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Protecting The Interests of Bidders for Public Contracts; The Role of the Common Law
Published online by Cambridge University Press: 16 January 2009
Extract
In the United Kingdom there has traditionally been little litigation over the award of public contracts. This is largely due to the absence, in the past, of formal rules regulating contract procedures, which might have founded a basis for legal actions. It is also to some extent a product of the reluctance of contractors to “bite the hand that feeds” and jeopardise their chances of future contracts; this factor may have discouraged contractors from taking advantage of the potentiality of common law doctrines for providing protection for bidders in the tendering process.
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References
1 Local authorities have also long been required to make their own standing orders providing for competitive procurement procedures: see Local Government Act 1972, s. 135. Also prior to 1988 market testing had been introduced for construction and maintenance by Part III of the Local Government Planning and Land Act 1980.
2 The main substantive rules are found in Directive 93 /37/EEC (public sector works contracts): Directive 93/36/EEC (public sector supply contracts); Directive 92/50/EEC (services contracts in the public sector); and Directive 93/38/EEC (works, supply and services contracts in the utilities sectors of water, energy, transport and telecommunications). Provisions on remedies for enforcing the rules are laid out in Directive 89/665/EEC (public sector) and 92/13/EEC (utilities sector).
3 For an outline of the procedures under the Directives see Lee, P., Public Procurement (London 1992)Google Scholar; Weiss, F., Public Procurement in European Community Law (Atlantic Highlands. N.J. 1993);Google ScholarTrepte, P.-A., Public Procurement in the EEC (London 1993)Google Scholar. On implementation in the United Kingdom see Digings, L. and Bennett, J., EC Public Procurement: Law and Practice (looseleaf)Google Scholar; Bickerstaff, R.. “The Utilities Supply and Works Contracts Regulations 1992: Implementation of the Utilities Directive in United Kingdom Law” (1993) 2 Public Procurement Law Review 117Google Scholar.
4 S.I. 1991/2680 (hereafter the Works Regulations). implementing Directive 71/305/EEC. above.
5 S.I. 1991/2679 (hereafter the Supply Regulations). implementing Directive 77/62/EEC above.
6 S.L 1993/3228 (hereafter the Services Regulations). implementing Directive 92/50/EEC above.
7 S.I. 1992/3279 (hereafter the Utilities Regulations), implementing Directive 90/531/EEC above.
8 Implemented by Works Regulation 31. Supply Regulation 26. Services Regulation 32 and Utilities Regulations 30 and 31.
9 One case under the new regulations has been decided: see General Building and Maintenance v. Greenwich Borough Council [1993] LR.L.R. 535 (noted by S. Arrowsmith. (1993) 2 Public Procurement Law Review CS92); others are pending.
10 11 March 1993, Lexis: The Times. 12 March 1991
11 [1990] 1 W.L.R. 1195
12 See generally Forsyth, C.F.. “The Provenance and Protection of Legitimate Expectations.” [1988] C.L.J.Google ScholarCraig, P.P.. “Legitimate Expectations: a Conceptual Analysis” (1992) 108 L.Q.R. 79Google Scholar: Elias, G.. “Legitimate Expectation and Judicial Review”, in Lowell, J. and Oliver, D. (eds.). New Directions in Judicial Review (1988). p. 37Google Scholar
13 [1984] 1 W.L.R. 1337. The general principle was also applied in R. v. Secretary of State for the Home Department, ex parte Ruddock [1982] 1 W.L.R. 1482. The reasoning in the later case of R. v. Secretary of State for Health, ex parte United States Tobacco International Inc. [1992] Q.B. 353 seems to cast doubt upon the application of the concept in a substantive way, but it can better be explained as a case where the public interest warranted a denial of the expectation. Academic writers generally support the principle: see the works cited in note 12 above; Schwehr, B. and Brown, P., “Legitimate Expectation: Snuffed Out?” [1991] P.L. 163Google Scholar; Cane, P., Introduction to Administrative Law. 2nd ed. (Oxford 1992), pp. 141–143Google Scholar.
14 Previous cases have not expressly addressed the question of whether it is for the court or authority to decide when the public interest is overriding. Interestingly in Hibbit & Sanders it was conceded that it is for the court, legitimate expectations being like natural justice an aspect of the general principle of fairness under which the court balances the public and private interests to decide what rules and procedures should be followed. This approach was expressly endorsed by the court.
