primarily wanted (and almost did not get a remedy at all).

The curious thing is not so much why the claimants won – there had been a breach that could not be denied – but why the government resisted the claim all the way to the high court (spending over two hundred thousand pound in legal fees).

Had the government simply admitted the breaches – but denied that the breaches were the result of any systemic and deliberate policy – and undertaken to publish the notices as soon as possible, then it would have been highly unlikely that the claim would have proceeded to a full hearing.

But the government did not, and so the claim did.

Something rather strange has gone on.

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In this post I now set out the elements of the case, as can be identified from the content of the judgment.

I will then set out what the case was – and was not – about.

But before we get to the judgment, we need to first understand the purpose of the contract award notices and why it matters that they were not published in time.

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‘Public procurement’ is the term used to describe the purchase by public authorities of goods and services from the private sector.

For various reasons, public procurement is subject to special legal rules that are in addition to (and sometimes qualify) the general law of contract.

In essence, the special laws of public procurement are about procedure: that is, what a public body has to do (and cannot do) when going about awarding a ‘public contract’.

And if that public body does not comply with those legal rules then a court can determine that it has acted unlawfully.

What then happens depends on the nature of the breach and the practical use of any remedy.

A court may compensate a wronged bidder for a contract, or it can issue a mandatory order that a public body do something (or not do something) in particular.

Or a court may just declare the correct legal position.

Or if there is nothing to be done, then a court may do nothing at all.

(For more on what it means, and what it does not mean, for a court to hold that a public body has acted unlawfully, see my post yesterday.)

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One of the reasons there is a special legal regime for public procurements is the need for transparency.

Transparency is a fundamental principle in the law of public procurement.

All sorts of things need to be published by public authorities (and some public utilities) when purchasing goods and services that would not need to be published by a private corporations making similar transactions.

In routine public procurement the principle of transparency is met by the publication, for example, of specifications and contract values, and of details of the procurement exercises to be followed and of the criteria to be applied.

Thousands and thousands of pages of this dry information are published every day: the dullest legal prose on the planet outside of a tax code or a trade agreement schedule.

Dull – but necessary and a public good.

And one of the things that should be published are contract award notices.

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A contract award notice is not, itself, legally that significant.

The parties to the tender exercise – the winners and (any) losers – will already have been notified of the contract award – and an aggrieved loser can bring a challenge if it acts promptly.

The purpose of the contact award notice is not for the benefit of the bidders and does not trigger or limit their rights.

The purpose of the contract award notice is for the benefit of the public

Contract award notices tell us which contracts have been awarded and for how much and so on.

Contract award notices also will alert investigatory bodies such as the National Audit Office to possible problems.

The alternative to a contract award notice is that nobody outside the government and any bidders would ever know what contracts had been awarded.

And so although contract award notices may not be legally that important – in that they do not trigger rights and so on – they are politically important.

Contract award notices are part of the tribute that public procurement pays to the principle of transparency.

And the need for transparency in the award of public contracts is a fundamental reason why we have special rules for public procurement in the first place.

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This need for the publication of contract award notices is all the more important when there has not been any advertisement or other publicity for the award of high-value contracts.

For in an emergency a public authority can dispense with a formal procurement process.

This is provided for in the United Kingdom by regulation 32 of the Public Contracts Regulations 2015:

The government has relied on this regulation 32(2)(c) exemption for a high number of pandemic-related contracts.

Few sensible people would object – as such emergency provisions exist for emergencies, and this was an emergency.

The flexibility is built into the system.

But.

Although the need for prior publications can be relaxed under regulation 32, this does not mean that the need for subsequent publication is relaxed too.

Indeed, such notices become crucial, so that the public may know what is (and is not) being done.

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Contract award notices are provided for under regulation 50 of the Public Contracts Regulations.

You will see that the regulation is one of a number of provisions dealing with transparency:

The relevant part of the regulation is regulation 50(1):There are some exceptions to this thirty day publication obligation (for example, national security) – but the government did not seek to rely on those exceptions in the coronavirus procurements.

So although regulation 32 allowed the government to dispense with prior publication about public contract the government still had to comply with the regulation 50 obligation once the contracts had been awarded.

And in a substantial number of instances, the government did not do so.

