Mon, 29 Mar 2021
In Bechtel v High Speed Two (HS2) Ltd [2021] EWHC 458 (TCC) (4 March), Fraser J rejected a challenge under the Utilities Contracts Regulations 2016 to HS2’s award of a billion-pound contract for the construction of a new railway station. As part of the decision, the judge found that HS2 had breached its obligation of transparency by failing to keep minutes of a meeting with the leading bidder. But the failure did not lead to the overturning of the award decision.
The judgment discusses when minutes of meetings should be kept in a regulated procurement process (such as under the Public Contracts Regulations 2015) and when a failure may lead to a successful legal challenge. There are also indications as to the level of detail required in minutes.
Facts of the case
HS2 had held a meeting with the leading bidder on 5 September 2018, after bids in the procurement had been marked but prior to contract award. The purpose of the meeting was to clarify certain points in the leading bidder’s bid, and the fact that this might be done had been made clear in the procurement documents. As a result of the meeting, HS2 decided that there was no need to alter the leading bidder’s score.
Bechtel came second in the procurement. It alleged that, at the 5 September meeting, HS2 and the leading bidder had effectively agreed to postpone making certain changes to the leading bidder’s bid until after the award decision was announced, in a manner that would have been unlawful.
One of the questions for the court was whether such an agreement had indeed been reached at the 5 September meeting. HS2 had not kept minutes of the meeting, and Bechtel argued that the failure to keep minutes represented a breach of HS2’s obligation of transparency, with the consequence that the award decision should be overturned.
Fraser J’s decision
Fraser J began by noting that:
“[t]he principle of transparency requires that a utility such as HS2 maintain suitable records of its procurement process to enable (i) an economic operator to understand the reasons for which decisions adverse to it were taken in the course of that process and (ii) the Court to exercise its supervisory jurisdiction.” (at [274])
HS2’s failure to keep minutes of the 5 September thus represented a breach of the obligation of transparency, but in the circumstances, it was a “technical breach only” and “had no causative effect” (at [278]). The court was able to exercise its supervisory jurisdiction (and to rule on Bechtel’s allegations as to what had occurred during the 5 September meeting) because it was able to hear evidence from witnesses who had been at the meeting. And the 5 September meeting did not affect the scores awarded in the evaluation exercise – those scores, and adequate reasons for them, were recorded separately (at [282]).
However the failure to keep minutes of the 5 September meeting “may have made [the trial] longer and more expensive than would otherwise have been the case”. It followed that it might be “necessary to consider this further at the costs stage” (at [282]).
Comment
The Bechtel judgment builds on the earlier case of Lancashire Care [2018] EWHC 1589 (TCC). In that case Stuart-Smith J found that the notes of a moderation meeting provided an inadequate record of the reasons and reasoning process leading to the award of individual marks. As a consequence the Court was prevented from “making a reliable assessment” as to the Claimant’s allegations of unlawful marking, “in circumstances where only a very modest adjustment in scores [...] would be decisive”. As a result the award decision was set aside.
Bechtel suggests that every meeting in a procurement process should be minuted. This may perhaps not extend to internal discussions simply regarding the scheduling or progress of the procurement (for example), but is likely to capture all formal stages of the process. Examples might include meetings to consider whether to query bids as abnormally low, and meetings to consider a report on the outcome of the procurement and decide whether to proceed to award.
Nonetheless a failure to minute these meetings will not lead to the overturning of the award decision in every case. A failure to keep minutes will likely lead to successful challenge if it makes a difference to the outcome of the procurement – in particular by preventing the court from ruling on allegations of unlawfulness, in circumstances where the allegations might themselves affect the outcome. If the court can “fill the gaps” by hearing witness evidence, and so is able to exercise its review function, the failure to keep minutes will not itself lead to overturning (as in Bechtel) – although the authority may be sanctioned in costs. But if witness evidence cannot “fill the gaps” the award decision may be overturned. Where the missing records are records of the reasons for individual scores (as in Lancashire Care), “filling the gaps” with witness evidence is perhaps inherently unlikely, because of the level of detail required.
In practice, contracting authorities may not know at the start of a meeting what decision will be taken, and thus the potential impact on the outcome of the procurement. Keeping a minute of every formal stage in the procurement – ideally by designating a minute-taker at the start of each meeting – may therefore be wise.
The Bechtel judgment does not directly address the level of detail required in minutes. Nonetheless Fraser J appeared to consider that a record produced six months after the 5 September meeting, and which noted that “a discussion was held” about certain issues, was insufficient (see [272]). On the other hand, Stuart-Smith J in Lancashire Care considered that it was not “necessary to keep a complete record of what was said or a comprehensive note of every point that was made” (above, at [59]). Taken together the judgments suggest that it is insufficient to record simply which matters were discussed; instead the aim of minutes should perhaps be to note down the essence of what was said about each point discussed.
Finally, the Bechtel judgment raises questions for contracting authorities as to how best to produce both minutes of discussions and a record of consensus reasons in an evaluation meeting, without distracting or overly burdening moderators. This video about the Bechtel case suggests ways in which this may be done.
Written by Jorren Knibbe, barrister at No5 Barristers' Chambers.
