NP Aerospace Ltd v Ministry of Defence [2014] EWHC 2741 (TCC)

Case No HT-14-162[2014] EWHC 2741 (TCC)
IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
TECHNOLOGY AND CONSTRUCTION COURT
Venue Royal Courts of Justice, Strand, London, WC2A 2LLDate 1 st August 2014
Before
MR JUSTICE AKENHEAD
Between
NP AEROSPACE LIMITEDClaimantMINISTRY OF DEFENCEDefendant
Jason Coppel QC and Joseph Barrett (instructed by Squire Patton Boggs (UK) LLP) for ClaimantValentina Sloane and Tim Johnston (instructed by Treasury Solicitor) for DefendantRob Williams (instructed by Freshfields Bruckhaus Deringer LLP)for Force Protection Europe LimitedHearing Hearing date: 31 July 2014
JUDGMENT
[1]This is a public procurement case in relation to a Defence project involving the conversion of armoured vehicles. There has been a tendering process and the Claimant, NP Aerospace Ltd (which trades as Morgan Advanced Materials Composite and Defence Systems:
"Morgan"), was unsuccessful. Morgan having commenced proceedings on 19 May 2014, the statutory suspension on the placing of the contract with the successful tenderer, Force Protection Europe Limited ("
FPE"), has come into force. The Ministry of Defence (“MOD”) apply to have the suspension lifted. The case raises issues about, as alleged, abnormally low tenders and predatory pricing. The case arises under the Defence and Security Public Contracts Regulations 2011.[2]It should be appreciated that, given the confidential nature of much of the information which has been disclosed in court and possibly in the national interest of avoiding providing unnecessary detail into the public arena in relation to what are likely to be sensitive defence matters, it is necessary that I limit the content of this judgement to what is essential for the parties to know why one has lost and the other has succeeded in relation to its application. The Background[3]On 21 August 2013, MOD advertised in the Official Journal of the European Union that it wished to commence a tender procedure to select a contractor for a project known as the "Protected Mobility Cougar Conversion Project" which will involve the conversion of approximately 250 such vehicles, which is about one third of the fleet. These are operational vehicles available for use for training but also in combat zones and other areas.[4]It is common ground that Morgan has historically been the sole provider of conversion services for this type of armoured vehicle since 2006. The existing vehicles had been acquired by the MOD from Force Protection Industries Inc, a company since bought out by General Dynamics Land Systems ("GD") which is now the holding company of FPE, albeit that FPE is said to be relatively autonomous. Morgan’s business goes well beyond simply armoured vehicle conversion including other work for MOD; indeed recently it has reported the successful tender with the MOD on another project. Morgan has in the past worked collaboratively with FPE.[5]There is evidence that the latest approved delivery date for the current Cougar Conversion project has been set at March 2016.[6]On 24 January 2014, MOD issued to 5 tenderers, including the Claimant, FPE and Thales, the Invitation to Tender (“ITT”) and the Special Notices and Instructions to Tenderers ("SNITS”). On 8 April 2014, Morgan submitted its tender and there has been no suggestion that it was not formally compliant. I presume that the other two tenderers also submitted their tenders on time and there is no suggestion that they were not in formal terms compliant.[7]On 9 May 2014, MOD wrote to Morgan notifying it of MOD’s decision to award the contract to FPE. It identified from the SNITS what the criteria used were and explained that the winning tenderer against a total of 100 had obtained 69.0 whilst Morgan had obtained 64.7. It set out in attachments the differences against the nine questions or criteria (only one of which was price 20% of the whole) how well both Morgan and FPE done. It appeared that, other than in respect of price and affordability related questions, Morgan had done and scored as well as FPE on four out of the eight remaining questions or criteria and had done better than them on four. However on price and affordability, whilst FPE scored 100%, Morgan had only scored 16.41%, the expressed reason for the award of the scores in relation to this being that Morgan "submitted a price of [X – well over that] of the Winning Bidder". There was also attached an Annex B which provided substantial detail of the basis on which they had been marked on the non-price and affordability question. It is clear that it was the price which led to Morgan losing out.[8]It is clear that Morgan was upset about this and through its solicitors wrote on 15 May 2014 to MOD expressing their extreme surprise and their belief that there could be grounds legally to challenge the decision. Substantially, the complaint was that the winning tenderer must have put in an "abnormally low tender" and also that it must have been involved in "predatory pricing" to secure the contract. They asked for further documents and information. On 16 May 2014, Morgan attended an evaluation debrief meeting at which its representatives made clear that they believed that FPE could not have priced everything, either deliberately or due to misinterpretation. Having not received any or any clear response from MOD, it issued the Claim in these proceedings.