15 The extent of the applicant's expectations in the matter were expressly considered by Rose, L.J., and Waller, J. agreed with his conclusions on these pointsGoogle Scholar.
16 See pp. 11–12 of the transcript (note 10 above).
17 See, in particular, the statement by Waller, J.. at pp. 19–20 of the transcript.Google Scholar
18 See p. 13 of the transcript.
19 Waller, J. also pointed specifically to the contractual nature of the present decision as a reason for regarding it, prima facie, as unreviewableGoogle Scholar.
20 R. v. Independent Broadcasting Association, ex parte Rank (26 March 1986; Lexis): R. v. Barnsley Metropolitan Borough Council, ex parte Hook [1976] 1 W.L.R. 1052: R. v. Wear Valley District Council, ex parte Binks [1985] 2 All E.R. 699. Cf. the approach of Lord Denning and Templeman L.J. in R. v. Basildon District Council, ex parte Brown (1981) 79 L.G. 655.
21 The decisions arc numerous: for a summary, sec Fredman, G. and Morris, S.. The State as Employer: Labour Law in the Public ServicesGoogle ScholarArrowsmith, S., Civil Liability and Public Authorities (Wintcringham 1992), pp. 127–136.Google Scholar
22 Further, the contractual nature of the power exercised has influenced the courts not only in cases concerning the review of contractual powers of public bodies but also in deciding whether public law remedies and procedures apply to bodies which are on the borderline of “public” and “private” law: see in particular the Court of Appeal decisions in Law v. National Greyhound Racing Club Ltd. [1983] 1 W.L.R. 1302 and R. v. Jockey Club, ex parte Aga Khan [1993] 1 W.L.R. 909.
23 [1985] 1 Q.B. 152
24 On these see Arrowsmith, op. cit. pp. 129–34.
25 Council of the Civil Service Unions v. Minister for the Civil Service [1985] A.C. 374: this case did not explicitly consider the need for a public law element to the decision but was interpreted as turning on the fact that the decision was one of a general nature by Woolf L.J. in R. v. Secretary of State for the Home Office. ex parte McLaren [1991] I.R.L.R. 338.
26 [1988] 1 All E.R. 938.
27 [1989] C.O.D. 466.
28 Indeed, it may be noted that in Hibbit & Sanders itself Waller J. thought that a decision not to deal with firms which employ trade union members would be a breach of public law—although he may have had in contemplation a general decision rather than a decision on a one-off basis. which the authority indicates would itself be sufficient to bring the matter within public law: see note 25 above.
29 [1990] 1 W.L.R. 54; aff'd [1990] I W.L.R. 1453.
30 See Arrowsmith, S., “Judicial Review and the Contractual Powers of Public Authorities” (1990) 106 L.Q.R. 277;Google Scholar and in more detail in the specific context of procurement Arrowsmith, S., Government Procurement and Judicial Review (Toronto 1988).Google Scholar It is submitted that the contractual nature of the power exercised should equally be irrelevant in determining the availability of public law remedies and procedures against bodies which exercise jurisdiction based primarily on contract, as considered in the cases cited in note 22; but it is not appropriate to pursue this point in detail here since we arc concerned with bodies which clearly arc subject to judicial review in respect of most of their actions, the only question being whether to make an exception for their contractual decisions.
31 At p. 25 of the transcript.
32 In R. v. Secretary of State for the Home Department, ex parte Ruddock [1982] 1 W.L.R. 1482 there was clearly no reliance.
33 Works Regulation 31(7); Supply Regulation 26(6); Services Regulation 32(6); Utilities Regulation 30(6); Local Government Act 1972. s. 135(4).
34 See p. 26 of the transcript (note 10 above).
35 It may be surmised that if the court were prepared to grant relief to set aside a concluded contract it would also consider the award of interim relief to prevent such a contract going ahead.
36 The only existing authority is Burroughes Machines v. Oxford Area Health Authority, 21 July 1983; Lexis. The judge indicated that interim relief would generally not be awarded in such a case and the Court of Appeal refused to interfere with this exercise of his discretion. If interim relief is considered appropriate the unavailability of interim relief against the Crown should not create problems, since it is generally assumed that it is the Minister in a separate capacity who administers an award procedure (even if the Crown itself is the party to the contract).
