Alstom Transport UK Ltd v London Underground Ltd [2017] EWHC 1521 (TCC)

Case No HT/2017000117[2017] EWHC 1521 (TCC)
IN THE HIGH COURT OF JUSTICE
QUEEN’S BENCH DIVISION
TECHNOLOGY AND CONSTRUCTION COURT
Venue Royal Courts of Justice, Strand, London, WC2A 2LLDate 27/06/2017
Before
THE HONOURABLE MR JUSTICE STUART-SMITH
Between
Alstom Transport UK LtdClaimantLondon Underground LtdDefendantTransport for London
Sarah Hannaford QC and Emma Healiss (instructed by Hogan Lovells International LLP) for ClaimantJason Coppel QC and Joseph Barrett (instructed by TfL Legal) for DefendantsHearing Hearing date: 15 June 2017
JudgmentMr Justice Stuart-Smith :Introduction
[1]The Defendants apply to lift an automatic suspension on contract making imposed by Regulation 45G of the Utilities Contracts Regulations 2006. They are responsible for the London tube system in general and the Central Line in particular and are commonly known as LUL and TfL. The Claimant is a company registered in the United Kingdom. It is a substantial enterprise in its own right and is part of the global Alstom business. The Alstom group is a global market leader in terms of size and expertise in the business of train manufacturing. I shall refer to the Claimant and the wider group as Alstom and the Alstom Group respectively.[2]The present dispute arises out of a procurement for the provision of AC traction motors for the Defendants’ fleet of Central Line trains. The outcome of the procurement was that the Defendants decided that Bombardier Transportation (UK) Limited should be the winning bidder, with Alstom coming second. By these proceedings Alstom challenges the validity of the procurement and its outcome; and in this application it opposes the lifting of the automatic suspension.[3]The evidence available to the Court on this application initially came from Mr Peter Campbell (the Senior Commercial Manager for the Rolling Stock Renewals Department for LUL) whose first witness statement was made on 18 May 2017. A witness statement was also provided on the same day by Mr Peter Fawcett (a Principal Sponsor). Alstom responded by a witness statement from Mr Piers Wood (who is responsible for managing Alstom’s Regional and Intercity business) on 1 June 2017. Mr Campbell replied with his third statement, made on 8 June 2017. The evidence was completed by a second statement from Mr Wood and a witness statement from Ms Anne Littlewood (a representative of Alstom’s solicitors) on 12 June 2017. Although at one point it was submitted that Alstom had felt constrained about replying to Mr Campbell’s 8 June 2017 statement, the evidence it served on 12 June 2017 was presented as a detailed response, making due allowance for the tight timetable imposed on the parties by the Court. Mr Campbell provided a fourth statement on 14 June 2017.[4]By its evidence and submissions Alstom takes the following main points: i) It is conceded by the Defendant for the purposes of this application that there is a serious issue to be tried. Alstom goes further and submits that the Court should at this interim stage form the view that its case is strong and that this assessment should be brought into the balance when deciding whether or not to set aside the automatic suspension; ii) Alstom submits that it is unjust that it should be confined to its remedy in damages and, adopting American Cyanamid language, that damages would not be an adequate remedy because: a) “The loss of the contract will have a huge impact on the Claimant’s centre of expertise in traction technology”; b) “damages would not compensate [Alstom] for the loss of competitive edge that it would suffer if it were to lose the … contract”; and c) “the Courts have frequently accepted that the calculation of damages in procurement cases can be a difficult and speculative exercise and that damages are not an adequate remedy for claimants … . [Alstom] will suffer, not only the loss of this contract … but the loss of the ability to win future contracts in this field of expertise”. iii) On the other hand, Alstom submits that damages would be an adequate remedy for the Defendants and that it has given a suitable undertaking in damages; iv) Alstom contrasts the adverse effect that the loss of the contract would have on its business with the limited effect that it submits would be the consequence of delay in proceeding with the intended contract until after the conclusion of these proceedings. It submits that this tends to support the maintenance of the suspension. In support of this submission it asserts that there has been significant delay in the procurement thus far and that a further delay is not disproportionate in the circumstances; v) Alstom submits that there is a strong public interest in bodies subject to the Regulations being required to carry out complex and significant procurements in a proper and lawful manner. It submits that the Defendants’ conduct in this procurement has been characterised by muddle and confusion and that, where such a picture emerges, it would not be right to confine a claimant to its remedy in damages. It also submits that there is a significant public interest in avoiding an outcome where bodies subject to the Regulations are required to pay losing bidders substantial sums in compensation and also pay the winning bidder the contract price; vi) For these reasons the balance of convenience favours maintaining the suspension.[5]Alstom’s other submissions, written and oral can be seen as developments of the main ones identified above. At this point it is sufficient to record that the Defendants take issue with each aspect of Alstom’s submissions. The Factual Background The ITT