[9]On 19 May 2014, MOD had a meeting with representatives of FPE to seek some information at least in general in relation to the relative level of pricing by it. It is clear from the meeting minutes and notes that there was provided by the FPE representatives general explanations as to why their price was at the level it was at but they declined to provide a detailed breakdown.[10]There then followed procedural disputes between the two parties in relation to the litigation as to the extent to which further disclosure or other information should be provided by MOD to Morgan. Confidentiality rings were established and more information was provided. The parties came before the Court and I ordered that Morgan should serve Particulars of Claim because I had formed the view that they had adequate information to set out what their case was and that it was important that the current application (which was anticipated) should be heard in the context of whatever it was that Morgan’s case was. I was also extremely concerned about the delay in the proceedings because unless and until Morgan set out what its case was the proceedings would be otherwise unnecessarily delayed. I also considered that it was important that MOD served a Defence. It was clear by an early stage in the proceedings that MOD wished to apply to have the statutory suspension on its placing of the contract with the successful tenderer lifted. Having at that stage a completely open mind (largely through not being aware in any detail how each party might put its case or defence) and then being unaware of the basis for or strengths or weaknesses of any MOD suspension lifting application I fixed not only a hearing date for any such application (31 July 2014) but also a trial date on liability to start on 10 November 2014, albeit I pencilled in a date also in early October 2014 (although, given the steps likely to be required to get the case ready for trial (which would include experts possibly of at least two disciplines), this was very provisional). I was anxious that any prejudice to either party from having a suspension lifted or not lifted might be at least somewhat limited.[11]There was a contested application by Morgan for specific disclosure which I heard on 16 July 2014 upon which it was substantially unsuccessful. The date for the hearing of the current application having been fixed by me some time before, MOD issued its application on 18 July 2014 to have the statutory suspension lifted. The Statutory Background[12]The Courts over the last few years have had to address the Public Contract Regulations but particular regulations have been introduced in relation to defence: The Defence and Security Public Contract Regulations 2011. These regulations followed the European Directive 2009/81/EEC 13 July 2009 and in particular Article 56(5): “Member States may provide that the bodies responsible for review procedures may take into account the probable consequences of interim measures for or interests likely to be harmed, as well as the public interest, in particular defence and/or security interests, and may decide not to grant such measures when they are negative consequences could exceed their benefits."[13]The 2011 Regulations contain many of the same features as the ordinary Public Contracts Regulations. Material ones for the purposes of this application are:
“5(2) A contracting authority shall – (a) treat economic operators equally and in a non-discriminatory way; and (b) act in a transparent way. 31(1) …a contracting authority shall award a contract on the basis of the offer which – (a) is the most economically advantageous from the point of view of the contracting authority; or (b) offers the lowest price… (6) If an offer for a contract is abnormally low the contracting authority may reject that offer but only if it has – (a) requested in writing an explanation of the offer or of those parts which it considers contribute to the offer being abnormally low; (b) taken on account of the evidence provided in response to a request in writing; and (c) subsequently verified the offer or parts of the offer being abnormally low with the economic operator. (7) Where a contracting authority requests an explanation in accordance with paragraph (6), the information requested may, in particular, include (a) the economics is of the method of construction, the manufacturing process or the services provided; (b) the technical solutions suggested by the economic operator or the exceptionally favourable conditions available to the economic operator for the execution of the work or works, for the supply of goods or for the provision of services; (c) of the originality of the work, works, goods or services proposed by the economic operator; (d) compliance with the provisions relating to employment protection and working conditions in force at the place where the contract is to be performed; or (e) the possibility of the economic operator obtaining State aid… 51 (1) This regulation applies to the obligation on a contracting authority to comply with – (a) the provisions of these Regulations… and (b) any enforceable EU obligation in respect of a contract… (a) treat economic operators equally and in a non-discriminatory way; and (b) act in a transparent way. (a) is the most economically advantageous from the point of