Bombardier Transportation UK Ltd v London Underground Ltd
| Jurisdiction | England & Wales |
| Judge | Mrs Justice O'Farrell |
| Judgment Date | 02 November 2018 |
| Neutral Citation | [2018] EWHC 2926 (TCC) |
| Court | Queen's Bench Division (Technology and Construction Court) |
| Docket Number | HT-2018-000204 HT-2018-000222 |
| Date | 02 November 2018 |
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Neutral Citation Number: [2018] EWHC 2926 (TCC)
Mrs Justice O'Farrell DBE
HT-2018-000204
HT-2018-000205
HT-2018-000222
IN THE HIGH COURT OF JUSTICE
BUSINESS AND PROPERTY COURTS OF ENGLAND AND WALES
TECHNOLOGY AND CONSTRUCTION COURT (QBD)
Royal Courts of Justice
Strand, London, WC2A 2LL
Philip Moser QC, Valentina Sloane and Anneliese Blackwood (instructed by Womble Bond Dickinson (UK) LLP) for the Claimant in Claim HT-2018-000204 and (instructed by DLA Piper UK LLP) for the Claimant in Claim HT-2018-000205
Sarah Hannaford QC and Ewan West (instructed by Hogan Lovells International LLP) for the Claimant in Claim HT-2018-000222
Jason Coppel QC, Joseph Barrett and Rupert Paines (instructed by Ashurst LLP) for the Defendant (in all three claims)
Rob Williams (instructed by Osborne Clarke LLP) for the Interested Party (in all three claims)
Hearing dates: 17 th and 18 th October 2018
Approved Judgment
I direct that pursuant to CPR PD 39A para 6.1 no official shorthand note shall be taken of this Judgment and that copies of this version as handed down may be treated as authentic.
The following applications are before the Court:
i) applications by the Defendant in each claim (“LUL”), supported by the Interested Party (“Siemens”), for the lifting of the automatic suspension which arose on issue of the claims pursuant to section 45G of the Utilities Contracts Regulations 2006 (as amended) (“the UCR 2006”) and which prevents LUL from entering into contracts with the successful tenderer, Siemens; and
ii) application by the Claimant in HT-2018-205 (“Hitachi”), supported by the Claimant in HT-2018-204 (“Bombardier”) and the Claimant in HT-2018-222 (“Alstom”) for an expedited timetable for the trial(s).
Background
These proceedings concern a procurement exercise conducted by LUL under the UCR 2006, in respect of part of the Deep Tube Upgrade Programme (“the DTUP”), comprising contracts for the manufacture and supply of 94 new trains and equipment for the Piccadilly Line, the provision of technical support and provision of spares for the new trains, together with options for the manufacture and supply of additional trains for the Bakerloo, Central and Waterloo & City Lines. The potential contracts have a duration of 40 years and a value of up to £2.5 billion.
LUL is responsible for the delivery of London Underground services. The tube stock fleet used on the Piccadilly Line was manufactured in 1973 and introduced into service in 1975. The trains have a design life of 40 years. LUL planned to replace the trains by 2014 under the Public Private Partnership (“the PPP”) but, as a result of the collapse of the PPP, the planned upgrade was cancelled.
On 4 March 2014 the procurement for the rolling stock project was published in the Official Journal of the European Union (“the OJEU”). The notice stated that the negotiated procedure under the UCR 2006 would be used. The scope of the project would include the design, manufacture, testing, commissioning, entry into service and maintenance of new rolling stock, comprising, approximately, 100 new trains for the Piccadilly line, with options for 100 trains for the Central line, 40 trains for the Bakerloo line and 10 trains for the Waterloo & City line. The trains were required to have a design life of 40 years. The estimated value of the procurement was £1 billion to £2.5 billion.
Following the pre-qualification responses, on 8 October 2014, five of the applicants were shortlisted.
On 18 January 2016 LUL issued the invitation to negotiate (“the ITN”) documents to the shortlisted bidders. The ITN documents included the instructions to bidders (“the ITB”), the draft Manufacture and Supply Agreement (“the MSA”), which included the train technical specification, and the draft Fleet Support Agreement (“the FSA”).