The Factual Background

[6]The ITT stated that the evaluation process “will be conducted in a fair, equal and transparent manner in accordance with UK and EU procurement rules.” The evaluation process was broken down into 4 key stages, and the ITT stated that Responses rejected during any of Stages 1, 2 or 3 would not be evaluated further. The stages, for which threshold scores were set by Part 6.5, were: i) Stage 1 – General Review and Mandatory Requirement; ii) Stage 2 – Technical Compliance and Maintainability; iii) Stage 3 – Project Deliverability; iv) Stage 4 – Commercial Evaluation.[7]Part 5.6 said:
“Any failure to meet the minimum thresholds described in Part 6.5 shall be treated as a Non-compliance and LUL will apply the process described in Part 5.3 Following the review of any further information submitted by a bidder in response to a request for a bidder to resubmit any aspect of its Response made under Part 6.5, LUL will finalise its scoring. Any Response that is rejected during Stage 3 shall not be evaluated further.”
Any Response that is rejected during Stage 3 shall not be evaluated further.”[8]Part 5.3 is central to the dispute between the parties. It said: “Qualifications and Non-compliances with ITT This Part 5.3 describes the process which LUL will follow at Stages 1 to 4 in respect of any matter contained within a Response which constitutes a Qualification, assumption or non-compliance (including without limitation any failure to meet the minimum thresholds set out in Part 6). LUL reserves the following rights:• to reject any Response which is identified at any time as failing to satisfy the requirements described below for Stages 1 to 4;• to reopen any of Stages 1 to 4 at any time if it becomes aware of information that would have(a) led to rejection of a Response during that stage, or(b) led to an adjustment of the score awarded during that stage; and• to request a bidder to resubmit any aspect of its Response at any time for the purpose of clarifying its offer following any use of the processes set out in Parts 3.8. Without prejudice to this position, LUL may, at its discretion, revert to bidders in relation to any Qualification, assumption or non-compliance contained within a Response and request the submission of further information. Further information to be submitted by the bidder will be required to take the form of: i) withdrawal of the Qualification or correction of the Non-compliance; ii) provision of clear assurances about the future resolution of the Qualification or non-compliance; and/or iii) provision of such other information or assurances as LUL may require. Should the bidder decide to increase its price as a result of any further submission requested by LUL, it shall comply with LUL’s instructions with regard to the resubmission of financial and associated parts of its Response. Bidders are advised that a Response which is rejected at Stage 1, Stage 2 or Stage 3 shall not proceed to the next stage of the evaluation.”• to reject any Response which is identified at any time as failing to satisfy the requirements described below for Stages 1 to 4;• to reopen any of Stages 1 to 4 at any time if it becomes aware of information that would have (a) led to rejection of a Response during that stage, or (b) led to an adjustment of the score awarded during that stage; and• to request a bidder to resubmit any aspect of its Response at any time for the purpose of clarifying its offer following any use of the processes set out in Parts 3.8.

Chronology

[9]The essential chronology is as follows: i) On 28 January 2015 the Defendants advertised the procurement in the OJEU; ii) On 13 March 2015 there was a Supplier Engagement Event at which background information was provided to potential bidders; iii) On 1 May 2015 the Pre-qualification Questionnaire [“PQQ”] was issued; iv) On 1 June 2015 PQQ responses were submitted; v) On 17 July 2015 the PQQ selection was issued: Alstom and Bombardier were among the potential bidders selected; vi) On 18 December 2015 the Invitation to Tender [“ITT”] was issued; vii) On 4 January 2016 a revised ITT was issued with a bid return date of 18 March 2016. After a number of requests from bidders to extend the deadline, on 3 March 2016 LUL extended the bid return date to 8 April 2016; viii) On 8 April 2016 bids were submitted; ix) On 19 July 2016 the LUL Evaluation Board endorsed a recommendation to shortlist 3 bidders, including Alstom and Bombardier. The recommendation document recognised that Bombardier had not met the stated scoring thresholds for passing Stage 3 of the procurement but recommended that “in order to maintain tender competition all three bidders are considered to have met the requirements for Stage 3 and have proceeded to the Stage 4 Evaluation”. This decision to retain Bombardier in the procurement and to consider it further lies at the heart of Alstom’s complaints; x) On 6 October 2016 the Defendants requested Best and Final Offers [“BAFO”] to be submitted by 13 October 2016. The BAFO documentation envisaged the Award Decision being made on about 4 January 2017; xi) Between about 21 November and 1 December 2016 the date for likely contract award went back from early January to March 2017. This was said to be “due to internal governance issues” in a notice to bidders placed on the procurement portal on 1 December 2016; xii) On 13 March 2017 Award Decision letters were issued to bidders with a standstill period to 24 March 2017. Bombardier was the successful tenderer and the Defendants intended to enter into a contract with them on 24 March 2017; xiii) On and from 14 March 2017 Alstom raised questions concerning whether Bombardier had failed the threshold requirements under Stage 3 and requested assurances that the Defendants would not enter into a contract with Bombardier; xiv) On 8 May 2017 LUL wrote to Alstom refusing to disclose documents and giving three days notice of its intention to enter into a contract with Bombardier; xv) On 11 May 2017 Alstom issued these proceedings. Directions were given by Coulson J on 26 May 2017, which included provision for a hearing of Alstom’s application for early disclosure on 6 June 2017 in advance of the hearing of the application to lift the automatic suspension; xvi) Late on (Friday) 2 June 2017 the Defendants gave limited disclosure of documents into a confidentiality ring. Alstom was not satisfied and persisted with its application for further disclosure. On 6 June 2017 I ordered the disclosure of some further documents; xvii) On 15 June 2017, the date of the present hearing, the Defendants served their Defence. On 14 June 2017 Alstom served a draft set of Amended Particulars of Claim, which had been prepared in the light of the disclosure that had been given on 2 June and pursuant to my order on 6 June 2017.

