| Date | 26 May 1999 |
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| Judgment | Matra Communications SAS -v- Home Office, CA 25 February 1999 |
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| The Issue | Procedures for the review of the award of public supply contracts under the Public Services Contracts Regulations 1993. |
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| Implication |
It is in the public interest that claims against public procurement authorities for failure to comply with procurement regulations should be made promptly. The three month time limit contained within the relevant Regulations will be applied strictly. |
printPublic sector construction clients have in recent years become increasingly familiar with the practical implementation of the EC procurement rules. This is reflected in that fact that effective challenges to public sector clients for failure to properly apply the rules have been extremely rare. The rules have their foundation in the EC Treaty of Rome which provides for the free movement of goods, persons, services and capital between member states. The Treaty prohibits discrimination on the ground of nationality, and the establishment of the "common market" as it became known involved the elimination of obstacles to trade within the community. The procurement rules apply to contracts above specified threshold values depending on the nature of the contract, and in a number of cases the values of more than one contract must be added together to establish whether the threshold is met. Three elements underpin the rules. (1) Free and equal access to information concerning public procurement is to be available to all suppliers or contractors within the EC. This includes information on planned procurement, specific contracts and tender procedures. (2) All tenderers regardless of origin within the EC are entitled to have their offers considered on a fair and equitable basis, and criteria should not be used to evaluate offers that have the effect of unfairly excluding foreign suppliers. (3) Tenderers who believe that they have been discriminated against should have access to remedies that can be readily applied and that compensate them for their losses. This latter point is addressed in Counsel Directive 89/665/EEC, often referred to as the "Compliance Directive". This Directive requires member states to enact legislation which will permit the setting aside of decisions taken unlawfully, and compensation to persons harmed by an infringement of the various procurement directives. Article 1 of the Directive requires member states to bring into force effective legislation such that "decisions taken by contracting authorities may be reviewed effectively and in particular as rapidly as possible". Article 2 provides that the legislation should include provisions enabling the courts to take interim measures with the aim of correcting an alleged infringement, including suspending the award procedure of a public contract. The legislation is also required to provide for the setting aside of decisions taken unlawfully and the award of damages to persons harmed by an infringement. These requirements are placed into UK law by the Public Services Contract Regulations 1993. Regulation 32 provides that a service provider may bring proceedings under the Regulations providing the proceedings are brought promptly and in any event within three months from the date when grounds for the bringing of the proceedings first arose. The Regulations allow that the court may give interim orders to suspend the procedure leading to the award of a contract, or, if satisfied that a decision or action taken by a contracting authority is in breach of the duties owed, it may order the setting aside of the decision and payment of damages to a services provider who has suffered loss. These issues were recently examined by the Court of Appeal in the case of Matra Communications SAS-v-Home Office. Matra is a French company specialising in the design of a mobile telephone system called Tetrapol. The main rival system backed by BT is based on technology called Tetra. In July 1995 the Home Office issued a consultation document that set out likely requirements for a new secure radio system for the police service. The Official Journal notice advised that the value of the project would be in the order of £1.5 billion over 15 years. Matra, however, learned that the Home Office policy was to require Tetra systems for the project. Matra sought without success to persuade the Home Office to change its announced policy. Exchanges between Matra and the Home Office continued but the Home Office made it clear that they would not interrupt the procurement process. The contract was eventually awarded some two years later to the BT consortium and three days later Matra issued proceedings in the High Court against the Home Office. Matra claimed that they had a real chance of being awarded the contract due to the low cost of its own systems and claimed damages for loss of profits and consequential loss due to damage to its reputation. The sums claimed were in excess of £100 million. The case proceeded on a series of preliminary points, culminating with the Judge holding that the action could not proceed further since it had not been brought within the time limits laid down in the Regulations, namely within three months from the date when grounds first arose. Lord Justice Buxton noted that Matra's claim was one for the loss of chance to obtain the contract. The grounds for bringing the proceedings therefore first arose when the Home Office had announced in the Official Journal its intention to adopt the Tetra standard. The Court of Appeal held that the provision of the 1993 Regulations could not be circumvented. Matra had failed to bring proceedings within the time limit laid down in the Regulations and there were no grounds for displacing the Judge's refusal to extend the time. Accordingly the appeal was dismissed.
CJ-9921
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