Covanta Energy Ltd v Merseyside Waste Disposal Authority
| Jurisdiction | England & Wales |
| Judge | The Hon. Mr. Justice Coulson |
| Judgment Date | 26 September 2013 |
| Neutral Citation | [2013] EWHC 2922 (TCC) |
| Docket Number | Case No: HT-13-173 |
| Date | 26 September 2013 |
| Court | Queen's Bench Division (Technology and Construction Court) |
[2013] EWHC 2922 (TCC)
IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
TECHNOLOGY AND CONSTRUCTION COURT
Royal Courts of Justice
Strand, London, WC2A 2LL
The Honourable Mr. Justice Coulson
Case No: HT-13-173
Nigel Giffin QC and Joseph Barrett (instructed by Pinsent Masons) for the Claimant
Sarah Hannaford QC and Simon Taylor (instructed by Eversheds) for the Defendant
Hearing dates: 23 and 24 September 2013
INTRODUCTION
The defendant, Merseyside Waste Disposal Authority ("MWDA") is a statutory waste disposal authority responsible for managing the municipal waste collected and delivered within its area. The claimant ("Covanta") is a company specialising in the development, construction and operation of Energy from Waste ("EfW") facilities. Between July 2006 and April 2013, MWDA carried out a lengthy procurement process for a proposed Resource Recovery Contract ("RRC") in respect of the processing of millions of tonnes of waste delivered to it by the district councils and residents of Merseyside.
The principal purpose of the RRC is to reduce the amount of waste going to landfill and instead to use the waste to generate heat and power. The value of the RRC is in excess of £1 billion and its intended duration has been put at 30-35 years.
Between October 2007 and April 2013 Covanta, one of the tenderers for the RRC, were closely involved in the competitive dialogue tender procedure required by MWDA. Such a procedure can only be used in relation to the award of a particularly complex contract where the contracting authority is not able to define the technical means capable of satisfying its needs or objectives and/or cannot specify the legal or financial make-up of a project. The nature of the competitive dialogue procedure, as set out in Regulation 18(20) of the Public Contracts Regulations 2006 (as amended), is that the contracting authority must engage in a dialogue with the economic operators selected to participate. It usually proceeds by way of the progressive development of the solutions proposed by the tenderers, and in the light of the views expressed about those solutions by the authority. That is what happened in this case.
Between December 2009 and June 2012, Covanta and a consortium headed by SITA were the only two tenderers involved in the detailed discussions with MWDA. The deadline for the final tenders was 22 June 2012. Ten months later, in April 2013, MWDA announced that they intended to award the RRC to SITA.
When Covanta received details of the tender evaluation process, they raised a series of concerns, alleging that there were manifest errors in that evaluation. In addition, they were surprised to discover that, despite their detailed involvement in the competitive dialogue procedure, two of the key elements of their tender received no marks at all, and were described as "fundamentally unacceptable", although that was a term used in the tender evaluation criteria which Covanta had been given. In consequence of their concerns, on 15 May 2013, Covanta commenced these proceedings in which they seek orders setting aside MWDA's decision not to award them the contract and to restrain MWDA from entering into the contract with SITA. They also seek an order requiring MWDA lawfully to re-evaluate the respective bids.
At a hearing before Akenhead J on 30 August 2013, a two day hearing was fixed for 23 and 24 September 2013 for the hearing of Covanta's claim for an interim injunction to restrain MWDA from entering into the RRC with SITA until the conclusion of the trial. This judgment arises therefore, from that hearing, and I should emphasise at the outset the enormous assistance that I derived from the written and oral submissions of both leading counsel. Without them, this hearing would have taken much longer than it did.
Covanta's primary case is that Regulation 47G of the Public Contracts Regulations 2006 (as amended) applies to this procurement process and thus there is an automatic suspension requiring MWDA to refrain from entering into the proposed contract with SITA. However, MWDA say that this amended Regulation does not apply because the procurement process began before it came into force.
