Montpellier Estates v Leeds City Council [2013] EWHC 166 (QB)

A recent case has highlighted issues around the conduct of competitive dialogue procurement processes.

A recent case has highlighted issues around the conduct of competitive dialogue procurement processes. The “competitive dialogue” is one of the permitted procedures laid down by the Public Contract Regulations 2006. It is used where the authority’s requirements are insufficiently fully developed to allow a defined requirement to be advertised and so a dialogue is facilitated through the process under controlled circumstances to arrive at a suitable solution.

While engagement with potential providers is generally a good thing, in undertaking such processes care must be taken to ensure no allegations of inequality of treatment or breaches of confidentiality are made as a result of bidders fearing that the process has become a “sham” with one solution (or bidder) becoming the front runner before conclusion of the process. These processes take months or years to complete and providers invest a lot of time and money in participating.

In the case of Montpellier Estates v Leeds City Council, [2013] EWHC 166 (QB) Montpellier alleged that the council deceived it into entering and/or remaining in a competitive dialogue procurement competition by false representations leading Montpellier to believe that the authority had no preference as to where a proposed arena should be built when in fact  Montpellier was a “stalking horse” for the council’s own development of an arena on the council’s own land ( a “Public Sector Comparator”).

The court dismissed Montpelier’s claim, accepting that the council genuinely did develop the Public Sector Comparator as a fall-back and negotiations were in good faith, but it is clear an authority should be careful not to allow bidders to incur further expense once it has decided to terminate proceedings. The court concluded an authority could be liable for the wasted costs of bidders if it continues negotiations that are bound to fail.

In addition, in bringing its case Montpellier made allegations of fraud and dishonesty against eight individuals who ended up being cross examined in the high court.

The court found in favour of the council on the basis of the veracity of the testimony of the council’s officials. This expensive and no doubt unpleasant experience could have been avoided by:

  • Not meeting the bidders outside of a controlled environment;
  • Not engaging in casual conversation about the project with bidders at social occasions;
  • Keeping full and accurate notes of all meetings – we even have clients video-taping such events.

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