view of the contracting authority; or (a) requested in writing an explanation of the offer or of those parts which it considers contribute to the offer being abnormally low; (b) taken on account of the evidence provided in response to a request in writing; and (c) subsequently verified the offer or parts of the offer being abnormally low with the economic operator. (a) the economics is of the method of construction, the manufacturing process or the services provided; (b) the technical solutions suggested by the economic operator or the exceptionally favourable conditions available to the economic operator for the execution of the work or works, for the supply of goods or for the provision of services; (c) of the originality of the work, works, goods or services proposed by the economic operator; (d) compliance with the provisions relating to employment protection and working conditions in force at the place where the contract is to be performed; or (e) the possibility of the economic operator obtaining State aid… (a) the provisions of these Regulations… and (b) any enforceable EU obligation in respect of a contract… (2). That obligation is a duty owed to an economic operator. 52 (1) A breach of the duty owed in accordance with regulation 51 is actionable by any economic operator which, in consequence, suffers, or risks suffering, loss or damage… 56 (1) Where – (a) a claim form is issued...in respect of a contracting authority’s decision to award the contract; (b) the contracting authority has become aware that the claim form has been issued…and that the claim form relates, or the proceedings relate, to that decision; and (c) the contract has not been entered into, the contracting authority is required to refrain from entering into the contract. (2) The requirement continues until any of the following occurs – (a) the Court brings the requirement to an end by an interim order under regulation 57 (1) (a)… 57 (1) In proceedings, the Court may, where relevant, make an interim order – (a) bringing to an end the requirement imposed by regulation 56(1)… (2) When deciding to make an order under paragraph 57 (1) the Court must take into account the probable consequences of interim measures for all interests likely to be harmed, as well as the public interest, and in particular defence or security interests.”
[14]At least in substantial part Regulation 57 (2) imposes a duty on the Court to take into account all interests likely to be harmed. There is no need to construe that narrowly as only relating to the contracting authority and claiming economic operator (MOD and Morgan respectively in this case). Wider or even specific defence or security interests must be taken into account and appropriate weight given to them. In my view, this also enables and indeed requires the Court to take into account the interests of the successful tenderer, FPE, in this case and the ramifications for it if the statutory suspension remains in place. The Law and Practice[15]It is common ground, following previous public procurement authorities, that the principles and approach laid down in the House of Lords decision in American Cyanamid Co v Ethicon [1975] AC 396 are applicable to the decision as to whether the suspension should be lifted. Lord Diplock gave the leading judgment and, having made it clear (Page 407G) that to obtain an interlocutory injunction the Court had to be satisfied that "there is a serious question to be tried", went on:
“It is no part of the court's function at this stage of the litigation to try toresolve conflicts of evidence on affidavit as to facts on which the claims ofeither party may ultimately depend nor to decide difficult questions of lawwhich call for detailed argument and mature considerations. These arematters to be dealt with at the trial. One of the reasons for the introductionof the practice of requiring an undertaking as to damages upon the grantof an interlocutory injunction was that " it aided the court in doing that“which was its great object, viz. abstaining from expressing any opinion upon "the merits of the case until the hearing" (Wakefield v. Duke of Buccleugh [1865] 12 L.T. n.s. 628 at 629). So unless the material available to the court at the hearing of the application for an interlocutory injunction fails todisclose that the plaintiff has any real prospect of succeeding in his claim for a permanent injunction at the trial, the court should go on to consider whether the balance of convenience lies in favour of granting or refusing the interlocutory relief that is sought. As to that, the governing principle is that the court should first considerwhether if the plaintiff were to succeed at the trial in establishing his rightto a permanent injunction he would be adequately compensated by an award of damages for the loss he would have sustained as a result of the defendant's continuing to do what was sought to be enjoined between the time of the application and the time of the trial. If damages in the measure recoverable at common law would be adequate remedy and the defendant would be in a financial position to pay them, no interlocutory injunction should normally be granted, however strong the plaintiff's claim appeared to be at that stage. If, on the other hand, damages would not provide an adequate remedy for the plaintiff in the event of his succeeding at the trial, the court