[00:00:00] Marta: Welcome to Bestek, the public procurement podcast. Today I’ll be talking about legal remedies in some of the Commonwealth and francophone African countries.

[00:00:10] Bestek Intro/Outro: Welcome to Bestek, the public procurement podcast. In this podcast, Dr. Willem Janssen and Dr. Marta Andhov discuss public procurement law issues, their love of food, and academic life. In each episode, Willem, Marta and their guests search for answers to intriguing public procurement questions. This is Bestek. Let’s dish up public procurement law.

[00:00:41] Marta: Hello, everyone, and welcome back to the Bestek podcast for another aperitif episode, where we’re taking bite-size, uh, commentary and discussion from panels from the June PurpLE Project Conference on Public Procurement and Public Contracts. My name is Marta Andhov, and I’m your host.

[00:01:01] This one’s a little different for me because this time I’m pulling clips from a panel that I had a chance to chair myself. Uh, this panel was focusing on remedial systems in public contract law versus non-legislative measures. I had four brilliant people with me for this one. Professor Laurence Folliot Lalliot from the University of Paris Nanterre, um, in France.

[00:01:29] Michael Bowsher KC, a very prominent barrister at the Monckton Chambers in London, and also, um, affiliated visiting, uh, scholar at the King’s College. Associate Professor Derek McKee from the University of Montreal in Canada, and Associate Professor Colette Langos from Adelaide University in Australia.

[00:01:53] As a chair, I had the privilege of leading the design of this panel and moderating this fascinating conversation. But one thread running through it I want to pull out today, and that one matters for me as a lawyer quite a lot as it touches upon the scope of bidders’ legal rights in case if public authority or public agency breaches its own procurement rules.

[00:02:22] Say it awards contracts on criteria it never disclosed, or it changes something that it does not communicate to all of the potential bidders. What can the wronged bidder actually do about it? What are the existing legal rights of such a bidder? We specifically look at this question in countries that take fairly different starting point, uh, to the current EU regime.

[00:02:54] So we focus on Commonwealth countries that are newer, uh, procurement regimes that sort of been modelled on the rules, uh, of the United Kingdom, but particularly how those rules developed before we had, uh, UK really adopting the European directive system. So we’re looking at the more Commonwealth underpinning, and here we’re looking at Australia, New Zealand, and Canada.

[00:03:23] And then on the other side of the conversation, we look on the, uh, francophone African countries that ultimately modelled their, uh, new systems on procurement, on their approaches on the French model. So let’s start with Michael and what Ma- Michael had to say because he took us all the way back to the foundations.

[00:03:49] Michael: Going way back, the basis is that these are private contracts governed by private law.

[00:03:54] There is no, there’s no, there’s no, uh, concept of a public contract being different. But, big but, public contracts are all subject to, um, some, some statutory regime. There is no way that they can be paid for without statutory regime. And this is, uh, becomes highly complex. Um, uh, but if you go back, the context therefore for the contract often provided an interpretative lens through which you could interpret the contracts differently from the standard private contract.

[00:04:28] So if it was a, a contract for land improvements, there would be some es- the, the idea of public good, so that there would be a statutory basis of challenge and say, “Well, that, that… although the contract says this, look at the statutory framework. It must, that must entail that the contract meant, meant this or that, or the way in which it was tendered.”

[00:04:47] Now, that, it means that there was no coherent or comprehensive system of, of court regulation. But there were other, actually, when you go back into Victorian case law, which is a common heritage of England and New Zealand, uh, there were lots, actually lots of cases. They look as if they’re case- if you look them up, they look as if they’re cases about sewage or something like that or, or drainage or something like that.

[00:05:08] But actually, when you dig down into them and get past the Victorian language, quite often there are little nuggets of procurement law in there.

[00:05:15] Marta: So buried underneath all that Victorian language about sewage and drainage disputes, there are these little nuggets of real procurement law. And I think that’s a lovely reminder that none of it’s, it’s new, right? People have been fighting about favouritism and money changing hands in public contracts for centuries.

[00:05:36] They just didn’t call it procurement law yet. And speaking of money, here’s just how seriously that money used to be taken.

[00:05:46] Michael: The Paymaster General for, for naval and army procurement during the painful period I was referring to, basically the Napoleonic Wars.

[00:05:54] Um, if you, um, if you misappropriated funds from the Paymaster General, the, the penalty was death. So, um, we’ve, we’ve scaled back our, our remedial system, at least in some senses.

[00:06:07] Marta: The penalty for misappropriating treasury funds used to be death, and Michael’s own line on that, “We’ve scaled back our remedial system, at least in some senses,” might be the driest joke on this whole panel. It’s also a useful way into a bigger question because it shows you that enforcement has always existed on a spectrum from execution at one end to whatever we’ve got today at the other.

[00:06:36] So let’s jump forward a few centuries and across an ocean to Canada, where Derek McKee has one of the more distinctive remedy system of anyone’s in this panel. Super interesting.

