Lettings International Ltd v London Borough of Newham

Interim relief restraining the conclusion of a public procurement process is governed by the ordinary principles applicable to interim injunctions. A serious issue arises where undisclosed weighted sub-criteria may have affected the preparation of tenders, or where the marking scheme reserves maximum marks for exceeding a specification without adequately informing bidders.

A breach compromising the fairness and transparency of the process may cause actionable loss through the loss of a significant chance of obtaining the contract. Where completing the procurement would leave the disappointed bidder only a difficult-to-quantify damages claim, the balance of convenience may favour preserving the opportunity to seek the setting aside of the award decision.

The council conducted a procurement exercise for framework agreements concerning privately leased accommodation. The contractor's tender was unsuccessful. It alleged that the council had used undisclosed weightings for five sub-criteria and had reserved the highest marks for tenders exceeding the published specification.

Openshaw J granted an interim injunction preventing the council from concluding the proposed agreements. Royce J discharged it, although he continued it pending the contractor's application for permission to appeal. The Court of Appeal considered whether the claims raised serious issues under the Public Contracts Regulations 2006, whether damages were adequate and where the balance of convenience lay.

1. The appeal was allowed and the injunction restored. The ordinary interim-injunction principles established in American Cyanamid applied to relief suspending a procurement process under Regulation 47(8)(a) of the Public Contracts Regulations 2006. The court therefore considered whether there was a serious issue to be tried, the adequacy of damages and the balance of convenience: [1975] AC 396.

2. The undisclosed weighting of the five method-statement subjects raised a serious issue under Regulation 30(3). The principles of equal treatment and transparency require tenderers to know the features relevant to identifying the most economically advantageous tender and, where possible, their relative importance. Although the adoption of sub-criteria is not invariably unlawful, it may be unlawful where it changes the published criteria, could have affected the preparation of tenders or creates a risk of discrimination. It was arguable that the council had treated the method statements as additional formal criteria carrying unequal weights without informing bidders.

3. The marking scale raised a further serious issue. A contracting authority has substantial latitude when evaluating individual aspects of a tender. The complaint, however, concerned the undisclosed scale itself, under which full compliance apparently earned only three of five marks while higher marks were reserved for exceeding the specification. It was arguable that the tender documents did not adequately disclose that approach and that its use offended transparency and fairness.

4. Regulation 47(6) provides a cause of action to an economic operator suffering or risking loss or damage. It does not invariably require a claimant to establish at the outset that, absent the breach, it would have obtained the contract. Where a breach compromises the process as a whole, the loss of a significant chance to compete in a properly constituted and operated procedure is arguably sufficient.

5. Damages were substantially less adequate for the contractor than for the council. The contractor's loss involved both the chance of obtaining a framework agreement and the further chance of receiving work under it. Those contingencies would be difficult to value. The council's likely losses from delay or a fresh tender were more readily quantifiable, and there was insufficient evidence that continuation of the injunction would materially impair its statutory functions. The balance of convenience therefore favoured maintaining the injunction.

1. Court of Appeal (Civil Division): Permission to appeal was granted, the appeal was allowed and the interim injunction was restored: [2007] EWCA Civ 1522.

2. High Court, Queen's Bench Division (Royce J): The injunction was discharged, but continued pending the application for permission to appeal.

3. High Court, Queen's Bench Division (Openshaw J): An interim injunction was granted without notice, restraining the council from entering agreements pursuant to the procurement procedure.