should then consider whether, on the contrary hypothesis that the defendant were to succeed at the trial in establishing his right to do that which was sought to be enjoined, he would be adequately taking as to damages for the loss he would have sustained by being preventedfrom doing so between the time of the application and the time of the trial. If damages in the measure recoverable under such an undertaking would be an adequate remedy and the plaintiff would be in a financial position to pay them, there would be no reason upon this ground to refuse an interlocutory injunction. It is where there is doubt as to the adequacy of the respective remedies indamages available to either party or to both, that the question of balance of convenience arises. It would be unwise to attempt even to list all thevarious matters which may need to be taken into consideration in decidingwhere the balance lies, let alone to suggest the relative weight to be attached to them. These will vary from case to case… Save in the simplest cases, the decision to grant or to refuse an interlocutory injunction will cause to whichever party is unsuccessful on the application some disadvantages which his ultimate success at the trial may show he ought to have been spared and the disadvantages may be such that the recovery of damages to which he would then be entitled either in the action or under the plaintiff's undertaking would not be sufficient to compensate him fully for all of them. The extent to which the disadvantages to each party would be incapable of being compensated in damages in the event of his succeeding at the trial is always a significant factor in assessing where the balance of convenience lies; and if the extent of the uncompensatable disadvantage to each party would not differ widely, it may not be improper to take into account in tipping the balance the relative strength of each party's case as revealed by the affidavit evidence adduced on the hearing of the application. This, however, should be done only where it is apparent upon the facts disclosed by evidence as to which there is no credible dispute that the strength of one party's case is disproportionate to that of the other party. The courtis not justified in embarking upon anything resembling a trial of the actionupon conflicting affidavits in order to evaluate the strength of either party’s case…”
[16]Thus, the process which the Court must go through is determine whether there is a serious question or issue to be tried, determine whether damages are an adequate remedy and consider the balance of convenience by comparing the difficulties, problems or prejudice to be suffered by each party (and other interests) if the statutory suspension is or is not continued. There has been some further unexceptionable development or explanation of what is meant by an adequate remedy. In Araci v Fallon [2011] EWCA Civ 668, Jackson LJ said based on a comment in Chitty on Contracts:
"The real question is whether it is just in all the circumstances that the claimant should be confined to his remedy in damages."
[17]I will consider the evidence and the arguments in relation to the three part American Cyanamid test. Serious question to be tried[18]It is common ground that there is a serious question to be tried. The Particulars of Claim, albeit in the Confidential Bundle of Documents, are predicated on claims that FPE’s price was "abnormally low" compared with the other tenderers’ prices and MOD’s predicted upper cost limit, that its price was "predatory" because, as asserted, the group of which FPE forms part is said to be dominant in the relevant market, that FPE should have been disqualified on or after 19 May 2014 in failing to provide MOD with a price breakdown of its tendered price and that there were or may have been other errors in the marking of FPE’s tender.[19]Both Mr Coppel QC initially and Ms Sloane by way of response sought to argue respectively that Morgan and MOD had a strong case or defence. Arguments were raised, supported by authorities, to the effect that the effect and consequence of the Regulations that MOD had, or did not have, a duty to Morgan to investigate any abnormally low tender from another tenderer. For instance, Ms Sloane referred to the permissive language in Regulation 31(6) and authorities such as J Varney & Sons Waste Management Ltd v Hertfordshire County Council [2010] EWHC 1404 (QB) to the effect that "the relevant authority is not under a duty to investigate the tender which appears abnormally low unless it intends to reject it" (Paragraph 155). Mr Coppel QC pointed to other authorities and, for instance, Article 69 of the European Directive 2014/24/EU of 26 February 2014 (albeit not yet in force but said to reflect the current law practice in the EC) which suggests that contracting authorities "shall require economic operators to explain the price or costs proposed in the tender where tenders appeared to be abnormally low in relation to the works, supplies or services."