The Nature of Alstom’s Business and Place in the Market

[10]Alstom’s Report and Financial Statements for the year to 31 March 2017 were filed at Companies House on 12 May 2017. The principal Key Performance Indicators used to assess the Company’s activities, as set out in the Strategic Report, were: Orders received £m Orders in hand £m Sales £m Income from operations £m 2017 442.6 1,962.0 598.4 65.0 2016 195.2 1,983.1 407.0 55.8 The Strategic Report stated that:
“Order flow continues to be positive and we see clear robust continued demand for the Company’s products and services. Alstom continues to win and deliver contracts on large infrastructure projects such as Crossrail, while also continuing to offer train maintenance and modernisation services to rolling stock leasing companies … and train operating companies. At the same time, Alstom recognises the enormous growth opportunities in the rolling stock market in the UK. … [T]here is a clear need for infrastructure, signalling and in particular new rolling stock across the spectrum from very high speed, through electric multiple units to metro over the coming years and Alstom is in a unique position to exploit all these requirements. The Company is well placed to leverage its strong position in all aspects of the rail market in the UK, and to make ready for this future growth.”
Referring to future prospects, the Strategic Report stated:
“To date we have invested £17.7m in our Widnes facility which opens in June 2017. The centre is rail head connected and will encompass the most efficient modernisation and train paint facilities in the UK. Additionally the centre will house the North West Transport Training Academy focused on delivering high quality apprenticeships and upskilling as we address the UK skills shortage. .. As the electrification programme has been pushed backwards indefinitely the future focus is now turning to innovative alternatives for fleet traction. … From a Metro perspective, operational performance has remained good throughout the year and the relationship with Tube Lines has been strong with an ethos of collaboration embedded in both teams. … In terms of business development, we have submitted several major bids including London Underground new Tube for London and London Underground Jubilee and Northern Line Additional Trains… .”
Under the heading “Principal Risks and Uncertainties” the Strategic Report said of the Market Environment that “The Company believes it competes effectively in its markets. It considers that its strong order backlog as well as all the measures it has taken, in particular for reducing costs and adapting headcount to demand, should enable it to face the current competition.”[11]The Financial Statements recorded Alstom’s average total employees by function. Manufacturing and engineering employees contributed 1,809 out of a total (including commercial, management and administration) of 2,410: the equivalent figures in 2016 were 1,371 out of 1,836. Manufacturing and engineering employees had therefore increased by 32% between 2016 and 2017. Confidential information in Alstom’s bid documentation emphasised the flexible and responsive nature of its engineering workforce approach which is said to enable Alstom to react to changing workloads without impacting the core competence of its permanent workforce.[12]Documents published online by Alstom describe the new Widnes facility as:
“ … a permanent home for Alstom’s train care activities. A base where we can support modernisation and innovation for industry-leading rolling stock and infrastructure for the entire network and create a world-class training academy that will benefit the region and the entire economy.”
The same documents describe the Widnes site as not just a production base but also a world class training facility and as a UK centre for research and development.