37 This is required by Directives 89/665/EEC and 92/I3/EEC, cited in note 2 above: for implementation see Works Regulation 31(6): Supply Regulation 26(5): Services Regulations 5: Utilities Regulation 30(5) and 30(7).
38 It can, however, be argued that interim relief might he required where damages arc not a realistic possibility, on the basis of a general Community law requirement that remedies must be effective-for example, this might apply where a contract has not been advertised at all, since no-one will then have a realistic prospect of showing they might have been successful if able to bid: see further S. Arrowsmith, “Enforcing the EC Public Procurement Rules: the Remedies System in England and Wales“ (1992) I Public Procurement Law Review 92, pp. 111–115.
39 Unless there is a knowing breach, when the tort of misfeasance in public office may apply.
40 Both judges made express reference to the fact that this case had not been cited
41 [1990] 1 W.L.R. 1195. One of the arguments in Burroughes, note 36 above, also seems to have been based on the existence of such a contract; but the issue was not expressly addressed by the court. The existence of an implied contract governing the tendering process had already been recognised in Canada, although the relevant decisions have not been considered by the English courts: see, in particular, R. v. Ron Engineering & Construction (Eastern) Ltd. [1981] 1 S.C.R. 111, and for discussion Fridman, G.H.L., “Tendering Problems” (1987) 66 Canadian Bar Review 582Google Scholar and Arrowsmith, S., Government Procurement and Judicial Review (Toronto 1988), pp. 323–327Google Scholar.
42 This is a contract where the remuneration of the contractor consists (at least in part) of the revenue collected by operating the concession. Often a concessionaire will have to pay the authority for the concession, rather than receiving any payment for a promise to operate it.
43 Another point which is not clear is whether the contract is to be considered a unilateral one, the tenderer's consideration being the submission of the bid., or whether it is a bilateral agreement under which the bidder also has obligations (for example, not to withdraw his bid), which arises by implication when the hid is submitted.
44 Sec p. 128 below.
45 Decision of 16 July 1992; sec [1992] Construction Industry Law Letter 779.
46 If the plaintiff would have succeeded he will obtain the difference between what it would have cost to perform and the contractual payment.
47 Using the term to refer to the contractual payment minus costs of performance.
48 See Arrowsmith, S., op. cit., note 38 above: Arrowsmith, S., “Enforcing the Public Procurement Rules: Remedies in the Court of Justice and the National Courts”. ch. I in Arrowsmith, S. (ed.). Remedies for Enforcing the Public Procurement Rules (1993)Google Scholar and Weatherill, S.. “Enforcing the Public Procurement Rules in the United Kingdom.” ch. 12 in the same volume.Google Scholar
49 Whether it is appropriate to apply them in this particular context was not discussed by the Court of Appeal in Fairclough, since the calculation of damages was not in issue.
50 [1911] 2 K.B. 786.
51 See C. & P. Haulage v. Middleton [1983] 3 All E.R. 94 and C.C.C. Films (London) Lid. v. impact Quadrant Fihns Ltd. [1985] O.B. 16. interpreting Anglia Television Lid. v. Reed [1972] 1 O.B. 60.
52 See Arrowsmith, S., Government Procurement and Judicial Review (Toronto 1988), pp. 325–328Google Scholar, discussing the Canadian case law; and the notes on the Blackpool case by Adams, J. and Brownsword, R. (1991) 54 M.L.R. 281Google Scholar, and Phang, A. (1991)Google Scholar J. of Contract L. 46. A different view. though, is taken by Davenport, B., in his note in (1991) 107 L.Q.R. 201Google Scholar.
53 The argument was considered but rejected by Bingham L.J. His reasoning, however, was largely confined to asserting the existence of the expectations and the need to protect them, and did not address the need for an intention to embody the expectations in a contractual relationship.
54 Or negligently—but this is hard to envisage.
55 As in Richardson v. Silvester (1873) L.R. 9 Q.B. 34 (liability for the expenses of the plaintiff in inspecting premises advertised for sale, where there was never any intention to sell).
56 This would not preclude an intention of going elsewhere later if the party calling for tenders is not satisfied with the responses received or a better contractor later comes to light.
