PCR 2015 and limitation: 6 months or 30 days?

Why should I read this?

The Court of Appeal, in considering a decision made in 2023 by the TCC[1], has confirmed that challengers have a six month time limit in which to challenge an award and seek a declaration of ineffectiveness where there is no competitive tender process. A contracting authority can reduce this time limit to 30 days if it publishes a contract award notice. In this case, the contracting authority’s limitation defence was struck out on the basis that the 30 day period did not apply. In reaching its decision, the Court also considered the contracting authority’s duties of transparency, fairness and treating each economic operator equally.

Below, we provide more detail on the appeal, and discuss the implications of the judgment on both contracting authorities and economic operators.

What should I do?

Contracting authorities and economic operators should be mindful of the limitation periods for commencing proceedings to challenge an award and seek a declaration of ineffectiveness.

Contracting authorities should also:

• understand the circumstances in which they can reduce the limitation period from six months to 30 days;
• have regard to their continuing duties of transparency, fairness and treating each economic operator equally when shortening any limitation period; and
• be clear, unequivocal and precise when outlining any subsequent contracts to be awarded under a framework agreement.

Background

Under Regulation 93(2) of the Public Contracts Regulations 2015 (the “PCR 2015”), when challenging an award and seeking a declaration of ineffectiveness proceedings must be started within:

• 30 days, beginning with the day after the date on which:
  • a relevant contract award notice has been published; or
  • the contracting authority has informed the candidate or tenderer of the conclusion of the contract and provided a summary of the relevant reasons why it was unsuccessful, which they would have been entitled to request pursuant to Regulation 55(2) of the PCR 2015; or
• six months, beginning with the day after the date on which the contract was entered into.

On 29 July 2022, Lancashire County Council (“the Council”) and Maple Grove Developments Limited (“Maple”) entered into a development agreement (the “Development Agreement”). The Council alleged that it had entered into the Development Agreement pursuant to the terms of a contract with Maple’s parent company dated December 2012, which had been awarded following a competitive tender process. It was the Council’s case, therefore, that no competition pursuant to PCR 2015 was necessary or required in respect of the Development Agreement. Accordingly, the Council did not publish any contract award notice.

The Council expressly notified Brookhouse Group Limited (“Brookhouse”) about the Development Agreement on 3 August 2022. Following receipt of a letter of claim from Brookhouse, the Council responded in writing on 22 September 2022 to explain why it did not consider that a competitive tender process was necessary. Brookhouse then commenced proceedings against the Council on 20 January 2023.

The Council defended the claim on the basis that Brookhouse had been informed of the conclusion of the Development Agreement and was provided with a summary of the relevant reasons in the Council’s response, so Brookhouse’s claim should have been brought within 30 days of the Council’s September 2022 response.

The TCC held that where a contracting authority had not carried out a competitive tender process, the 30 day limit does not apply and the limitation period is six months.

The Appeal

The Council’s appeal was dismissed on the basis that:

• there had been no competitive tender process, so the relevant time limit for Brookhouse to commence proceedings was six months;
• the Council could have reduced the limitation period to 30 days had it published a contract award notice, but it chose not to in order to avoid alerting other economic operators. The Court also held that the Council was in breach of its obligations of transparency, fairness and the requirement to treat each economic operator equally by only informing Brookhouse of the contract award;
• while contracting authorities can provide the relevant reasons for an unsuccessful tender voluntarily to reduce the limitation period from six months to 30 days, the Council’s response did not constitute a summary of the relevant reasons for the purpose of Regulation 55(2) of PCR 2015 as, for example, Brookhouse was not a “candidate” or “tenderer” (as defined in PCR 2015); and
• providing a summary of the relevant reasons is about why a candidate or tenderer has been unsuccessful in a tender process; it is not about why there hasn’t been a competitive tender process.

The Court therefore struck out the Council’s limitation defence and confirmed that the six month limitation period applied. The Court cited “sound policy reasons” for its judgment: to avoid contracting authorities trying to conceal direct awards from economic operators and then trying to rely on a shorter limitation period.

The Court of Appeal issued its judgment in June 2024, and there is currently no indication that the case will proceed to the Supreme Court.

[1] Brookhouse Group Ltd v Lancashire County Council [2023] EWHC 2921 (TCC)