The ITB stated that the trains and equipment element of the upgrade programme would be effected by:
“(1) the MSA, whereby London Underground Ltd (LUL), as Purchaser, procures a new fleet from the Manufacturer by way of a Base Order of New Trains and Equipment for the Piccadilly line. LUL has the right to exercise Whole Line Options (WLOs) to procure separate fleets of Trains and Equipment for each of the Bakerloo, Central and Waterloo & City lines (with the Waterloo & City line fleet anticipated to be ordered alongside one of the other fleets or the Base Order). There is also the option for LUL to supplement the Base Order and each WLO with further option Trains and Equipment; and
(2) the FSA, whereby LUL, as Customer, procures certain technical support services and establishes spares supply arrangements (additional to and following on from those in the MSA) to support maintenance (to be carried out by LUL) of the fleet or fleets supplied under the MSA…”
The ITB stated that the first fleet to be replaced would be approximately 94 trains on the Piccadilly line, with subsequent whole line options for the other lines.
The ITB stated that the procurement process would be carried out in four stages:
i) Stage 1 – general review and mandatory requirements;
ii) Stage 2 – technical compliance;
iii) Stage 3 – project deliverability;
iv) Stage 4 – contractual compliance (stage 4A) and whole life costs and benefits (stage 4B).
Bidders were required to satisfy minimum threshold scores for each of stages 1 to 4A to pass to the next stage of the evaluation process. At stage 4B, LUL would assess the net present value (“NPV”) for each line, using discounted cash flow methodology applied to the Rolling Stock CAPEX OPEX Model (“the RSCOM”) and the Rolling Stock Tender Evaluation Model (“the RSTEM”), completed by each bidder. The RSCOM identified key capital, maintenance and associated costs of the project. The RSTEM was intended to identify the marginal operational cost and benefit impacts of the new trains, by reference to costs associated with train ownership, such as energy consumption, track damage, cooling and platform interface, and benefits, such as improved journey time and carbon emissions.
The ITB stated that LUL intended to award the contract to the most economically advantageous tender (“MEAT”), that is, the proposal that passed each of stage 1, stage 2, stage 3 and stage 4A, and achieved the highest overall NPV.
The original procurement programme provided for a tender submission deadline of 18 July 2016, an award decision on 13 October 2017 and execution of the contracts on 23 October 2017.
The tender submission deadline was postponed and revised to 26 September 2016. Bombardier and Hitachi, acting as a joint venture (“the JV”), Alstom and Siemens submitted bids.
In 2017 revised commercial bids were requested and submitted by the bidders.
On 15 June 2018 LUL sent letters to the bidders, notifying them of the outcome of the procurement exercise. Siemens was identified as the successful bidder.
The anticipated date on which the contracts will be commenced by LUL and Siemens is 8 November 2018.
Proceedings
On 13 July 2018 the JV issued proceedings seeking to challenge the procurement as contrary to the UCR 2006. Particulars of Claim were served on 27 July 2018. Although Bombardier and Hitachi have issued separate proceedings, the pleaded allegations concern the evaluation of the JV's bid and are identical in all material respects for the purpose of these applications. The alleged breaches include manifest error and/or unlawful procedure in the evaluation of the JV tender, failure to provide to or seek from the JV adequate information during the procurement exercise, application of unlawful and undisclosed award criteria, discrimination and apparent bias. The remedies claimed by the JV include an order setting aside or amending LUL's decision to award the contracts to Siemens or damages.
On 27 July 2018 Alstom issued proceedings seeking to challenge the procurement as contrary to the UCR 2006. Particulars of Claim were served on 3 August 2018. The alleged breaches include manifest error and flawed methodology in LUL's assessment and evaluation of Siemens' tender, unlawful post-bid negotiations and amendments to the Siemens tender, and failure to provide adequate reasons for the award decision, including the characteristics and relative advantages of the successful tender. The remedies claimed by Alstom include an order setting aside LUL's decision to award the contracts to Siemens, a declaration that LUL was in breach of the UCR 2006, a declaration that the contracts should be awarded to Alstom or damages.
On 5 September 2018 LUL issued its applications to lift the automatic suspension in each claim.
On 7 September 2018 the Defence to the JV's claim was served and on 14 September 2018 the Defence to Alstom's claim was served, in each case disputing the allegations.
On 27 September 2018 Hitachi issued its application for an expedited trial.
On 4 October 2018 Alstom served a Reply.
At a directions hearing on 3 October 2018, Fraser J ordered that Siemens should be joined as an interested party to the claims for the purposes of that hearing, the hearing of the suspension and expedition applications, and issues concerned with the disclosure or inspection of Siemens' confidential information.
Application for part of the hearing to be held in private
At the commencement of this hearing, Mr Coppel QC, counsel for LUL, made an application for the Court to sit in private for part of the hearing because he wished to refer to confidential material in the pleadings and evidence. Ms Hannaford QC, counsel for Alstom, indicated that it was a matter for the Court but that...
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