Energy Solutions EU Ltd v Nuclear Decommissioning Authority
| Jurisdiction | England & Wales |
| Judge | Mr Justice Fraser |
| Judgment Date | 20 December 2016 |
| Neutral Citation | [2016] EWHC 3326 (TCC) |
| Docket Number | Case No: HT-2014-000053, HT-2014-000094, HT-2015-000163 |
| Court | Queen's Bench Division (Technology and Construction Court) |
| Date | 20 December 2016 |
[2016] EWHC 3326 (TCC)
The Honourable Mr Justice Fraser
Case No: HT-2014-000053, HT-2014-000094, HT-2015-000163
IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
TECHNOLOGY AND CONSTRUCTION COURT
Royal Courts of Justice
Strand, London, WC2A 2LL
John Howell QC, Andrew Hunter QC and Ewan West (instructed by Skadden, Arps, Slate, Meagher & Flom (UK) LLP) for the Claimant
Nigel Giffin QC, Joseph Barrett and Rupert Paines (instructed by Burges Salmon LLP) for the Defendant
Hearing dates: 14, 15, 16, 17 November 2016
JUDGMENT No.3 (2 nd FRANCOVICH CONDITION)
Introduction
In these three sets of proceedings, there are three claims, each commenced by the entity that at the time was called Energy Solutions EU Limited (and is now called ATK Energy EU Limited) as Claimant ("Energy Solutions") against the Nuclear Decommissioning Authority ("NDA"). All three claims concern the same procurement exercise, and have been case-managed and tried together. This procurement exercise was in relation to the decommissioning of the UK's 10 Magnox power stations, together with two other separate nuclear research facilities. The 12 different sites no longer have active Magnox reactors, and they are all now in different stages of nuclear decommissioning. Energy Solutions was part of a consortium that was unsuccessful in the procurement exercise for that project, the consortium's other member being Bechtel Management Company Ltd ("Bechtel"). The consortium was called RSS, and Bechtel took no part in the litigation (although it has since issued separate proceedings against the NDA). The tender process was initiated by the NDA by way of publication on 18 July 2012 of a notice in the Official Journal of the European Union, published under the number 2012/S 136–227570 (the "OJEU Notice"), and was conducted under what is called the competitive dialogue procedure.
The different bids were required to be submitted to the NDA by 1 November 2013, and a complex analysis of the different bids then took place whereby teams of Subject Matter Experts ("SMEs") at the NDA evaluated the different tenders and arrived at a score for each, to determine which bidder had submitted the most economically advantageous tender (sometimes in the contemporaneous documents and authorities referred to as "MEAT"). That determination by the SMEs was done against scoring criteria contained in the Statement of Response Requirements, or SORR, which formed part of the rules of the procurement competition by reason of being included in the Invitation to Submit Final Tenders. The contract that was to be awarded by the NDA which was the subject of the procurement was called the Transition Agreement. Assuming certain conditions precedent were complied with, a successful tenderer who was awarded the Transition Agreement would be awarded another contract with the NDA called the Parent Body Agreement (or "PBA") about six months after award of the Transition Agreement.
The successful tender was submitted by a different consortium to RSS, which did not win the competition. At the time of the competition this other consortium was called the Cavendish Fluor Partnership, and had as its members Babcock Nuclear Services Ltd (through its subsidiary Cavendish Nuclear) and Fluor Enterprises Inc. (I will refer to this consortium as "CFP" throughout). Following the detailed evaluation exercise performed by the NDA, the overall scores given to these two different tenderers were 86.48% to CFP and 85.42% to RSS. The claims brought by Energy Solutions in the proceedings were founded on allegations that the basis upon which the evaluation exercise had been performed by the NDA upon both tenders was manifestly erroneous in certain discrete respects.
Following the hearing of the trial of all liability issues which took place before me on different dates between November 2015 and July 2016 (in circumstances explained in [58] to [68] of that judgment, entitled Judgment No.2 (Liability)), I found that some of the scores for various Requirements in the tenders both of RSS and CFP had been awarded on a manifestly erroneous basis, and should be changed. I also found that CFP should have been disqualified from the competition entirely due to deficiencies in its tender in two of what were called Threshold Requirements, namely Requirements 306.5.1(j) and 401.5.1(b)(ix).
