How losers win

One day someone is going to take these damn awful regulations, all of them, by the throat and sling out the Treaty on the Functioning of the European Union. The rules for procuring bids for public contracts such as roads, schools and hospitals are way over the top save that they produce a glint in the eye of big gun lawyers. And I can’t help but giggle at the way some construction folk are aiming to make a profit out of not winning the contract. Yes, not. The European regulations for tendering are so ham-fisted they are a gift for lawyers and contractors.

All this European guff can be replaced with just two laws. Law 1: You get bashed if you are out of order. Law 2: You get well and truly bashed if you are bang out of order. Come to think of it we can use Law 1 to get rid of stupidly complicated rules. And when it comes to tendering, let’s use Laws 1 and 2 for both public and private contract bidding.

The rules for procuring bids for public contracts such as roads, schools and hospitals are way over the top save that they produce a glint in the eye of big gun lawyers

Mind you, I blame Sir John Wilder. Remember him? A wonderfully wicked character on ITV’s sixties show The Power Game. He ran Bligh Construction. His toady contract getter was Don Henderson. Chairman Caswell Bligh was the stern old school patriarch. He resented Sir John’s scheming and conniving when it came to bidding for work for those multi-squillion-pound pieces of civil engineering … and winning. It helped of course that Sir John’s enthusiasm for senior civil servant Susan Weldon was matched vice-versa since she had quite a lot to do with placing motorway contracts.

The Treaty for the Functioning of the European Union talks of transparency (Sir John preferred opaqueness), equal treatment (Sir John was hell bent on out-maneuvering his competitors, manipulating the market, nods and winks in the bidding process), non discrimination (true, Sir John didn’t discriminate between any of his competitors - he beat the hell out of all of them).

I am not going to tell you very much about the recent case of Excel Europe Ltd vs University Hospital Coventry Trust. That’s because this possibly £1bn procurement bid is now the subject of continuing litigation in the High Court. Excel has looked at the public contracts regulations and claims that the procedures were not followed for a framework bid and in consequence it seriously lost out. The upshot is that Excel dropped out of the bidding for lack of information - after all, if you are bidding for risks in a billion pound adventure, the guessing can only go so far - they looked up the European rules and cried “out of order”. If I was a public authority of any sort or size I would have to spend pots of money on the best lawyers to fathom how to make the actual bidding process satisfy all these regulations. Only then would I go out to tender. And then the whole team would spend more money watching their backsides. And then when the winning bid was announced, everyone’s eyes would be skinned waiting for one at least of the losing bidders to sue.

The Court of Appeal has long since decided that, when you bid for building work, the bidding process itself is a contract

Ok, let’s be fair, the public procurement rules are an attempt to explain in detail Law 1 - how to avoid being out of order. You and I know that things go on in the building bidding process which are, how shall we say, intended to steal a march on the competition. Government departments and other bodies governed by public law and public spending have to look squeaky clean. But what about the private sector? What if your bid is second in a competition to build an office or factory and one of the competitors is Sir John? What if you obtain evidence of sleight of hand, unfairness in the bidding process; what if you can show that the process was “out of order”? The Court of Appeal has long since decided that, when you bid for building work, the bidding process itself is a contract. And that contract contains an implied term that the whole process will be “bona fide and honest”. If the affair becomes distorted by bias, lacks impartiality, lacks integrity, contains conflict of interest - is, in other words, “bang out of order” - then you will have caused what the law calls “loss of chance” and the consequences include money compensation. All you have to do is prove Sir John’s footwork caused you a lost chance of earning money. The bang out of order law applies to all competitions without regard to public or private sector services.

Tony Bingham is a barrister and arbitrator at 3 Paper Buildings Temple