[20]There are other arguments deployed by both parties in relation to a document entitled "Tender Evaluation Commercial Policy Statement" ("CPS") which is on a government Acquisition Operating Framework website which sets out what is said to be MOD policy on how to conduct a tender evaluation for the award of competitive contracts. The CPS was not apparently referred to or incorporated by reference into the ITT or SNITS and, indeed, there was no evidence before the Court that anyone from Morgan specifically knew about it or consciously referred to it in the tender period, although Mr Coppel QC told me on instructions that it had been considered. The document is headed "Tender Evaluation" and it was primarily addressed to commercial officers of MOD charged with evaluating tenders. They were directed under the words "Our Policy" on Page 1 to carry out the tender evaluation in accordance with the process stated in the original tender document and in the Official Journal of the European Union and that the tender evaluation had to include only factors which were quantifiable and had to be conducted using information contained within the tender returns. The words "abnormally low tender” are not used but between Paragraphs 66 and 76 the commercial officers are told how to evaluate “unrealistically low” tenders to identify and assess the risks. Morgan by way of the argument and pleading relies heavily on this document using it as a basis to argue that MOD was not acting fairly and transparently if it did not comply with the CPS, it being asserted that MOD did not so comply. Whilst MOD accepts that judged by the CPS the lowest price was "unrealistically low", it argues through Counsel that the CPS had no contractual or even statutory relevance and imposed no obligations on MOD.[21]I can see strength in both sides’ arguments here. One can see for instance that there may be a very good argument that MOD had no absolute obligation to reject FPE’s tender or its pricing even if it was "abnormally low" and that, provided that FPE had the capacity, capability, motivation and financial well-being and support to perform the contract, it could well be in the MOD’s interest and rights and indeed in the Government’s interest to save substantial amounts of money by accepting such a low tender. Against that, it might well be a good argument for Morgan to point to the apparently significant difference in the levels of pricing and to the statutory framework and say that the provisions in relation to abnormally low tenders are not just for the benefit of the tenderer which put in the abnormally low tender, albeit that they give it the opportunity to justify its apparently low price, and they go to provide a level playing field for all tenderers.[22]In my judgment, and bearing in mind the strong advice from Lord Diplock in the American Cyanamid case, I consider that it would be wholly wrong for the Court to say anything more than that there is a serious issue to be tried and that this is not a case or defence which can properly at this stage (without the benefit of full and detailed argument and of material and established facts) be described as weak. Damages as an adequate remedy[23]There is and can be some overlap between the consideration of whether damages are an adequate remedy and the balance of convenience. Certainly one factor within the consideration of damages as an adequate remedy concerns the relative ease or difficulty of establishing the losses.[24]I do not consider that there is likely to be any significant difficulty in Morgan establishing and proving any loss or damage flowing from it not being awarded the contract (assuming that it succeeds on establishing material breaches of the Regulations on the part of MOD). The most obvious head of loss is the loss of profit. This is to be a project which runs for some 16 to 18 months and involves the conversion of 250 armoured vehicles; the maximum projected cost was some £47 million and it is no secret that all the tenders were below that, albeit that there was a fairly wide range between the highest and lowest prices. Morgan has presented to the Court an actual breakdown of its tendered price for this contract which shows the risk and margin (profit) elements. The loss of profit will be and indeed is readily discernible, albeit that there might be some argument that the costs of providing services may be more than projected by Morgan (albeit given the tender of FPE, assuming that it turns out to be not unrealistic, that might be a difficult argument for MOD to run); there might be some, merely actuarial, argument about a reduction in the recovery of all the profit to reflect the removal or reduction of any risk and the receipt by way of damages award of the amount in a lump sum before the conclusion of the 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 case, if his client is unable to establish that the MOD would on a balance of probabilities have rejected FPE’s tender and then placed the contract with Morgan, who overall came second in the tender process. Without finally deciding the argument, and although Morgan has not yet pleaded that as a basis of claim, it may well be a difficult argument which may depend upon whether or not there was a duty on the facts of this case (yet to be established of course) on the part of MOD to reject FPE’s tender. If there was no such duty, at the moment I can not see how Morgan would establish a case on causation to the effect that MOD would then probably have rejected that tender; put another way, I do not see on the current (and as yet not fully formulated) arguments that this is a loss of chance case. If there was a duty, then I can see that the duty would have to be complied with and the probability must be that MOD would have to have placed the contract with FPE. As I said, I am not deciding the point but it seems to me at this stage a weak one.