57 For a good discussion of the policy issues see Stapleton, J., “Duty of Care and Economic Loss: A Wider Agenda” (1991) 107 L.O.R. 249.Google Scholar
58 [1991] A.C. 398.
59 Although the nature of the loss is different here the nature of the relationship is similar. However, even in this context there will probably only be a duty where there is some special factor, notably reliance on the superior expertise of another: see Esso Petroleum v. Murdon [1976] Q.B. 801.
60 [1993] 3 All E.R. 481.
61 Cf. Holman Construction v. Delta Timber Company [1972] N.Z.L.R. 1081. where Henry J. held that a subcontractor who made an error in calculating his bid and subsequently withdrew it owed no duty of care to a main contractor who relied on the quoted amount in formulating his own bid on the main contract.
62 [1980] Ch. 297.
63 He found it unnecessary to address it in detail since the plaintiff succeeded on the implied contract ground. Stocker L.J. did not consider the point at all.
64 This is conducive to efficiency: if liability is imposed, the party who has generated the expectations will go back on them only if the benefit is outweighed by the damages payable.
65 See generally Fuller, L.L., Basic ContractGoogle ScholarHenderson, S.D.. “Promissory Estoppel and Traditional Contract Doctrine” (1969) 78 Yale L.J. 343.Google Scholar
66 On the history of the Restatement provision see Yorio, E. and Thel, S.. “The Promissory Basis of Section 90” (1991) 101 Yale L.J. 111.Google Scholar
67 The debate to date is neatly summarised by Yorio and Thel.
68 For the discussion of the application of the doctrine in the bargaining context see Henderson, op. cit. pp. 357–368; and for a more general discussion of legal obligations regulating the conduct of the bargaining process, Kessler, F. and Fine, E., “Culpa in Contrahendo, Bargaining in Good Faith and Freedom of Contract” (1964) 3 Harv. L. Rev. 401;Google ScholarFarnsworth, E.A.. “Precontractual Liability and Preliminary Dealings: Fair Dealing and Failed Negotiations” (1987)Google Scholar 87 Colum. L. Rev. 217; S.A. Mirimina, “A Comparative Survey of Culpa in Contrahendo, Focusing on its Origins in Roman. German. and French Law, as well as its Application in American Law” [1992] Connecticut Journal of International Law 77.
69 26 Wis. 2d 683. 133 N. W. 2d 267 (1965).
70 (1988) 62 A.J.L.R. 110, noted by A. Duthie (1988) 104 L.O.R. 362. For discussion see B. Mescher, “Promise Enforcement by Common Law or Equity?” (1990) 64 A.L.J. 536.
71 Deane and Gaudron concurred in the result, but on the basis of common law estoppel, which applies where there is reliance on an induced assumption of existing fact; they found that in this case Maher acted on an erroneous assumption that the contract was already in existence.
72 Amalgamated Investment and Property Co. Ltd. v. Texas Commerce International Bank Ltd. [1982] Q.B. 84: Taylor Fashions Ltd. v. Liverpool Victoria Trustees Co. [1982] Q.B. 133: Pacol Ltd. v. Trade Lines Ltd. [1982] 1 Lloyds Rep. 456.
73 e.g. Crabb v. Arun D.C. [1976] Ch. 179; Ramsdell v. Dyson (1866) L.R. 1 H.L. 129
74 The leading authority is Central London Property Trust Ltd. v. High Trees House Ltd. [1974] K. B. 130.
75 For a summary of the argument see Atiyah, P.. Introduction to the Law of Contract. 4th ed. (Oxford 1989), pp. 145–148.Google Scholar
76 In Blackpool the plaintiff had not incurred any significant costs but Bingham L.J. expressly noted the possibility of heavy tender costs as a reason for implying a contract: see [1990] 1 W.L.R. 1195 at 1202.
77 The author is not aware that the principle has been used yet in the United States to control the way in which a party acts in selecting a contractor: it is assumed, though, by Mirimina, op. cit. note 68 above at p. 101, that it would be available in this context. It is interesting that the United States federal courts have also developed a so-called “implied contract” principle to provide a remedy for bidders on public contracts where certain-expectations about the conduct of the tendering process are not met. As in Blackpool this is in reality a situation where the court is protecting the bidder for reasons other than the existence of a bargain, and the fictitious nature of the contract is acknowledged in the nature of the remedy given which is limited to tender costs. On this see Heyer Products Co. v. U.S.. 492 F. 2d. 1200 (Ct. CI.. 1974).