The Applicable Principles

[13]The applicable principles are now generally settled and well known. Typically in a given case the exposition of the relevant principles will be tailored to address the particular points of fact or law that the parties have raised; and, for this reason, differences of emphasis may emerge.[14]On this application the Court was referred to 19 previous decisions, including my previous decisions in OpenView Security Solutions Limited v LB Merton Council [2015] EWHC 2694 (TCC) and Kent Community Health NHS Foundation Trust v NHS Swale Clinical Commissioning Group and Anr [2016] EWHC 1393 (TCC). For reasons that will appear, I do not consider that the present case raises any new issues of law for decision. For that reason, I will try to deal with the legal submissions as shortly as possible, consistent with doing justice to the parties’ submissions. Since, in my view, most of the submissions were going to points of emphasis rather than any novel development, I will deal with them as they arise under the various sections of the exercise that the Court is routinely required to undertake when considering whether or not to lift an automatic suspension in procurement proceedings.

Serious Issue to Be Tried

[15]It is as well to remind myself at the outset of the fact that the present application is an interim application that does not and cannot amount to a trial or quasi-trial of the issues that will ultimately be determined.[16]Ms Hannaford QC submits that the Claimant has a strong case. When setting out the principles to be applied at 408B-409C of American Cyanamid, Lord Diplock placed consideration of the relative strengths of the parties’ case at the end, identifying it as something which “may not be improper to take into account in tipping the balance”. I repeat and adopt what I said at [27] of Openview:
“The first prerequisite to the application of American Cyanamid principles is no more demanding than that there is a serious issue to be tried. In some cases, of which the present is one, the party resisting the interim injunction may consent to the application proceeding on the assumption that this pre-requisite is satisfied while maintaining that, if put to the test, the Court would conclude that it was not. It will only be in rare cases that the potential outcome of the ultimate hearing can be predicted with any confidence, and American Cyanamid itself is clear about the caution to be exercised when attempting to assess the relative strength of the parties' cases at this stage. First, it features in the House of Lords' statement of principle if there are uncompensatable disadvantages to each party and the extent of their uncompensatable disadvantages would not differ widely. Second, it is worth repeating that: “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 court is not justified in embarking upon anything resembling a trial of the action upon conflicting affidavits in order to evaluate the strength of either party's case.””
[17]Ms Hannaford placed her oral submissions about the strength of Alstom’s case at the end. That is consistent with Lord Diplock’s formulation and correct in principle. I therefore leave further consideration of the strength of the case until later.

Adequacy of Damages and the Balance of Convenience

[18]Ms Hannaford submitted that the question to be decided is whether it is just to confine Alstom to its remedy in damages, adopting the formulation that can be traced back to Evans Marshall & Co Ltd v Bertola SA and another [1973] 1 WLR 349. Evans Marshall is a decision of the Court of Appeal that pre-dated American Cyanamid.TheHouse of Lords in American Cyanamid did not adopt the Court of Appeal’s formulation, asking instead whether damages in the measure recoverable at common law would be an adequate remedy. However, the Courts have routinely adopted either or both formulations, implicitly treating them as two sides of the same coin even if, in some cases, the formulations may carry slightly different emphasis.[19]Ms Hannaford referred to a number of the authorities where this has been done. In National Commercial Bank of Jamaica v Olint Corpn [2009] UKPC 16, [2009] 1 WLR 1405 at [16] the Privy Council said:
“The purpose of such an injunction is to improve the chances of the court being able to do justice after a determination of the merits at the trial. At the interlocutory stage, the court must therefore assess whether granting or withholding an injunction is more likely to produce a just result. As the House of Lords pointed out in American Cyanamid Co v Ethicon Ltd [1975] AC 396, that means that if damages will be an adequate remedy for the plaintiff, there are no grounds for interference with the defendant’s freedom of action by the grant of an injunction.”
[20]In Araci v Fallon [2011] EWCA Civ 668 at [42], Jackson LJ (with whom Elias LJ agreed) adopted the phrase “adequate remedy” as “convenient shorthand” while saying that it was “not entirely appropriate” and that “the real question is whether it is just in all the circumstances that the claimant should be confined to his remedy in damages”. As explained by Elias LJ at [69], the Claimant in that case was seeking to enforce a negative covenant so that the adequacy of damages would not generally be a relevant consideration: see [68-70], and see [35]-[39] per Jackson LJ. That is not the case here. The reference by Jackson LJ to Chitty on Contracts emphasises that, in general, the principles to be applied when considering whether to grant an interim injunction should be applied flexibly to meet the justice of the case, as indicated in the passage from the Bank of Jamaica case cited above.[21]In NATS (Services) Limited v Gatwick Airport Limited and anor [2014] EWHC 3133 (TCC) at [25] Ramsey J accepted the elision by Akenhead J in Exel Europe Ltd v University Hospitals Coventry and Warwickshire NHS Trust [2010] EWHC 3332 (TCC) at [26] of the American Cyanamid principles into a two stage test: see also Counted4Community Interest Company v Sunderland City Council [2015] EWHC 3898 (TCC) at [11] per Carr J. I respectfully question whether it is sufficient or strictly accurate to compress them in this way; but that does not matter because(a) the American Cyanamid principles are clearly stated by Lord Diplock and(b) describing them as a two stage test does not identify any difference between the alternative formulations of the question to be asked at this point in the enquiry or require a different approach to be adopted based on the number of stages that are said to arise.[22]In my judgment the modern approach has been accurately summarised by Coulson J in Covanta Energy Ltd v Merseyside Waste Disposal Authority [2013] EWHC 2922 (TCC) at [48] and again in Bristol Missing Link Limited v Bristol City Council [2015] EWHC 876 (TCC) at [49] as follows:
“(a) If damages are an adequate remedy, that will normally be sufficient to defeat an application for an interim injunction, but that will not always be so (American Cyanamid, Fellowes [1976] 1 QB 122 CA, National Bank [2009] 1 WLR 1405); (b) In more recent times, the simple concept of the adequacy of damages has been modified at least to an extent, so that the court must assess whether it is just, in all the circumstances, that the claimant be confined to his remedy of damages (as in Evans Marshall [1973] 1 WLR 349 and the passage [paragraph 27/005] from Chitty on Contracts, 31st Edition); …”