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The judgment sets out the extent of the government’s failure to publish contract award notices in accordance with regulation 50:Note that this was set out in the government’s own witness statement.

(The mentions to the ‘policy’ are to a formal government policy on publications that was also breached – but for the purposes of this post, the policy adds nothing.)

Given that there was a legal rule that applied, and given that the government did not comply with it, then the only result is to conclude that the government had acted unlawfully.

There was no other outcome available to a competent court.

The wider (wilder?) claims of the claimants were found wanting: no probative evidence was before the court on this non-compliance being directed and cynical.

Of course, one may have suspicions and may regard those taking the government’s version of events at face value as naive.

But suspicions are not evidence, let alone proof, and the claimants’ assertion that the policy of delayed publication was part of a deliberate system fell flat in the (virtual) court room.

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What also did not get traction was the claimants’ demand for a mandatory order – an order of the court to the government to comply with regulation 50 under pain of contempt of court.

And the reason why such an order was not made was because it was, by the time of the hearing, unnecessary.

The government had published the notices, although out of time.

Perhaps this late activity was because of this litigation.

Perhaps it was because, as the government’s evidence detailed, there were now more resources in place for such tasks.

But whatever the explanation: there was nothing left for a mandatory order to do – and so such an order was not made.

All that the court could do positively was to exercise its discretion to make a declaration that the law had been broken – and that is what the court did, though refusing to use words like ‘systemic’ as requested by the claimants.

But any declaration by a court is discretionary and it may well not have been made.

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So this is case about non-compliance with a statutory deadline, which the government did not deny, and that had been remedied by the time of the hearing of the court.

And once at court, not a difficult case for the claimants to win.

So – and this is the curious question – why did this case ever get to court?

Why?

Here paragraph 153 of the judgment is fascinating.

(It is too long to screengrab or quote here – so click and read it here.)

For although the claimants undoubtedly overstated their case, the government’s reaction was extraordinary.

The government sought to claim that there was a special species of ‘technical breaches’ that were not really legal breaches at all.

The government also resisted until the very last moment any admissions as to what had happened.

The claimants may have had a free run at goal – but the government managed to intervene and score an own goal anyway.

If Alan Hansen were a legal commentator, one could imagine him wincing at almost every sub-paragraph of paragraph 153 of the judgment.

What on Earth was happening?

One can be fairly sure the fault is not with the government lawyers – their internal advice would have been much as I have averred above – to acknowledge a problem and to undertake to put it right.

(And the judge himself in this case was an experienced barrister in such public law matters – that is how he can set out the details in paragraph 153 in such a – well – systemic way.)

Someone in government insisted that this case went all the way to court – at the cost of over two hundred thousand pounds.

There may not have been a deliberate policy of delaying contract award notices – but there seems there was a deliberate decision to delay admitting that there had been legal breaches.

The claimants deserve some criticism for overstating their case without direct evidence.

Yet that overstatement is as nothing to the remarkable decision by the government to defend the legally indefensible at every step up to a high court hearing.

Perhaps this was a strategic decision by the government, in view of the other cases brought to challenge particular public procurement decisions, as opposed to this general challenge.

The government may well have nothing to hide – but it is certainly conducting its litigation as if it has.

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The last word will be with the judge, who in paragraph 140 of the judgment summarises the fundamental problem presented by this case (which I have broken into smaller paragraphs for flow):

‘The obligations imposed by reg. 50 and by the Transparency Policy and Principles serve a vital public function and that function was no less important during a pandemic.

‘The Secretary of State spent vast quantities of public money on pandemic-related procurements during 2020.

‘The public were entitled see who this money was going to, what it was being spent on and how the relevant contracts were awarded.

‘This was important not only so that competitors of those awarded contracts could understand whether the obligations owed to them under the PCR 2015 had been breached, but also so that oversight bodies such as the NAO, as well as Parliament and the public, could scrutinise and ask questions about this expenditure. By answering such questions, the Government “builds public trust and public confidence in public services”: see §1 of the Transparency Principles.

‘One unfortunate consequence of non-compliance with the transparency obligations (both for the public and for the Government) is that people can start to harbour suspicions of improper conduct, which may turn out to be unfounded.’

Or they may not be.

And that is why transparency is important.

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