The proceedings between IGT and the Gambling Commission shed some light as to whether sub-contractors of bidders can initiate a procurement challenge against a contracting authority.
On 31 August 2020 the Defendant, the Gambling Commission (the “Commission”), commenced a competition for the Fourth National Lottery Licence (the “Competition”). There were four bidders in total, these included Camelot and Allwyn Entertainment Ltd (“Allwyn”). On 15 March 2022 Allwyn was deemed to be the successful bidder, with Camelot coming in second place.
On 31 March 2022, Camelot brought a procurement challenge against the Commission for alleged breaches of the Concession Contracts Regulations 2016 (“CCR16”) which governed the Competition. Camelot sought an order to set side the Commission’s decision to award the contract to Allwyn.
As a result of this challenge, the Commission were obliged to suspend the awarding of the contract to Allwyn, until the matter was resolved.
IGT who was not a bidder in the competition but who was at best a sub-contractor for Camelot decided to initiate its own claim against the Commission on 01 April 2022.
On 29 June 2022 the Court decided to lift the automatic suspension and granted Camelot permission to appeal against this decision. Both Camelot and IGT did not submit a challenge to the lifting of the suspension. Going forward both Camelot and IGT’s claims only sought damages for the breach of the CCR16.
In February 2023, Allwyn’s parent company purchased Camelot. The newly purchased Camelot then dropped its claim against the Commission. Subsequently IGT remained as the sole applicant in the proceedings.
The Commission argued that IGT had no standing as the remedies available under the CCR16 did not apply to them as they did not fulfil the definition of an “economic operator”.
There was a mismatch in the submissions advanced by both sides as they focused on different elements of UK and EU law.
In clarifying the standing of sub-contractors and their ability to commence procurement challenges the court held:
(a) The Remedies Directive (89/665/EEC) (“the Remedies Directive”), as amended, does not impose an obligation on the UK to enable a wider group other than simply unsuccessful bidders, including (but not limited to) potential sub-contractors and sub-sub-contractors to commence a procurement challenge.
(b) Following a thorough review of Remedies Directive, the travaux préparatoires, CJEU and relevant case law the court decided that only entities which sought to obtain the contract (i.e. a bidder) have the necessary standing to challenge the result of the procurement.
(c) Subsequently the court had to review whether the UK intended to “gold plate” the CCR16 by overextending the powers of the Remedies Directive and imposing such an obligation. The court found that:
“It was not the intention of the UK Government, when they made the CCR16, to expand the pool of those who had standing to bring a procurement challenge, and to include those who had not had such standing before such as, say, sub-contractors and sub-sub-contractors. There is nothing in the CCR16 or any of the other explanatory material which gives any such indication: indeed, all those documents point unequivocally in the other direction.”
(d) Coulson LJ described this finding as the “small dollop of jam in the middle” you get after “chewing through an extremely soggy biscuit” (i.e. reviewing the implementation of European Directives in domestic UK law!).
(e) Finally, the court had to assess CCR16 in its own right regardless of the previous two findings. In short, the court had to determine if the definition of “economic operator” contained in CCR16 when interpreted included the wider group of sub-contractors. Coulson LJ remarked:
“In my view, the proper interpretation of “economic operator”, even ignoring the purposive interpretation derived from EU law, produces the same result. Unsuccessful bidders have standing whilst, subject to the Grossman exception, those who did not make a bid – including sub-contractors, sub-sub-contractors and suppliers – do not.”
In conclusion the court held that IGT did not have the necessary standing to commence a procurement challenge. A copy of the judgement can be found here.
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