78 For discussion see, for example. Henderson. op. cit. note 65 above.
79 See 76 A.L.R. 513, p. 525. lines 37–46.
80 See section B above.
81 See, for example, Mcscher, op. cit. note 70 above; Belobaba, E.P., “Good Faith in Canadian Contract Law”, in Law Society of Upper Canada, Special Lectures. Commercial Law (1985) 73 at 77–80;Google ScholarCauchi, G.F., “The Protection of the Reliance Interest and Anticipated Contracts which Fail to Materialise” (1981) 19 University of Western Ontario Law Review 237Google Scholar. Cf. G.R. Shell, “Opportunism and trust in the negotiation of commercial contracts: toward a new cause of action” (1991) 44 Vanderbilt Law Review 221. arguing, inter alia, that the costs (for example. in increased uncertainty) would outweigh the advantages, but advocating instead a more specific doctrine directed at “opportunism” in contract negotiation. The phrase “good faith bargaining” is used in different ways and different writers have different views on its scope. but generally it is envisaged as being concerned at the very least with the protection of reasonable expectations generated in the bargaining process. What a party's reasonable expectations are—how far the law will permit a party to retain the freedom to withdraw from negotiations under such a principle—will itself, of course, be debatable: see, for example. Attorney General of Hong Kong v. Humphreys Estate (Queens Gardens) Ltd. [1987] A.C. 114.
82 In principle he ought to be able to recover not just expense incurred in reliance but also other types of loss—for example, profits from other contracts where the opportunity to bid had been passed up in order to bid on the present contract. However, such losses will he very difficult to prove.
83 See note 51 above.
84 See the articles cited in note 12 above.
85 On the implication of terms see Treitel, G.. The Law of Contract. 8th ed. (London 1991). pp. 185–189.Google Scholar
86 See section D below.
87 See section D below. r See section E below.
88 [1990] 1 W.L.R. 1195 at 1202.
89 This will generally apply even when bids are solicited only from parties individually invited. It may sometimes be better to vet bidders for financial and technical standing after bids have been obtained, since this may be more efficient than screening all interested parties on these grounds before inviting bids; and even if bidders have been screened beforehand, checks may still be run later in case their position has changed. Oddly, the UK Works and Supply Regulations do not seem to permit checks once invitations have been issued: on this see General Building and Maintenance v. Greenwich L.B.C. [1993] I.R.L.R. 535 and the note by Arrowsmith, S. (1993) 2 Public Procurement Law Review CS 92Google Scholar.
90 Cited in note 45 above and discussed in accompanying text.
91 See Turpin, C., Government Procurement and Contracts (Harlow 1989), pp. 73–79;Google ScholarDigings, L. and Bennett, J., EC Public Procurement: Law and Practice (looseleafGoogle ScholarMorris, P., “Legal Regulation of Contract Compliance: an Anglo-American Comparison” (1990) 19 Anglo-American Law Review 87;Google Scholar and on policies relating to labour issues. Fredman, S. and Morris, G., The State as Employer: Labour Law in the Public Services (London 1989), ch. 12.Google Scholar
92 This could be done expressly or by implication–for example, where there is a requirement for contractors to provide information which relates to secondary matters.
93 Local Government Act 1988, ss. 17–20. In any case, secondary policies—at least those relating to matters generally outside local authority jurisdiction—are also precluded by the general principle that statutory authorities may only use their procurement powers for the purposes for which they are given: see R. v. Lewisham L.B.C., ex parte Shell UK [1988] 1 All E.R. 938.