Adequacy of Damages

[23]Turning to the facts of the present case on which Alstom relies in support of the submission that damages would not be an adequate remedy and, if different, that it would be unjust to confine it to its remedy in damages, I look first at its pleaded case. Alstom seeks an order that the Defendants’ decision to award the contract to Bombardier be set aside; further or alternatively it seeks a declaration that the Defendants were in breach of the Regulations and a declaration that the contract should be awarded to Alstom; further or alternatively it alleges that it “has suffered loss and damage, namely its lost profits on the anticipated Contract and/or its wasted tender costs.” If the automatic suspension is lifted, it may safely be assumed for present purposes that Alstom would be confined to its remedy in damages.

Difficulties of Calculation

[24]There should be no difficulty in formulating a claim for loss of profits on the anticipated contract. Primary evidence will come from a number of sources, including Alstom’s historic rates of profit, its projected profit on the anticipated contract, and expert and lay evidence about the probable outcome had Alstom been awarded the contract. There should also be no difficulty in formulating a claim for wasted tender costs, as they are historic costs which were incurred. Ms Hannaford attempted to maximise the difficulties that would be inherent in pursuing and proving a claim. She went so far as to suggest to the Defendants that they should argue that the case involves no more than a loss of a chance, notwithstanding the fact that Alstom was the runner-up to Bombardier. There is no hint of such a defence being run at present: the Defence merely denies breach and causation, pleading that “Alstom was not awarded the contract because it did not submit the most economically advantageous tender, as assessed pursuant to the ITT.” While it is not impossible that the Defendant may take up Ms Hannaford’s invitation at a later date, the fact that the assessment of the tenders placed Alstom second does not immediately suggest that it would be well advised to do so.[25]Ms Hannaford identified cases where difficulties in formulation and proof of losses influenced the court to grant an interim injunction. Specifically: i) In Morrison Facilities Services Ltd v Norwich City Council [2010] EWHC 487 (Ch), Arnold J accepted that in cases alleging undisclosed criteria it is very difficult indeed for the court at trial to assess damages because assessment of what chance has been lost by the claimant in those circumstances is virtually impossible; ii) In Alstom Transport v Eurostar International Limited and anor. [2010] EWHC 2747 (Ch) at [129] Vos J took into account that “the assessment of Alstom’s loss would be a complex process requiring the valuation of a lost chance which is always a somewhat difficult process. The evaluation of its reputational and market position losses would be very difficult indeed.” iii) In Covanta at [51]-[54] Coulson J held that damages would not be an adequate remedy because(a) there were many errors alleged, each of which would need to be evaluated before any assessment could be made as to the value (if any) of the loss of a chance,(b) it would be difficult to work out what Covanta’s actual rate of return might have been, because it would depend on so many variables,(c) the claim that Covanta had been misled would require the court to look at hundreds or even thousands of exchanges to see in relation to each one whether Covanta had been materially misled and, if so, what the aggregate effect had been, and(d) the allegation that important matters were not made clear to Covanta made the case very similar to undisclosed criteria cases such as Morrison; iv) In NATS at [81]-[83] Ramsay J treated the case as a case of undisclosed criteria and said that the great difficulty that would be encountered in estimating damages was a factor to be brought into account in determining whether it would be unjust to confine the claimant to a remedy in damages;[26]So far as can be seen at present, none of the particular complexities that arose in these four cases is likely to arise or to prove particularly difficult in the present case. Nor are other difficulties of analogous complexity identified.

