This article is an excerpt from The Art of Tendering: A Global Due Diligence Guide, which is available for purchase.
Recent cases from the United Kingdom show how the courts are parting company with the process contract and are refusing to impose its implied terms to every public tendering process. As these cases illustrate, the courts do not apply process contract rules, originally referred to as “Contract A” by the Canadian courts, to every public tendering process and instead look at the specific terms of the solicitation document before determining which rules apply to that process.
For example, in its November 2021 decision in Adferiad Recovery Limited v. Aneurin Bevan University Health Board, the England and Wales High Court of Justice rejected a bid protest since the contract in question was below applicable open tendering thresholds and therefore not subject to legal challenge under applicable regulations. In rejecting the challenge, the Court also refused to apply an implied process contract as a means of regulating the contract award decision under contract-based common law rules.
The Court cautioned that a process contract should not be lightly implied by the courts to impose an additional regulatory scheme on the bidding process unless an intention to be governed by those rules is clearly expressed in the bidding documents. The Court concluded that there was no evidence that the purchasing institution intended to create a process contract. In fact, the Court noted that the tendering documents expressly stated the opposite, finding that “the documentation is inconsistent with any intention on the part of the defendant to enter into voluntary contractual obligations” since the tender call contained a provision that “expressly negatives contractual intent.” The Court refused to override the express intention of the tendering terms and imply a process contract.
Similarly, in its February 2022 decision in Excession Technologies Limited v. Police Digital Service, the England and Wales High Court of Justice rejected a legal challenge to the government’s tendering process after finding that the tendered contract fell under security exceptions and was not subject to statutory open tendering rules. The case dealt with acquisition of covert surveillance technology for police forces and security agencies. While the government voluntarily used a tendering process to assist its contract award decision, it asserted that its tendering process was exempt from open tendering rules and from legal challenge. The Court agreed, finding that the software acquisition, which fell under intelligence activities, was exempt from open procurement requirements and therefore not subject to challenge.
The Court dismissed the complainant’s assertion that the bidding process created an implied process contract that would allow the court to regulate the contract award decision under implied common law rules. As the Court concluded, the government was clear “throughout the tender process that no such legal obligations would be owed to bidders” and that there was therefore “no legitimate or sustainable basis for a court to purport to impose far-reaching legal obligations in circumstances of this sort under the rubric of ‘contract’.”
As these cases illustrate, the Contract A process contract, and its additional common law duties, can be avoided through clearly drafted tendering documents.