94 Secondary policies are probably precluded under the Directives except to the extent that compliance is included as a term of the procurement contract: this is one interpretation of case 31/87, Gebroeders Beentjes v. The Netherlands [1988] E.C.R. 4635 (although it can be criticised: see Arrowsmith, A Guide to the Procurement Cases of the Court of Justice (1992) at 8.3.2.), and is also supported by the decision in case 360/89, Commission v. Italy, judgment of 3 June 1992, holding that secondary factors cannot be taken into account under the Works Directive in selecting contractors to be invited to tender. The United Kingdom Works and Supplies Regulations follow this approach, appearing to leave no room for the consideration of secondary factors in the procedure set out for choosing the contractor. An exception to the Beentjes rules may also apply to allow authorities to consider whether in performing the contract the contractor is able to comply with its obligations as imposed by law and this appears permissible in the United Kingdom: this is the best interpretation of the ruling in General Building and Maintenance v. Greenwich L.B.C. [1993] I.R.L.R. 535 holding that a contractor's health and safety policy could be taken into account to eliminate him from the list of those from whom the authority was to select firms to receive invitations to tender: see further the commentary by S. Arrowsmith, (1993) 2 Public Procurement Law Review CS92.
95 For examples of how the Treaty provisions can operate in this context see case 76/81, S.A. Transporoute v. Minister of Public Works [1982] E.C.R. 417; case 45/87, Commission v. Ireland [1988] E.C.R. 4929; case 31/87, Beentjes, above; case C-3/88, Commission v. Italy [1989] E.C.R. 4035; case C-21/88, Du Pont de Nemnours Italiana SpA v. Unita Sanitaria Local No. 2 di Carrara [1990] E.C.R. 889; case C-351/88, Laboratori Bruneau Sri v. Unita Sanitaria Local RMI24 de Monterondo. judgment of 11 July 1991; case 360/89 (preceding note).
96 See the Beentjes case, note 94 above.
97 It is not clear why this was seen as necessary prior to Blackpool, since it was then generally considered that an authority was under no private law obligations in the award procedure.
98 Apart from the exceptional cases where use of a negotiated procedure is expressly permitted. the complex award procedures prescribed by the EC rules and UK implementing Regulations require the contract to be awarded to the bidder offering the lowest bid or most economically advantageous tender in the procedure laid down and simply leave no room for negotiation.
99 See Turpin, op. cit. note 91 above, p. 143.
100 See [1990] 1 W.L.R. 795 at 800 and 802.
101 For example, the Audit Commission in its guide on information technology procurement for local authorities recommends inclusion of a clause disclaiming responsibility for costs incurred by suppliers in preparing their tenders: see The Acquisition if IT: a Good Practice Guide (1992). p. 22, para. 39. Such clauses have always been useful in clarifying the understanding which would normally be held to exist in any case, that tender costs are generally incurred at the risk of the unsuccessful contractor; but they might also be invoked to negate any liability over contractor selection.
102 As mentioned earlier, a statement commonly found in tender documents is that the authority is not obliged to accept the lowest or any tender. This would not suffice to preclude any obligation to taken into account only limited criteria in selecting a bidder.
103 Edwards v. Skyways [1964] 1 W.L.R. 349.
104 Rose & Frank Co. v. J.R. Crompton & Bros. Ltd. [1925] A.C. 445. Cf. Edwards v. Skyways [19641 1 W.L.R. 349, where the wording of the clause was not clear. In R. v. Lord Chancellor's Department, ex parte Nangle [1991] I.R.L.R. 343 a clause denying the existence of a contract between the Crown and its servants was held to be a statement of a belief about the state of the common law, rather than a denial of a contract which was otherwise accepted to exist: but this is not an appropriate construction of a clause introduced specifically to negate a contract which the common law has clearly established would otherwise arise.
105 Unless, perhaps, the implied contract is developed to provide benefits for the party calling for tenders also. For example. if this contract is a bilateral contract, it may oblige the bidder to enter into a contract once selected, so precluding the possibility of his withdrawal in the period between the award decision and actual conclusion of the contract. A party who wishes to bid on a main contract and calls for tenders to establish the price of subcontracting part of the work may wish to rely on tenders made in calculating his own bid on the larger project, and thus might not wish to exclude a contractual relationship with his own bidders. However, it is possible to achieve such a result in any case by extracting a promise under seal from those bidders that they will not withdraw their bids.
106 s. 3(2)(a).
107 s. 3(2)(b)(i).
108 See s. 2(2). and s. 1(1) (definition of negligence).
109 As in Ashdown v. Samuel Williams [1957] I Q.B. 409.
110 See notes I and 2 above and adjacent text.
111 Works Regulations. Regulation 7(1) (public sector)—and see the rest of Regulation 7 for qualifications to this and details of valuation methods: Utilities Regulations, Regulation 9(2)(c).