Adequacy of Damages

[27]Alstom places in the vanguard of its submissions under the heading of “adequacy of damages” the assertion that “the loss of this contract will have a huge impact on the Claimant’s centre of expertise in traction technology.” It bases its submissions on the evidence of Mr Wood at [67]-[72] of his first statement and [27]-[30] of his second statement.[28]Second, Alstom submits that “damages would not compensate the Claimant for the loss of competitive edge that it would suffer if it were to lose the [LUL] contract.” It bases its submissions on the evidence of Mr Wood at [73]-[75] of his first statement and [31]-[32] of his second statement. It is said that “without this contract, it is submitted that re-entry into the [UK traction system market place] is very unlikely.”[29]The evidence in support of Alstom’s submissions is surprisingly lacking in detail but is to the effect that: i) Alstom has for years maintained a centre of expertise at Preston in both AC and DC traction technology. It has also developed the new facility in Widnes which is due to open on 29 June 2017. The Preston centre of expertise will then transfer to Widnes. Alstom’s aim is to develop its traction technologies at the new facility in order to maintain a strong position in the traction system and rolling stock market place. However, if Alstom does not get the LUL contract, it is highly unlikely that it will be able to maintain its centre of expertise for traction technology. Failing to secure the contract will mean that there will “almost inevitably” be redundancies; ii) Preston will close sooner than planned; iii) “The existing Preston workforce will not transfer as we will not have work for the staff”; iv) “Any future traction systems tenders if won, will be dealt with elsewhere, but not in the UK”; and v) There will be an impact on the local area of Widnes: the intention was that the new facility should be part of an overall regeneration plan to improve the area.[30]I have referred to Alstom’s published accounts and to what it has said in public about the Widnes facility. It is clear that the Widnes facility is a very substantial and long term investment designed to maintain Alstom’s place as a market leader in the United Kingdom and to contribute to the Alstom group’s place as a market leader globally. The notion put forward by Mr Wood’s evidence is that a national market leader with a bulging order book and income of £65 million on annual sales of £600 million would sacrifice a specialist resource and thereby exclude itself from future profitable work that it regards as part of its core business. Such a suggestion obviously demands scrutiny. The need for scrutiny is not diminished when the national company is placed in its proper context of a group that must maintain its acknowledged expertise in order to compete globally as an acknowledged global market leader.[31]On enquiry, it transpires that the picture painted by Mr Wood is partial and that both scrutiny and scepticism are justified.[32]I have referred to the evidence of Alstom’s financial size and strength at [10] above. The Defendants submit, by reference to Alstom’s tender documents and other published material, that Alstom itself is an integrated part of the Alstom Group’s global train manufacturing business. I accept that submission as fully made out on the evidence. Without going into potentially sensitive detail, it comes as no surprise that Alstom proposed in its tender that the replacement traction system would be designed and tested outside the United Kingdom. The motors were to be designed and manufactured outside the United Kingdom. Prototype installation, testing and validation were to be managed by Alstom’s personnel and carried out in the United Kingdom. Series build of the traction cases was to be carried out at Preston, but not until 2019. No part of the process was identified as being carried out at Widnes, and the involvement of Preston (rather than Widnes) was confirmed by tender clarification. The total UK manufacturing resource to be allocated to the contract was 12 people (of whom just 8 were identified as Electrical/Mechanical), with an additional 10 support staff. This allocation was to be from a Preston headcount of 180 and Alstom’s total manufacturing and engineering headcount of 1,809. It therefore appears that, however the numbers are broken down, the allocation of human resources from Preston to the project was to be modest and would not arise in substance for two years. None of this was apparent from Mr Wood’s evidence, which gave a very different impression. Furthermore, information was provided to the Court that Alstom has not had a traction contract of or similar to this type since 2014. This information immediately provokes the question what work the centre for traction expertise has been doing until now, to which no satisfactory answer was provided.[33]In the light of the specific evidence that I have just summarised, the evidence of Mr Wood that, if it does not get the LUL contract, it is highly unlikely that Alstom will be able to maintain the centre of expertise for traction technology is barely credible.