Summary
- In the latest of a series of significant judgments which will be of great interest to procuring authorities and tenderers for contracts procured under the Utilities Contracts Regulations 2016 (UCR), the Court has issued a reminder of the hurdles faced by disappointed challengers
- Each of Siemens' challenges to the outcome of the c. £2.75bn contract to supply trains to HS2 was dismissed
- The case emphasises that the Court is unlikely to intervene if there is evidence that the tender rules have been followed
- Authorities are reminded that it is vital to keep good records of any decisions made within the procurement process and that the Court is likely to have regard to the quality of this record keeping in forming its views on whether tender rules have been breached
- Judicial review should always be a last resort and other possible options should be exhausted first.
Background
On 6 November 2023, the High Court handed down its judgment in Siemens Mobility Limited (Siemens) v High Speed Two (HS2) Limited (HS2), in which Siemens challenged (via a series of consolidated Part 7 claims and judicial review claims (which relied upon the same allegations but by reference to public law duties rather than the UCR)) HS2's decision to award a contract for the HS2 high-speed rail project to Bombardier Transportation UK Limited (Bombardier) and Hitachi Rail Limited (Hitachi).
By way of a comprehensive judgment, the Court rejected each of Siemens' Part 7 claims and refused permission for Siemens to proceed with its judicial review claims.
The facts
HS2's procurement process
In April 2017, HS2 commenced a procurement exercise under the UCR relating to: (i) the manufacture and supply of a train fleet for the HS2 rail project, and (ii) train maintenance and services. The contract was valued by HS2 at £2.75 billion.
The procurement process was made up of five stages: the first stage comprised the submission of the tender, stages two to four comprised the scored design and delivery elements and stage five comprised evaluation of the whole life value of the bids and determination of the "Assessed Price". At stage five, none of the scores achieved in stages two to four would be taken into consideration in determining the winning tender (except to resolve any tie-break in Assessed Price). The tenderer with the lowest Assessed Price would be identified as the lead tenderer.
In order to progress to stage five, businesses tendering for the work had to either:
- Meet the defined evaluation threshold
- At HS2's discretion, be deemed to meet the defined evaluation threshold.
Two of the tenderers for the contract were: (i) Siemens; and (ii) a joint venture comprising Bombardier (now Alstom) and Hitachi (together, the JV). Siemens met the evaluation threshold and therefore automatically progressed to the final stage of the procurement process. The JV failed to meet the evaluation threshold in respect of one particular area, but HS2 exercised its discretion (which it was entitled to do under the tender rules, subject to such discretion not being exercised on an unlimited, capricious or arbitrary basis) to deem that the JV met the evaluation threshold. Accordingly, Siemens and the JV proceeded to the final stage of the procurement process.
Following the conclusion of the procurement process, HS2 approved the JV as lead tenderer on the basis that the JV submitted the lowest "Assessed Price", that being the determining factor at the final stage of the process. On 29 October 2021, HS2 notified Siemens that it had decided to award the contract to the JV and, on 30 November 2021, HS2 entered into a contract with the JV.
Siemens' challenge
Between June 2021 and January 2023, Siemens issued 17 claims against HS2 (a mix of CPR Part 7 claims and claims for judicial review) challenging HS2's decision to award the contract to the JV. Siemens asserted that HS2 had failed to comply with its obligations under the specific tender rules and the UCR, including its duties to:
- Treat tenderers equally and without discrimination
- Act in a transparent and proportionate manner
- Act without manifest error.
Siemens also argued that HS2 owed it a public law duty to act in accordance with Siemens' legitimate expectations.
The decision
The Court rejected Siemens' claims and found that:
- Siemens did not establish that HS2 was in breach of its obligations under the UCR
- HS2 did not owe Siemens any public law duty to act in accordance with Siemens' legitimate expectations because: (i) there is no reference to any such obligation in the UCR; (ii) no authority was identified in which general public law obligations have been used to supplement the procurement regulations regime; and (iii) the obligation is not necessary in circumstances where the UCR already contain principles of transparency and equal treatment.
The Court also refused Siemens' application for permission to apply for judicial review.
Conclusion and takeaways
The Court's decision in this case does not make new law but serves to emphasise the following:
- The importance of good record keeping – in reaching her decision, the Judge repeatedly referred to HS2's technical assessments and minutes of moderation meetings as evidence that HS2 had properly considered the tenders and had "clear and coherent reasons" for the scores awarded. The Judge also commented: "In order to establish a breach of the UCR in respect of the alleged scoring errors, it would be necessary for Siemens to identify deficiencies that were not considered by the assessors, or to identify matters relied on by the assessors that were extraneous to the [invitation to tender], or to identify some other clear error in the assessment." Keeping detailed, accurate records of decisions throughout a tender process is therefore vital. Those records should address positive and negative aspects of a bid in order to demonstrate that deficiencies have been taken into account.
- The Court's role is supervisory – The Judge in this case stressed that "The court’s role is not to carry out its own assessment of the proposals and substitute its own scores. The court’s role is supervisory; it is limited to reviewing whether the rules set out in the [invitation to tender] were followed, in accordance with the principles set out in the UCR, without discrimination or manifest error". This demonstrates the Court's unwillingness to interfere with the substance of decisions made by procuring authorities, i.e. decisions "made by those with specialist knowledge in [the relevant] field". Provided that the UCR and tender rules have been complied with, and there is evidence to support that (i.e. good records, as above), the Court is unlikely to intervene.
- Judicial review is a last resort – In rejecting Siemens' application for permission to proceed with its judicial review claims, the Court emphasised that judicial review should always be a last resort. If there is another route by which the decision can be challenged, which provides an adequate remedy for the claimant, that alternative remedy should be used.
It's worth noting that, since this case was heard, the Procurement Act 2023 (Procurement Act) has received Royal Assent. The Procurement Act introduces changes to the way in which procurement challenges will work, including implementing a shorter standstill period (i.e. the period between notification of the contract award and the signing of the contract). The new rules aren't in force yet though – the Government currently expects the new regime to go live in October 2024, with at least six months’ advance notice.
If you would like any further information or advice regarding procurement issues, please contact Richard Collins, Naomi Findlay, Emma Welch, Deborah Ramshaw or Laura McIntyre.