If the amended Regulations, including Regulation 47G, apply to this case, then MWDA seek to discharge the automatic suspension pursuant to Regulation 47H. The authorities make plain that any application under Rule 47H has to be treated in the same way as an application for an interim injunction. And if MWDA are right and the amended Regulations do not apply, so that there is no automatic suspension, then Covanta's fall back position is to seek an interim injunction in accordance with the well known principles in American Cyanamid. Accordingly, the real issue between the parties is whether or not there should be an interim injunction restraining MWDA from entering into the RRC with SITA until the end of the trial on the substantive issues.
BRIEF CHRONOLOGY
On 26 July 2006, MWDA published a Prior Information Notice in the Official Journal of European Union in respect of the proposed RRC. The notice said that service provision under the RRC (and two related contracts) would commence in 2008.
On 9 July 2007, MWDA published a contract notice in the Official Journal in respect of the RRC. This stated that the tender process would be conducted using the competitive dialogue procedure. At the same time, MWDA issued a descriptive document in respect of the RRC stating that final tenders would be submitted by 2 February 2010 and a preferred bidder would be appointed by 7 July 2010.
On 13 August 2007, Covanta submitted a Pre-Qualification Questionnaire ("PQQ") and, on 9 October 2007, were notified that it had been successful at that stage. Covanta were therefore invited to participate in the competitive dialogue procedure with, at that time, fifteen other participants. The procedure had three stages: stage one, which was an invitation to submit outline solutions; stage two, which was an invitation to submit detailed solutions; and stage three, which was a call for final tenders.
On 6 November 2007, Covanta received the stage one invitation to submit an outline solution. It submitted its response on 11 January 2008. On 30 June 2008, Covanta was notified that it has been successful at stage one. By that time, there were four remaining participants, including both Covanta and SITA.
On 20 March 2009, Covanta submitted its stage two detailed solutions response. On 15 December 2009 Covanta was notified that it had also been successful at stage two and would, along with SITA, be asked to proceed to the final stage of the competitive dialogue process. At that point, the other two prospective tenderers were eliminated.
Between 17 December 2009 and 15 June 2012, Covanta and MWDA were involved in detailed discussions in relation to the RRC. Covanta were invited to submit their final tender by 22 June 2012, which they duly did.
Although the tender process had already taken five years from PQQ to final tender, it took MWDA a further ten months before completing the evaluation of the tenders. On 19 April 2013, MWDA wrote to Covanta to notify it that its bid had been unsuccessful. The letter also informed Covanta that SITA's bid had been successful. In relation to the tender evaluation, the letter said:
(a) Under the 'financial' criteria, which accounted for 40% of the total score, Covanta scored 17.85% compared with SITA's score of 11.33%;
(b) Under both the 'legal and contractual' and the 'overall integrity' criteria, Covanta's bid had been scored at 0%.
The letter went on to suggest that those two aspects of the Covanta tender were "fundamentally unacceptable'.
Covanta commenced these proceedings within the 30 day period required by the Public Contract Regulations 2006 (as amended). As I have noted, in their Particulars of Claim, they raise a number of issues relating to the evaluation process alleging manifest errors in the scoring of their tender. In addition, they allege that something must have gone very wrong when a six year competitive dialogue procedure resulted in a conclusion that important aspects of the tender, that was the final result of that dialogue, were "fundamentally unacceptable".
DO THE AMENDED OR UN-AMENDED PUBLIC CONTRACT REGULATIONS APPLY?
The Public Contracts Regulations 2006 have their origin in the EU Council Directive 89/665/EEC, referred to at the hearing as "the Original Remedies Directive". Amongst other things, that required Member States to ensure that the decisions of contracting authorities could be reviewed effectively and, in particular, as rapidly as possible. Relevant Articles from that Directive include the following:
Article 1 provides:
"1. The Member States shall take the measures necessary to ensure that, as regards contract award procedures falling within the scope of Directives 71/305/EEC and 77/62/EEC, decisions taken by the contracting authorities may be reviewed effectively and, in particular, as rapidly as possible in accordance with the conditions set out in the following Articles, and, in particular, Article 2(7) on the grounds that such decisions have infringed Community law in the field of public procurement or national rules implementing that law.