[00:06:49] Derek: The Supreme Court of Canada developed this idea in the 1980s. Originally, the process contract was, was to protect the public authority, uh, against a bidder trying to withdraw its bid. Uh, but then it came around to bite back and became a way for the, for the frustrated bidder to sue and obtain damages calculated on the basis of lost profits.

[00:07:13] So a very, a very generous, uh, form of recourse for those who could get it. Um, of course, the, the, the conditions that need to be fulfilled, uh, to be able to, to, to make a claim on a process contract or what in Canada we’d call Contract A, are quite narrow. You have to fulfil certain specific requirements for it to be applicable.

[00:07:34] Marta: So in Canada, if you win, you don’t just get your bid cost back, you can sue for lost profits, right? Which is a generous form of recourse if you can meet the conditions. But I remember stopping there and right there in the room because I wanted him to explain in plain terms what this thing he kept calling a process contract really is, since I don’t think most of our European colleagues in the audience had ever heard of it.

[00:08:04] It’s definitely a Commonwealth, um, construction. So it was really good to get Derek to comment on it.

[00:08:12] Derek: So the process contract essentially is the idea that the, the bidding process itself is governed by a contract, uh, between the public authority that solicits, uh, bids and the, and, and the bidder.

[00:08:26] And the bidder is bound by its bid, uh, under this process contract, and the public authority is also bound under this process contract to, um, for example, apply the cr- the stated criteria and to, uh, conduct a procedurally fair process. And if a, if a, if a bidder can prove that they would have obtained the contract but for the breach of the process contract, that can produce the basis for a claim for lost profits.

[00:08:55] Marta: So that’s the mechanism, right? The bidding process itself becomes a contract binding both sides. And if the authority breaches it, a bidder who can prove they would have won can sue for lost profit. It is a distinct tool, and I think what makes it interesting is that it developed almost entirely through case law, um, as typical Commonwealth solution would.

[00:09:21] So how often does it get used in practice? Um, as from what I heard from previous research, um, that I had a chance to read and people to talk to, the process contract is not that much used anymore, at least definitely not in the UK. Australia and New Zealand also quite often exclude them. So I asked Derek that directly, and his answer was, uh, very candid.

[00:09:49] Derek: There, there is no centralised, uh, source of statistics in Canada within many different…

[00:09:55] With the various authorities that we have, the, the Canadian International Trade Tribunal receives about 70 or 80 procurement complaints per year. Um, but only, you know, 10 or 15 of those actually lead to a decision on the merits. Many of them are rejected for technical reasons, procedural reasons along the way.

[00:10:13] Uh, Quebec’s public procurement authority receives about 100 to 150 complaints per year. Uh, but again, only a small number actually make it to a, a final decision.

[00:10:23] Marta: 70 to 80 complaints a year at the federal tribunal, and only 10 to 15 of those ever reach a decision on the merits. Quebec’s numbers are a bit higher, 100 to 150, but the conversion rate is just as thin. And I think that what tells you more than anything is that most of what gets filed never gets resolved on its substance at all.

[00:10:51] So given all of that, I ask Derek the obvious follow-up, does this tool he spent years studying really works?

[00:11:01] Derek: I won’t hide the fact that I’m, I’m quite critical of the process contract model that, uh, we have relied on in Canada for 45 years essentially. Um, I think that it’s, it’s, it’s a very– it’s, it’s better than nothing, but it’s a very blunt instrument, uh, that often takes many years to reach a final outcome, uh, after the, after the contract has already been completed.

[00:11:22] Um, very generous payouts for the, the few companies that can manage to win. Uh, but by that time it’s sort of too late, uh, to learn any lessons from, from what went wrong.

[00:11:33] Marta: Better than nothing, but a very blunt instrument, and by the time you get a result, it’s too late to learn any lessons from what went wrong. I respected how self-critical Derek was being about the limits of his own, uh, country’s system.

[00:11:50] That’s not a small thing for an academic to say out loud about the tools, um, that are present in, in their own jurisdiction. So let’s go to complete opposite end of spectrum, speed instead of thoroughness maybe, or maybe that’s too blunt of a statement. Laurence Folliot Lalliot studies procurement across roughly 20 francophone African countries, and she brought a system that moves faster than almost anything else on this panel.

[00:12:21] Laurence: There is only three days to bring a complaint, the first one, three days to bring the complaint

[00:12:26] be-before, uh, the procuring agency itself, uh, the contracting authority, and then, uh, two days to bring it, unsatisfied, two, two days to bring it to the regulatory body, and

[00:12:44] this regulatory body will have only seven days to decide the case. So seven days when you have sometimes a huge contract, uh, it’s obviously not enough. So it creates a lot of burdens, uh, delays. Most of the time, they are unable to respect the time frame, and so some, uh, unsatisfaction from the bidders and the, and people, uh, challenging the decision.