[26]A number of other points are raised in argument and in evidence by Morgan. It needs to be borne in mind that Morgan is, so to speak, the incumbent contractor or provider to the MOD for conversion work for these vehicles and has been for some six years or more. It is concerned that a “data pack” will be given to the winning tenderer including relevant design drawings of the vehicles in question once the contract is entered into; its concern is that, although as a matter of Intellectual Property Rights, MOD is entitled to do that, FPE would be put in an advantageous position to the detriment of Morgan were there to the future tenders the similar work. That is a risk which of course it always faced if it failed in the current tender round. However, in my judgment this is likely to be a minor problem because Morgan will still have that information and know-how for any future rounds of tendering for this type of work and therefore it will be on a more even footing with FPE, assuming FPE tenders again. The likely contract period from the current contract is a relatively short one. There are, so the evidence suggests, likely to be more contracts relating to the remaining 500 vehicles which will need conversion and my strong impression is that Morgan will be well-placed to tender for those.[27]Next, it is said that there would be reputational damage because, it is said by Morgan’s solicitor that "it is likely that current and potential customers would interpret this as a strong indication that the Claimant’s performance and/or tender must have been unsatisfactory in material respects", the argument being that it is difficult to prove financial loss from a loss of reputation. There is little or no evidence to support this assertion. Indeed, one of the most important clients of Morgan is and has been MOD and there is no hint or suggestion that Morgan’s stock or reputation has been or will be reduced with that client. It is not obvious in the contracting business (whether in defence or, for instance, construction) that simply because one does not succeed in securing the contract for every submitted tender reputation is lost or diminished. Indeed, Morgan has recently won a moderately substantial contract from MOD.[28]There is reference (albeit through Confidential information in a witness statement from Morgan’s solicitor, Ms Haughton) to the impact on Morgan’s workforce albeit that Morgan’s evidence is not responsive to the evidence put forward by Mr Pilch on behalf of MOD. It is probably not breaching any confidentiality to say that Morgan is and remains a reasonably substantial and successful company which is still winning and bidding for defence contracts and that historically it has made use of independent sub-contractors, both of which factors suggest that workforce problems are likely to be relatively limited. In the light of these matters, I do not attach much importance to this factor.[29]Ms Haughton says that there may be damage to Morgan’s future chances of winning contracts and to its position in the market if it does not secure the current contract. I have to say that her statement in this respect is vague. The point is seriously undermined by the fact that there are likely to be further contracts not only in respect of the 500 remaining vehicles in this group but also in respect of other vehicles, by the fact that Morgan has recently tendered for a MOD contract said to be worth over four times the current project and by the fact that about three months ago Morgan secured a further contract in respect of army vehicles (for a not insignificant 8-figure sum value). Morgan thus in reality gives the impression of a vibrant and pro-active company which has every reasonable chance of securing other contracts and maintaining its position in the market. In addition, Ms Sloane makes a fair point which is that, if Morgan is vindicated by a public judgment in its favour in effect that the contract should not have been awarded to FPE, that will reflect badly on FPE which will, so to speak, take out that part of the competition or reduce its acceptability.[30]Finally, concern is expressed about the possibly unquantifiable effect of a competitor, FPE, securing access to Morgan’s patented advance armour technology used on the existing vehicles on which it itself has worked, which would give rise to a very real concern. However, if FPE "leaks", uses, copies or allows others to copy such technology, it will be breaching Morgan's intellectual property rights and can be pursued in court. Also little or no compelling evidence has been put forward to suggest it would be necessary or inevitable that FPE would be able to work out any confidential or patented information based on the work which will have to be done to the vehicles.