[34]In the course of the hearing Ms Hannaford provided further information on instructions relating to Alstom’s intentions in relation to its current workforce. However, that information was not capable of explaining satisfactorily or providing substantial support for Mr Wood’s evidence. In my judgment, Mr Coppel QC’s criticisms of the information were compelling: first, there was no good reason why the information was not provided before; second, the information, which relates to the future of the Preston workforce, was at odds with the evidence that Mr Wood chose to give, the burden of which was that losing the contract would prejudice Widnes; third, the information provided no explanation for the basic facts that were being asserted; fourth, even if the information now being provided were correct, it did not explain how the centre for excellence had survived since 2014 without a traction contract or why it could not continue to survive on the same basis in the absence of the LUL contract.[35]I return to the inherent implausibility of Alstom’s basic proposition. The numbers of employees in the centre of excellence for traction technology are nowhere given in Mr Wood’s evidence; but they must be assumed to be limited, not least because of the relatively limited numbers of people from Preston identified in the tender document as being directly involved if the LUL contract was won. The proposition is that Alstom would forego its ability to tender on equal or preferential terms for traction contracts in the future by choosing to shed irrevocably the expertise held by this limited number of people. This proposition appears to ignore or take inadequate account of at least five points. First, the loss of individuals would not mean the loss of accumulated expertise that would be recorded and not lost with individual employees, which would mitigate the loss. Second, Alstom has access to the accumulated expertise of the Alstom Group – and there is no evidence that the Group’s expertise is unable to plug the gap: I note in passing that Alstom’s tender referred to the place outside the United Kingdom where the traction system was to be designed as “one of our” two European centres of excellence for traction” (emphasis added). Third, on the evidence, there will undoubtedly be further contracts involving similar technology for which Alstom (or the Alstom Group) will wish to tender. Fourth, assuming income at about 10% of turnover (as indicated by the key performance figures set out above), a single contract will generate income that exceeds many times over the savings that could be made by shedding the centre of traction enterprise personnel. Put another way, on the information provided to the court, closing the centre for excellence would appear to be a serious case of cutting off the nose to spite the face. Fifth, if Alstom’s case is well founded, it will receive substantial damages to plug the funding gap left by the loss of the LUL contract, even though the date on which such damages might be received cannot be predicted with certainty at this stage.[36]I accept that, in principle, the loss of a uniquely qualified workforce could in appropriate circumstances support a finding that damages would be an inadequate remedy and that it would be unjust to confine a claimant to its remedy in damages: see Counted4Community Interest Company at [40]. However, the facts of the present case could hardly be further from the facts of that one. For the reasons I have outlined above, Alstom has come nowhere near satisfying me that there is a real prospect that it will suffer irremediable and uncompensatable loss in the way suggested by Mr Wood if it is confined to its remedy in damages.[37]The second major plank of Alstom’s submission is that damages will not compensate the Claimant for the loss of competitive edge it would suffer if it loses this contract. In my judgment, Alstom has not shown that there is any significant risk that it will lose competitive edge if it loses this contract. First, I do not accept that loss of this contract would mean that it lacked expertise, for the reasons already given (including, in particular, the fact that it has access to another Alstom Group European centre of excellence for traction). Second, there is no reasonable basis for doubting that it will continue to tender for such contracts as and when they arise and that it will continue to do so as a national market leader with the additional muscle and expertise inherent in being part of a group that is a global market leader. Third, there is no reason to suppose that a future tender outcome would be determined by the fact that Alstom had won the LUL contract; nor is there any reason to suppose that a future tender outcome would be determined by the fact that it had not. I reject outright the suggestion that loss of the LUL contract would mean that Alstom was excluded from the United Kingdom traction system market altogether, as suggested by Mr Wood at [73] of his first statement.[38]Mr Wood’s assertion that there would be an impact on the local area of Widnes is hard to understand given that none of the LUL contract work was to be carried out there. As formulated it is not a loss suffered by Alstom at all, though it could in theory raise a matter of public interest. At [33] of his second statement Mr Wood summarised the impact as being that “Alstom will not be investing in an additional area in Widnes and this will impact on plans to develop the new younger generation of engineers.” This is, to my mind, hopelessly vague. If it means that the centre of traction expertise will close, I have considered it above. If it means something else, it does not indicate what is meant by “an additional area in Widnes”. Alstom’s published documents make plain that Widnes is going ahead as a major long-term investment which has as one of its core objectives the training of engineers to meet the challenges of the future. I am unable to accept this evidence as adding anything of significance to the evidence that I have considered already.

