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Manchester faces Sita at High Court

Sita’s £90M claim against the Greater Manchester Waste Disposal Authority (GMWDA) has started at the High Court in London, with GMWDA appealing to have the case struck out of court.

On the final day of the “strike out” hearings at London’s High Court on February 9, Michael Bowsher QC, who represents Sita, said that the GMWDA failed to give Sita a “fair depiction” of decisions it made in 2008 in relation to Viridor Laing (VL) who eventually reached financial close on the £3.8bn bid in April 2009.

Waste firm Sita say changes made to the contract with VL were not shared with other bidders, in contravention of Public Procurement Regulations. Sita claims it did not know of any breaches in the Greater Manchester waste PFI contract until July 3 2009.

There is a ‘statute of limitations’ on when a company can start such proceedings. Sita claims that those time limits run from the time a firm knew or ought to have known that there had been a breach of the regulations, which it claims was 3 July 2009.

However, GMWDA alleges Sita did not start these proceedings in time and knew of the breaches from 8 April 2009.

Sita says it received a letter from GMWDA relating to the procurement of the waste PFI on July 3 2009. Sita began legal proceedings a month later against GMWDA.

Sita is trying to secure more than £90M in damages for the authority’s “failure to award the contract to the claimant”.

GMWDA has brought this matter before the judge in advance of the main litigation to have Sita’s claim struck out. From February 4, Mr Justice Mann has heard both cases from Sita and GMWDA at London’s High Court.

In court, Bowsher referred to ‘Uniplex versus NHS Business Services Authority’ (January 2009) which addressed the issue on how long a firm has to bring a legal challenge against a public contract award. 

The case highlighted whether an action could be dismissed as inadmissible if it was not brought “promptly” and how the UK court should exercise its discretion to extend the time period for bringing proceedings. He said that the judge should consider the case when making his ruling.

In response, Rose Dinah QC, representing GMWDA cited case law that occurred before the Uniplex case and argued that “time runs from the first actual breach of regulations” and the court should not exercise its discretion to extend the time period for bringing proceedings.

She said what is alleged by Sita in April 2009 is that “procedure was flawed because VL was permitted to make its material changes in its bid” and was able to increase the price above the level of Sita’s bid.

Dinah said Sita also claims the GMWDA breached regulations because the GMWDA reassessed VL’s bid in relation to the submission of its best and final offer without “letting Sita come back in” to make a further bid.

It also claims GMWDA allowed VL to make “significant changes” to increase its capital expenditure costs, site plans, and construction works. She said Sita claims that it “could have undercut VL” if it knew about the changes, which it alleges it did not know about until July 3.

Dinah stated that Sita doubts that GMWDA picked the most “economically advantageous tender”.

Sita maintains it did not know about documents outlining changes in the procurement contract until November 2009. Details of these documents were not revealed in court due to commercial confidentiality.

On the second day of the hearings, Dinah claimed that the latest date Sita could have launched its legal action over the costs of the contract increasing, was April 8 2009, when the GMWDA issued a press release detailing the increased costs of the contract - from £3bn to £3.8bn.

She said it was “wrong as a matter of fact” that Sita was unaware of how the contract was developing including developments such as VL’s decision to involve the proposed Ineos Chlor combined heat and power plant in Runcorn in its plans. She added: “It can’t be right that they were not aware of those significant changes.”

Countering, Bowsher said: “The numbers are going up and down and substantial changes are made to the contract. It’s inherently likely that these changes are breaches because different bidders would price those changes differently.”

He also said that the correspondence being sent from GMWDA before July did not indicate any procurement changes. He explained that GMWDA failed to give Sita “a fair description” of the decisions GMWDA made in awarding the contract to VL.

“The correspondence was drafted in such a way that it did not enable us to get information for us to question it.”

He said that the issue of how long it has to bring a legal challenge against a public contract award was a “difficult” area of law and was a side of EU law that was developing.

“It is not appropriate for this court to re-write this legislation,” he said.

Bowsher concluded that taking the case to a “trial judge” would be most appropriate.

Justice Mann, hearing the case, said that a judgement will be made in the week commencing February 15 at the earliest and not on February 12 as previously expected.

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