After the appropriate weighting was applied to the new scores, the results of the procurement competition as adjusted in these proceedings following Judgment No.2 (Liability), and without taking account of the disqualification of CFP that I found should have occurred, should have been 91.48% for RSS and 85.56% for CFP. Accordingly, the most economically advantageous tender was that of RSS, whether as a function of the percentage outcome of the evaluation compared to CFP and the other tenderers (had CFP remained within the competition) or in any event (had CFP been disqualified as a result of the application of the terms of the SORR to CFP's Tender Submissions for Requirements 306.5.1(j) and 401.5.1(b)(ix)). Damages for Energy Solutions' claim are yet to be assessed, and this is to take place in the next round of the litigation.
However, Edwards-Stuart J had, prior to the trial on liability, handed down judgment on three preliminary issues on 23 January 2015, and that judgment is at [2015] EWHC 73 (TCC). I will refer to that as Judgment No.1 (Preliminary Issues). That judgment is relevant to this judgment, which I will call Judgment No.3 (2 nd Francovich condition). The need for this third first-instance judgment arises in the following circumstances. Energy Solutions had issued proceedings in the First Claim, HT-2014-000053 on 28 April 2014 against NDA seeking damages. This post-dated the date by which proceedings must have been commenced to have triggered the automatic suspension that would have prevented the NDA from contracting with CFP. There is what is called a standstill period under Regulation 32A of the Public Contracts Regulations 2006 (SI 2006 No. 5) (the "Regulations") within which an authority is prohibited from entering into the contract (or framework agreement) with a successful bidder. That period starts with the notification of the outcome of the competition to the participants, and ends at the later of either midnight at the end of the 15 th day after the relevant sending date, or the 10 th day after the last date of receipt by the tenderers, of the regulation 32(1) notice. It is this notice which notifies the bidders of the outcome of the procurement competition. In this case, the standstill period ended at midnight on 14 April 2014. Energy Solutions therefore issued proceedings 14 days after that period had ended.
If proceedings are issued within this standstill period, an automatic suspension operates to prevent an authority from entering into the contract the subject matter of the procurement. It was open to RSS, Bechtel and/or Energy Solutions (the latter two as members of the consortium) to have issued proceedings against the NDA under regulation 47C of the Regulations, and to notify the NDA that they had done so, before the end of the standstill period, and therefore before the Transition Agreement was entered into between the NDA and CFP. Had this been done, the NDA would have been required to refrain from entering into the contract under regulation 47G(1) of the Regulations. This automatic suspension is similar in effect to an injunction, and prevents an authority from contracting with the winner of a procurement competition if that outcome is under legal challenge by another bidder. Because the period within which proceedings had to be issued for such a suspension had elapsed, the Transition Agreement had already (when proceedings were issued by Energy Solutions) been entered into between the NDA and CFP on 15 April 2014. This was the day after the end of the standstill period. It should also be stated that the NDA had refused a request by RSS to extend the standstill period. Even in cases where proceedings are issued within the period necessary to initiate the automatic suspension, an authority is entitled to apply to the court (and often does) to have that lifted. The principles that apply in such a situation are analogous to those for interim injunctions, including the question of whether damages are an adequate remedy, and the availability (and efficacy) of cross-undertakings in damages. This is clear from a number of cases, most recently those such as NATS (Services) Ltd v Gatwick Airport Ltd and DFS Deutsche Flugsicherung GMBH [2014] EWHC 3133 (TCC), [2015] PTSDR 566 a decision of Ramsey J who found that the principles to be applied were the same as those contained in the seminal American Cyanamid test. The same principle has been applied subsequently, in cases such as Group M UK Ltd v Cabinet Office [2014] EWHC 3659 (TCC) by Akenhead J and Bristol Missing Link Ltd v Bristol City Council [2015] EWHC 876 (TCC), [2015] PTSR 1470 by Coulson J.
Preliminary issues were tried by Edwards-Stuart J concerning whether, by Energy Solutions having failed to issue proceedings within the period which would have led to the automatic suspension of the contract award, Energy Solutions had in some way either damaged its position or broken the chain of causation. The findings on the three preliminary issues were then challenged on appeal by both parties. The judgment of the Court of Appeal (Lord Dyson, then Master of the Rolls, Tomlinson and Vos LJJ) on that appeal was handed down during the trial of liability. The judgment on the appeal is at [2015] EWCA Civ 1262. The relevant preliminary issues (one of them did not arise) and the answers to them are therefore as follows after the appeal (in...
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