The Public Interest

[39]Ms Hannaford advanced two submissions in relation to the public interest. Her first was that there is a public interest in procurements being carried out properly. I agree. However, for the reasons that I gave at [27] of Openview, which I repeat and adopt, I do not accept that the undoubted public interest in procurements being carried out properly tends of itself to support the maintenance of the automatic suspension. Ms Hannaford made the point that the Regulations provide more than one possible remedy. I agree; and, in my judgment, that supports the conclusion that the appropriate remedy should be identified without preconception or prejudice as to which one may be appropriate. Despite Ms Hannaford’s submissions to the contrary, I remain of the view that the appropriate course is for the Court to apply established principles and that it will only be in an exceptional case that it can be said that the application of American Cyanamid principles fails to give adequate support to the public interest in procurements being carried out properly. Of course, setting aside the automatic suspension at a time when the Court does not know what the final outcome of the Claimants’ allegations will be gives rise to the possibility that the Defendant will end up paying a contract sum to the successful tenderer and damages to the aggrieved Claimant. However, that possibility is not a reason for maintaining the automatic suspension if it is otherwise inappropriate to do so. On the contrary, the prospect of paying damages as well as a contract price if it breaches its obligations is an integral part of the scheme under the Regulations for encouraging proper and principled procurements since it is to be assumed that contracting authorities will (in general) wish to avoid double payment. If there were even a whiff of corruption in a given case (e.g. that the procurement had deliberately been conducted in breach of the regulations to achieve a given end irrespective of the risk of double payment), I have no doubt that any Court would regard that as a feature tending to support the maintenance of the automatic stay. However, I make plain that there is no evidence to give rise to even a whiff of that sort in the present case.[40]Under the general heading of public interest, Ms Hannaford also submitted that there have been delays in the procurement process that should persuade the court to take the view that a further delay is insignificant. I do not agree. Without rehearsing the evidence in detail, the slippage in the timetable upon which Alstom relies is to a considerable extent explained by LUL’s evidence and does not demonstrate that the passage of further time is to be regarded as insignificant. To the contrary, LUL’s evidence establishes that the current traction systems on the Central Line are unreliable and should be changed sooner rather than later.[41]I have referred elsewhere to the difficulties in predicting how long it may take for procurement litigation to be brought to a conclusion, despite the fact that the TCC will make resources available quickly: see Kent Community Health HHS Foundation Trust at [34]-[38]. Alstom has not shown any basis upon which it may be assumed that final resolution will be achieved within a timeframe that does not involve a significant and material delay in implementing the works. In other words, Alstom has not shown that the speed of the court process supports the maintenance of the automatic suspension.

Interim View

[42]Pausing at this point, nothing advanced by Alstom has persuaded me that damages will not or may not be an adequate remedy or that it would be unjust for Alstom to be confined to its remedy in damages. On the contrary, my interim view is that damages will be an adequate remedy and that it is not unjust for Alstom so to be confined. The application of conventional American Cyanamid principles therefore means that the automatic suspension should normally be lifted. I proceed on the assumption (without expressly finding) that damages would also be an adequate remedy for the Defendants: there is no reason to doubt the substance that lies behind Alstom’s undertaking in damages.[43]At this point Ms Hannaford pressed on the Court that Alstom has a strong case. She points, rightly, to the fact that the Defendants’ case has changed; and she identifies various figures that are not obviously compatible with each other and which a sequence of correspondence since the hearing has not fully resolved. However, the central issue between the parties depends upon the interpretation of Part 5.3, which I have set out above. Specifically, it depends upon the question whether the Defendants were entitled to take Bombardier’s bid through to Stage 4 on the basis that they did or whether, as a matter of construction of the ITT in general and Part 5.3 in particular, the Defendants were bound to take certain steps (which the Defendants accept they did not take) before retaining Bombardier as a bidding party for the purposes of Stage 4.[44]I bear in mind that I am not conducting (and am not asked to conduct) a trial of the issue of the correct interpretation of the ITT. Even so, I have had to consider its proper interpretation sufficiently to decide whether I accept Ms Hannaford’s submission to the effect that “there is no credible dispute that the strength of one party’s case is disproportionate to that of the other party.” Since I am not deciding the issue, a detailed analysis in this judgment is likely to be positively unhelpful. It is sufficient to say that Clause 5.3 is, to adopt Mr Coppel’s phrase, “replete with discretions”; and I do not consider that it can be said at this stage of the proceedings that there is no credible dispute that the strength of Alstom’s case is disproportionate to that of the Defendants.[45]Alstom also advances a case that Bombardier’s bid should have been treated as abnormally low and that the commercial evaluation of the bids was fundamentally flawed. The apparent incompatibility of figures to which I have referred is likely to be grist to Alstom’s mill at a trial when it attempts to show that there was not merely confusion and muddle but breach of the Defendants’ obligations in relation to tender evaluation. At this stage, however, the inconsistency cannot be said to lead inexorably or inevitably to a conclusion that the strength of Alstom’s case is disproportionate to that of the Defendants.[46]For these reasons, even if the application of American Cyanamid principles required or permitted the relative strengths of the parties’ cases to be taken into account in assessing the balance of convenience, I would reject the submission that the strength of Alstom’s case is a material factor to be placed in the balance or that, if placed in the balance, the strength of Alstom’s case should lead to the conclusion that the automatic suspension should be maintained.

Conclusion

[47]For the reasons set out above, I conclude that damages would be an adequate remedy for Alstom and that it is not unjust for it to be confined to its remedy in damages. If it is material separately to consider the balance of convenience, I hold that the balance is in favour of setting aside the automatic suspension so that the contract may be concluded with Bombardier sooner rather than a contract being concluded at the end of an uncertain process later.

Cited in 9 later judgments