2. Member States shall ensure that there is no discrimination between undertakings claiming injury in the context of a procedure for the award of a contract as a result of the distinction made by this Directive between national rules implementing Community law and other national rules."
Article 2 (1)(a)(b) provides:
"1. The Member States shall ensure that the measures taken concerning the review procedures specified in Article 1 include provision for...
To continue reading
Request your trial
-
NP Aerospace Ltd v Ministry of Defence
...contract period. However, these are not difficult matters. This current case is nowhere near the factual scenario in Covanta Energy Ltd v Merseyside Waste Disposal Authority [2013] EWHC 2922 (TCC) 25 An argument is raised by Mr Coppel QC to the effect that this may well be a loss of chance ......
-
Nats (Services) Ltd v Gatwick Airport Ltd Dfs Deutsche Flugsicherung GmbH (Interested Party)
...referred to the Court of Appeal decision in Araci v Fallon [2011] EWCA Civ 668 and the decision of Coulson J in Covanta Energy Limited v Merseyside Waste Disposal Authority [2013] EWHC 2922 (TCC) at [48]. She submitted that lifting the suspension or not granting the injunction would mean ......
-
Sysmex (UK) Ltd v Imperial College Healthcare NHS Trust (Defendant/Applicant)
...of procurement cases in recent years in which the court has refused to lift the automatic suspension. One example is Covanta Energy Ltd v Merseyside Waste Disposal Authority [2013] EWHC 2922 (TCC), where the delays of 5 years in the procurement process itself, the extended period over which......
-
Camelot UK Lotteries Ltd v The Gambling Commission
...v Olint Corporation Limited [2009] UKPC 16 per Lord Hoffmann at [17]–[18]; Covanta Energy Ltd v Merseyside Waste Disposal Authority [2013] EWHC 2922 per Coulson J (as he then was) at [34] and [48]; and summarised in Alstom v Network Rail Infrastructure Ltd [2019] EWHC 3585 (TCC) at 48 The......
-
Procurement Pulse
...in the balance of conveniencesometimes that price might by unduly high (as in Covanta Energy v Merseyside Waste Disposal Authority [2013] EWHC 2922 (TCC) - but in his view, it would not be so in this particular case. Circle Nottingham Ltd v NHS Rushcliffe Clinical Commissioning Group [2019......
-
Clyde Procure Alert: Maintaining The Automatic Suspension - Buyer Beware
...an interim application, the Court applied the established "American Cyanamid" principles as summarised in Covanta Energy Ltd v MWDA [2013] EWHC 2922 (TCC). These principles are, in short, as Is there a serious issue to be tried? If there is a serious issue to be tried, would damages constit......
-
Contracting Authorities Face Uphill Task In Lifting Automatic Suspension in Procurement Disputes
...interlocutory injunction applications. These principles were more recently supplemented in the case of Covanta Energy Ltd v MWDA [2013] EWHC 2922 (TCC) In that case the Court held that in deciding whether to lift the suspension, the Court needed to have regard to whether there is a serious ......
-
Table of cases
...properties Ltd v Greencore pF (UK) Ltd [2014] EWhC 184 (TCC) III.26.272 Covanta Energy Ltd v Merseyside Waste Disposal authority [2013] EWhC 2922 (TCC) I.4.69 Covanta Energy Ltd v Merseyside Waste Disposal authority [2013] EWhC 2964 (TCC) I.4.69, I.4.80 Covecorp Constructions pty Ltd v Indi......
-
Procurement
...per Akenhead J; Resource (NI) Ltd v University of Ulster [2013] NIQB 64; Covanta Energy Ltd v Merseyside Waste Disposal Authority [2013] EWHC 2922 (TCC) at [34]–[36], per Coulson J; Covanta Energy Ltd v Merseyside Waste Disposal Authority [2013] EWHC 2964 (TCC) at [12], per Akenhead J; DWF ......