Procurement Law Update: Irish Decisions on Automatic Suspension, Reasons for Rejection, and Costs
Several recent judgments from Irish courts will be of interest to those conducting or competing in public procurement competitions, which we look at under the headings below:
- Court lifts Automatic Suspension of Search and Rescue Contract
- Failure to give Adequate Reasons leads to quashing of Contract Award
- Court of Appeal clarifies Principles for awarding Costs to Entirely Successful Litigants
Court lifts Automatic Suspension of Search and Rescue Contract
The High Court again commented on the ramifications of automatic suspension, which is triggered if an unsuccessful bidder issues legal proceedings to challenge the outcome of a procurement process. So long as the suspension remains in place, the successful bidder cannot enter into the new contract.
In CHC Ireland DAC (applicant) v the Minister for Transport (respondent) and Bristow Ireland Ltd (notice party)  IEHC 457, Mr Justice Twomey signalled the nuanced consideration the Court will apply in light of this being the “only area of law where a court injunction is effectively there ‘for the asking’”, describing automatic suspension as “an exceptionally powerful weapon in the hands of any individual or any business that has lost a tender, … [arising] irrespective of the importance or value of the public contract which is being injuncted”. Similar comments were made in Glenman Corporation Ltd v Galway City Council, which we looked at here.
In CHC Ireland DAC, Mr Justice Twomey lifted the automatic suspension, triggered by the incumbent applicant’s challenge to the award of a 10-year contract to provide aviation services for the Irish Coast Guard’s search and rescue work.
In lifting the suspension, Mr Justice Twomey applied the well-established legal principles of whether first, there was a fair question or serious issue to be tried and, second, the balance of justice favoured the grant of an interlocutory injunction.
Also noted was the Supreme Court statement that legal principles applying to the grant of injunctions “need to be applied in different ways in different cases”. The nature of automatic suspension was relevant to deciding what would preserve the status quo, pending trial of the substantive case.
The respondent conceded there was a fair issue to be tried, so the question was where the balance of justice lay.
In lifting the suspension, the Court took into account the following factors.
Avoiding a gap in provision of an essential service
Continuing the suspension meant the notice party would definitely not be able to provide the service, following a compressed two-year transition, by the planned date in July 2025. The knock-on delay would be greater than delay in signing the contract because of the complexity and interdependency of tasks in the transition plan, including in relation to aircraft manufacturing slots. Sub-contractors would not likely hold tendered prices.
Enhancements under the new contract
The new contract contained enhancements relevant to lifesaving. The Court could take the public interest into account.
Extending the existing contract was not a solution
Extension of the existing contract beyond June 2025 would be for a lengthy and unknown duration, so the Court could not determine whether it would be lawful under procurement law. Doubts about the legality of an extension had to weigh heavily in the balance of convenience and favoured lifting of the automatic suspension. Service enhancements under the new contract were also relevant.
The automatic suspension could continue for a lengthy period
This was a further factor in favour of lifting the automatic suspension.
Quality of the parties’ respective services
The applicant argued, in effect, that its service was more likely to save lives and that the Court should not, at the interlocutory stage, defer to the specialist evaluators who had assessed the tenders. The Court said the correct approach was to consider the applicant’s evidence in conjunction with all the other facts, which included that the expert evaluators had reached a contrary view.
Preservation of the status quo until facts could be established at substantive hearing
The status quo was the position before the applicant obtained a suspension, that is, the Minister being entitled to sign a contract with the notice party. With the parties claiming that the other’s preferred course would put lives at risk, and the Court not being in a position to determine which was correct, preserving the status quo was of particular importance.
Public law measures should be given appropriate deference
The case effectively involved an injunction to prevent a prima facie valid public law measure being brought into force. Disapplying that public law measure would be a serious matter and not to be undertaken lightly.
Forcing the respondent to contract with the applicant
The nature of the services and circumstances of this case meant that continuing the automatic suspension would compel the respondent to contract with the applicant.
Would damages be an adequate remedy instead?
