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

Arrangements between government departments to share existing public resources for policy delivery do not constitute a public services contract merely because one department reimburses another. A public contract requires a binding written agreement with a person legally distinct from the contracting authority. A non-binding memorandum of understanding is not converted into a contract by detailed service provisions, charging arrangements or statutory provisions identifying who may provide the service.

An amendment to an existing public contract is material only where it amounts to a renegotiation of essential terms, such as by introducing new services, widening competition or changing the economic balance in favour of the contractor. The proposed amendment here remained within the advertised scope and did not distort competition.

The claimant, a childcare voucher provider, challenged the decision of HM Treasury, HMRC and National Savings and Investments to deliver tax-free childcare through childcare accounts administered by NS&I, using operational support supplied by Atos under an existing outsourcing contract.

The claimant argued that the proposed memorandum of understanding between HMRC and NS&I was a public services contract or created an economic opportunity requiring transparent procurement under the Public Contracts Regulations 2006 and article 56 TFEU. Alternatively, it argued that the proposed amendment to the NS&I–Atos outsourcing contract was a material variation requiring a new procurement.

The claimant also advanced a loss-of-chance claim in the alternative.

1. Nature of the HMRC–NS&I arrangements. The arrangements were internal resource-sharing between departments of the Crown. The memorandum of understanding was expressly non-binding, capable of termination by HMT, and created no enforceable obligations to provide services or pay for them. Its detail and charging provisions did not alter its legal character. The Childcare Payments Act 2014 did not transform it into a contract. The Regulations and article 56 TFEU were therefore not engaged on this ground.
2. Material variation. Applying Pressetext [2008] ECR I-4401, a material variation is one which renegotiates essential terms, admits tenderers or tenders that the original process would have excluded, substantially extends the scope of services, or changes the economic balance in favour of the contractor. The outsourcing procurement expressly contemplated future business-to-business banking, account and payment services and contained substantial financial headroom.
3. The services supporting childcare accounts were operational, banking, payment-processing and IT services of the same nature as those already advertised. They were not new or different services. The evidence also did not establish any realistic bidder who was ready, willing and able to bid and had been excluded by the absence of a specific reference to childcare accounts. The amendment did not confer a competitive advantage on Atos or alter the economic balance in its favour.
4. Alternative loss and remedy. Any loss had to be assessed as a loss of a real, rather than fanciful, chance of obtaining a contract. Edenred had not shown such a chance against a bank or business-process-outsourcing provider. Even if there had been a breach, the court would not have granted declaratory relief or set aside the decision where the remedy would confer no practical benefit.
5. The claim was dismissed.