112 Supply Regulations, Regulation 7(1) and 7(2)(b): and see the rest of Regulation 7 for qualifications and details of valuation. The same figure applies to services.
113 Supply Regulations, Regulation 7(2)(a).
114 See Utilities Regulations, Regulation 9(2)(a) and (b).
115 Works Regulation 20(3): Supply Regulation 20(3).
116 This is implicit in the fact that a major contract may in any circumstances be awarded only in compliance with the procedures in the regulations. which do not generally allow for an award to anyone other than the party offering the lowest or most advantageous bid in a procedure conducted according to the regulations' requirements.
117 For details of the EC rules see Lee, P., Public Procurement (London 1993).Google Scholar ch. 4; Weiss, F.. Public Procurement in European Community Law (Atlantic Highlands N.J. 1993)Google Scholar. ch. 8; and O'Loan, “An Analysis of the Utilities Directive of the European Communities” (1992) 1 Public Procurement Law Review 175: and on implementation in the United Kingdom, Bickerstaff. “The Utilities Supply and Works Contracts Regulations 1992: an Analysis of the Implementation of the Utilities Directive in United Kingdom Law” (1993) 2 Public Procurement Law Review 117.
118 Works Regulation 31(6)(b); Supply Regulation 26(5)(b); Utilities Regulation 30(5) and 30(7).
119 On this measure of damages and the prospects for its application in the present context in English law see Arrowsmith, “Enforcing the EC Public Procurement Rules: the Remedies System in England and Wales” (1992) 1 Public Procurement Law Review 92. at pp. 107–109 and 114–115. The principle has not been applied in a tort case yet and the question of whether it may generally be employed in a tort claim was expressly left open by the House of Lords in Hotson v. East Berkshire Health Authority [1987] A.C. 750: but. as argued in the article just cited, it may be necessary for the principle to be applied where damages are claimed for breach of the procurement regulations in order to comply with the Community law obligation to provide an effective system of remedies. On this see also Arrowsmith, S.. “Enforcing the Public Procurement Rules: Legal Remedies in the Court of Justice and the National Courts”. ch. 1 in Arrowsmith, S. ed., Remedies for Enforcing the Public Procurement Rules (1993), pp. 69–83Google Scholar and Weatherill, S., “Enforcing the Public Procurement Rules in the United Kingdom”. ch. 8 in the same volume, pp. 286–295.Google Scholar
120 Chaplin v. Hicks [1911] 2 K.B. 786.
121 See Mulland v. William Sanders [1944] K.B. 78.
122 This is not the same as saying that there is liability for breach of statutory duty. The liability does not arise from a legislative intention to give damages, and the measure of damages is different. Nor, of course, does it follow that reliance damages are generally available where legislative rules of public law are breached: this would only apply where a common law principle protecting reasonable expectations has been recognised in the field of activity covered by the legislative rules.
123 The measure may be different, of course: damages under the Public Works and Supply Regulations are probably calculated in the same way as for the tort of breach of statutory duty, requiring the contractor to be placed in the position he would have been in had the rules not been broken—that is, normally, as if the contract had been properly awarded, which will allow recovery for lost profits (see further the works cited in note 119 above); whilst, as explained, damages under the common law will normally be for lost tender costs only. This latter measure will be less favourable, unless a less stringent burden of proof is placed on the contractor, as was suggested might be the case, which may enable him to recover lost bid costs when he could recover nothing under the legislation. However, under the Utilities Regulations there is a general right to damages on the same basis as under the public sector regulations and in addition a right to recover tender costs automatically where the bidder had a “real chance” of being awarded the contract: see Utilities Regulation 30(7). This extra provision was included to ensure that the right to damages is effective. Under the Local Government Act 1988 damages are limited to lost bid costs.
124 Arguably it might be applied where there is a breach of general administrative law principles, such as the proper purposes rule or natural justice (as to which see the discussion at section 111 above). This would not violate the principle that damages are not generally awarded for ultra vires administrative action, which, it is accepted, is based on sound policy considerations (see further S. Arrowsmith, Civil Liability and Public Authorities (Winteringham 1992), pp. 236239). Rather, it would give a right to damages in a limited context where significant policy considerations do not apply.