[31]All in all, I do not consider that any of the points raised by Morgan on adequacy of damages as a remedy are good or well-established or even in some cases logical. I therefore conclude that damages would be an adequate remedy in this case and that it would be just for Morgan’s remedy to be damages. Balance of convenience[32]I am constrained by the Regulations to consider the public interest and, in this particular case, the national defence interests of the United Kingdom. Given the confidential nature of much of the information, it will suffice to say that I am wholly satisfied from the evidence particularly of Major General Jaques that the suspension on the placing of the contract needs to be lifted immediately to avoid serious impact to the training and operational capability of the Army. I can address several of the arguments put forward by Morgan. It is clear that MOD plans to have this contract completed by March 2016 and, taking into account army planning, there is no good reason to believe that it will be acceptable and in the national interest if this contract is not completed within as short time as is possible. It is the case that the placing of the contract has already been delayed by 2½ months. Assuming a 4-6 day trial starting on 10 November 2014, the judgment (which will have to address, I anticipate, some complex issues on pricing as well as on the market and competition) can be expected to follow possibly one month later. There will therefore have been a seven-month delay in a project which, militarily and for military training purposes, is, on the evidence, a very important one. The project will be even further delayed by about 4-6 months if Morgan is successful and secures a re-run of the tender competition. That it seems to me and on the evidence is contrary to the national interest.[33]There are some tangential arguments put forward by Morgan. The first is that there has already been some delay and slippage on the contract and the second is that MOD (it is asserted) has not got a good record of delivering projects on time. Even if that is all true, the Court should not contribute to yet further delay on a project which is being pursued in the national defence interest. It is argued in similar vein that some of the delay, at least since proceedings were brought on 19 May 2014, is attributable to the delay on the part of MOD in issuing its application to lift the suspension. MOD says, with some justification, that it wished to see the precise basis on which (in the light of further disclosure provided in late May and throughout June 2014) Morgan was going to put its case. I have formed and retain the view that the delay was as much and probably more due to Morgan's failure to serve Particulars of Claim at least several weeks before the time that it did. Part of the problem was that Morgan wished to pursue an application for specific disclosure before the application to lift the suspension was heard and this had to be dealt with first. This is at best a neutral point and at worst one against Morgan. In any event, I doubt that more than two or three weeks have been lost as a result of anything which could conceivably be put down to MOD.[34]One poor point taken by MOD was the "Treasury" risk that, if budgets are not spent within the accounting year, the beneficiary so to speak loses anything unspent and has to re-apply for more funding for the following year, there being a risk that it might not get the funding or that further funding might be delayed. Whilst there is a theoretical risk, I doubt that it is anything other than minimal in relation to a project which MOD is, properly, arguing is of great importance; put another way, in those circumstances I can not see that the Treasury would not provide some further funding in those circumstances or that MOD could not "find" any such funding elsewhere.[35]Another factor which I can and do take into account is the impact on FPE, the "winning" tenderer. Because much of what it has argued and produced evidence about is confidential, I will not set it out. Suffice it to say, much of the prejudice which it says that it will suffer is the mirror image of what Morgan says, for instance in relation to the impact on staffing. There are other even more serious consequences referred to in its evidence than those matters put forward by Morgan.[36]Finally, I do take into account that, if the injunction lifting the suspension was granted, Morgan would be deprived of a remedy provided for under EU law but it is common ground that this is only one (albeit important) factor which should be taken into account and it can be balanced by other factors.[37]Looking at matters overall and all the above factors, I am satisfied that the balance of convenience is firmly in favour of the lifting of the suspension. Morgan will have an adequate remedy in damages if it succeeds in establishing any case on the facts, merits and the law; if it fails to do so, the lifting of the suspension will have proved prescient and limited the continuing prejudice occasioned overall as a result of the suspension being and continuing to be in place.[38]FPE attended this application and I ordered, by consent of the other parties, that it could do so and it could participate. It was also common ground that, if the suspension was not lifted, a cross undertaking in damages would be provided not only to MOD but also to FPE, the only proviso being that formal instructions for the giving of such undertaking would have been required. Decision[39]MOD’s application is granted and the statutory suspension imposed on MOD from entering into the contract following the procurement is to be brought to an end pursuant to the powers which this Court has under Regulation 57 (1).

Cited in 1 later judgment