Edenred (UK Group) Ltd v Her Majesty's Treasury & Ors (Rev 1)

A non-binding memorandum of understanding between government departments is not a public services contract merely because it is supported by a separately procured commercial contract. An amendment to a public contract constitutes a new award only where it is materially different, including by attracting additional tenderers, considerably extending the scope to services not initially covered, or changing the economic balance in favour of the contractor. A clear and transparent change mechanism may permit amendments within the original outsourced service scope. The application of the same services to new inter-governmental business need not require a new procurement. Article 56 TFEU is not engaged where the arrangements impose no restriction on cross-border services.

The Government planned to deliver Tax-Free Childcare through HMRC, using National Savings & Investments and amendments to NS&I’s existing outsourcing contract with Atos. No competitive tender was conducted for the new scheme. Edenred challenged the arrangements under the Public Contracts Regulations 2006 and Article 56 TFEU.

Andrews J dismissed the procurement claims and refused to lift the stay on linked judicial review proceedings. Edenred appealed, challenging the classification of the memorandum of understanding, the scope and variation of the Atos contract, its alleged status as a framework agreement, and the judge’s amendments to her draft judgment.

The appeal was dismissed unanimously. Etherton LJ gave the judgment, with Underhill LJ and King LJ agreeing.

1. Draft judgment. The appeal was to be decided on the judgment handed down, not an earlier draft. A judge may change their mind until the order is drawn up and perfected, and the guiding principle is that the case must be dealt with justly. Greater latitude exists while a judgment remains in draft. Brewer v Mann [2012] EWCA Civ 246 concerned post-hand-down alterations, while Saunders v Chief Constable of Sussex [2012] EWCA Civ 1197, Re L (Children) [2013] UKSC 8 and English v Emery Reimbold & Strick Ltd [2002] EWCA Civ 605 supported the conclusion that the alterations were legitimate.
2. HMRC and NS&I memorandum. A public services contract has an autonomous EU meaning and requires a binding, legally enforceable obligation on the service provider. The memorandum was expressly non-binding. Section 16(2) of the Childcare Payments Act 2014 merely limited the circumstances in which NS&I could provide childcare accounts; it did not create contractual obligations. Section 113 of the Financial Services Act 2012 supplied the relevant power to enter arrangements.
3. The MoU and Atos contract remained legally distinct. Atos owed contractual obligations to NS&I, not HMRC, and NS&I could not be treated as a legally insignificant intermediary. The internal allocation of public work between closely related government entities did not infringe procurement law or Article 56 TFEU.
4. Atos contract variation. Applying the principles in Pressetext Nachrichtenagentur GmbH v Austria C-454/06, a variation is material where it could attract additional tenderers, considerably extend the contract to services not initially covered, or alter the economic balance in favour of the contractor. A sufficiently clear, certain and precise change mechanism may avoid a new award. The Contract Notice and Atos contract covered the same outsourced operational services for present and future B2B services to government bodies. TFC applied those services to new business but did not change their nature or extend the contract beyond its advertised scope. The amendments therefore did not infringe the Public Contracts Regulations 2006.
5. The Atos contract was not a framework agreement because it did not set terms for future contracts; it was a single outsourcing contract operated through its change provisions. The court therefore did not need to determine causation or loss.

• Court of Appeal (Civil Division): [2015] EWCA Civ 326 — appeal dismissed.
• High Court, Queen's Bench Division: Andrews J, 22 January 2015 — held that the MoU was not a public services contract, that the proposed Atos amendments were within the original contract’s scope, and dismissed the relevant claims.