The applicant is the Irish subsidiary of a global company and the existing contract is its only contract. The applicant relied on authority that if a business will probably cease to trade if an injunction is withheld, damages are not an adequate remedy. However, the Court effectively viewed the applicant’s business from a global perspective. The weight to be attached to this factor needed to be considered in the circumstances of automatic suspension cases. Here, the suspension meant that an injunction had been obtained without court scrutiny to restrain a prima facie valid public measure. Even if it were assumed that damages were not an adequate remedy for the applicant, damages would not be an adequate remedy for the respondent because lives were alleged to be at risk. Therefore, even if damages were not an adequate remedy for the applicant, that would not swing the balance in favour of the suspension continuing.
Failure to give Adequate Reasons leads to quashing of Contract Award
In Liam Ó’Dubhgáin t/a WJ Duggan (applicant) v Minister for Culture, Heritage and the Gaeltacht (respondent)  IEHC 396, the Court quashed the respondent’s decision to award a contract for providing a fast ferry passenger service between Tory Island and the mainland on the basis that the respondent failed to comply with its duty to inform the applicant of the reasons for the rejection of its tender.
The judgment is a reminder of principles that must be followed when feedback is provided to unsuccessful bidders, particularly when the award turns on qualitative criteria.
The Court identified the leading authorities as elaborated in RPS Consulting Engineers Limited v Kildare County Council & Others  3 IR 61. The position was summarised to the effect that “the authority must give reasons as to the relative advantages of the preferred tenderer on the basis that there is a legal requirement for a bespoke statement of reasons which must be sufficiently precise to enable the applicant to ascertain the matters of fact and law which resulted in the rejection of his offer and the acceptance of another”.
In the feedback on five criteria, no specific advantages of the winning tender had been identified. For example, on ‘quality and suitability of the vessel’, there was nothing that identified why the successful bidder scored 15 more points than the applicant. There were no specific respects, examples or facts to support the general assertion of superiority of the successful bidder. Instead, the reason was limited to “good detail provided in relation to the proposed vessel and in relation to passenger facilities”. There was nothing to identify why the passenger facilities of one vessel secured more marks than the other and the comments were essentially bland and uninformative. The Court carried out a similar analysis on the feedback for the other criteria.
In addition, the respondent had erred by taking into account an irrelevant consideration: feedback included that proposals on how to cater for unaccompanied passengers with reduced mobility were unclear. However, the Request for Tenders had not specified the need to address this point, so the applicant had lost marks for not providing a detail which had not been sought.
Court of Appeal clarifies Principles for awarding Costs to Entirely Successful Litigants
In Word Perfect Translation Service Ltd v Minister for Public Expenditure and Reform  IEHC 219, the Minister successfully defended Word Perfect’s challenge, but was awarded only 50% costs.
Though the Minister succeeded on a preliminary point that Word Perfect was not an “eligible person” to challenge the tender, she had failed to bring a motion to have this point decided before the trial of the substantive claim.
The Minister has now successfully appealed the costs decision and been awarded full costs by the Court of Appeal (in  IECA 189).
In reaching its decision, the Court of Appeal commented on the impact of the Legal Services Regulation Act 2015 (the “Act”) and in particular section 169(1), which provides that a party who is entirely successful is entitled to an award of costs unless the court orders otherwise, having regard to the particular nature and circumstances of the case, and the conduct of the proceedings by the parties, including the matters set out at sub-sections (a) to (g). The Court noted the guidance at paragraph 19 of Chubb v The Health Insurance Authority  IECA 183.
In this case, the Court reached the following conclusions.
- It is not correct that the starting point for assessing costs to be awarded to an entirely successful litigant is to ask whether the parties conducted the case in the most cost-effective manner possible.
- Under section 169(1) of the Act, the starting point is that an entirely successful party is entitled to costs. The courts may order otherwise having regard to the nature and circumstances of the case and conduct of the proceedings by the parties and there is a non-exhaustive list of matters that can be considered at sub-sections (a) to (g).
- Before the Act, the general rule was that costs followed the event. Even where a party was entirely successful, if the litigation was pursued in an unreasonable manner a court was entitled for stated reasons to modify the usual costs order.
- The Act did not change that position. It continues to be the position that the parties must conduct litigation fairly, reasonably and proportionately to the issues at stake.
- A failure to move by way of preliminary application on a point that is ultimately successful is a factor that may be taken into account in assessing whether there should be a modified costs order. The test is whether the approach was objectively reasonable in all the circumstances of the case.
- The costs hearing ought not to be an exercise in nit-picking. A broad-brush-stroke approach must be taken. Otherwise, there is a danger that costs applications will spiral out of control.