[00:13:07] Marta: Three days to file, two more to escalate. Seven days total for a regulatory body to decide, and Laurence’s own read on that: obviously not enough for a contract of any real size. But I think what’s interesting is that isn’t a failure of ambition.

[00:13:27] It’s a system that choose speed as its central value deliberately and is now living with what the trade-off cost is in practice. Laurence had one more thing she wanted to raise with us in the room that I hadn’t even, um, contemplated on, and it ended up being one of my favourite moments of the whole panel.

[00:13:50] Who else besides the losing bidder gets a say in any of this?

[00:13:55] Laurence: It was decided more recently that even during the life of the contract, it was possible to raise the issue. First of all, because the directives, the remedies directives of 2007 were required, but also because the Conseil d’État decided to look further, and he decided to offer also this possibility to third parties, like citizens.

[00:14:15] Of course, they have to demonstrate an interest and, uh, but for

[00:14:22] example, a subcontractor will be entitled to, an as-association protecting the environment will be entitled to challenge the, the award and to challenge the contract and to challenge how the contract is actually implemented. And I think it’s a quite interesting way also to enforce all the other goals we are mentioning.

[00:14:46] Because when we talk about environment, when we talk about sustainability, when we talk about security, when we talk about sovereignty, who is going to take care of that? I don’t think the bidders will be in-interested in this. So the only watchdog we may have are third parties. Of course, with a limited and very, very strict, uh, standing and organising the, the way for them to protest.

[00:15:13] But I think this is a way we should maybe look at if we really want to cover all these collateral, uh, goals of public procurements.

[00:15:23] Marta: Subcontractors, environmental associations, general public, ordinary citizens, NGOs, all of them how they play into this scenario. All of them now have standing in France to challenge a contract, not just at the award stage, but throughout its whole life cycle.

[00:15:45] I think that’s a different way of thinking about who our remedy system is even for. It’s not just protecting the bidder who’s lost, it’s protecting the public interest more broadly, which sounds right if we consider the French model is and always have been very strongly focused on protection of public interest.

[00:16:07] So last clip, and it comes back to Michael with a question I ask everyone to close on. What should our remedy system even be trying to achieve going forward?

[00:16:17] Michael: I think actually what we really need to do is, is, is look at a much more performance-based system where, for example, completely overturning, you know, all our EU law learning. You, for example, using the learning that we get from our colleagues at King’s College London about, about construction frameworks, where good performance on one construction contract delivers, um, d- delivers the points to win the next construction contract.

[00:16:43] You actually, you actually get the benefit in a future public contract from good performance, and you demonstrate your good performance by performing, not by writing a good essay. Um, and there are tools which we’re, which we’re beginning to put in place which work in that way.

[00:17:00] Marta: Performance, not paperwork. “You demonstrate good performance by performing, not by writing a good essay,” in Michael’s words, and it reframes the whole conversation, right? We’d spent the better part of an hour talking about what happens after something goes wrong, and Michael ends by asking whether we should be building systems that reward things going right instead.

[00:17:24] I think it’s a fair point. We focus quite extensively on trying to regulate every single aspect and ensure its enforceability. Maybe we should pay the same attention to rewarding the positives. Four countries, four perspectives, and if I have to sum it up, it largely depends where you are. Your legal culture informs this quite extensively.

[00:17:55] The Commonwealth countries that are based on discretion, developing of the case law to inform really the regulatory process versus the French model and the francophone African countries model on it that so extensively focuses on public interest. Those two broadly scoped models pull us in different direction.

[00:18:23] One, the French one, is quite heavily regulated, enforceable, detailed, while the other one rather takes the approach, the Commonwealth one, of addressing one issue at the time when it arises, at least in the non-European context. So if we take out the UK really out and we focus on Canada, Australia, and New Zealand, that’s where we see much more the role of the non-statutory rules of soft law mechanisms.

[00:19:00] And I think that that points out to different, uh, different areas of a need of further improvement. But interestingly, the question of the possibility of be- better, uh, recourse largely depends on where you are. In England, historically, you mostly get damages after the fact, and those damages will be financial damages.

[00:19:29] In Canada, where we still see application of process contract, which is quite different to other Commonwealth countries in which process contract quite extensively is right now excluded from application. In Canada, you have through process contract a shot at loss of profits, um, if you fulfil the requirements.

[00:19:53] But it is a slow process, and it only resolves the small fractions on what gets filed. In the francophone African region, the system moves in days, not in years, but that speed comes at the cost of giving ultimately, uh, justice to more complex matters. Put all four together, and I think that what you get is not really a one answer, but a spectrum.

[00:20:19] When that speed rigidly, uh, of rules are somewhere, uh, scattered on two different ends, thoroughness again on a different one, and every country picks a different point to sit on. A short bit about where all this discussion came from. The panel was one of many at the Public Procurement and Contracts Conference this past June, hosted by PurpLE Project and funded by Carlsberg Foundation.

[00:20:48] More than 40 expert speakers joined us at– across those two days from across the globe, and there is more from this conversation still coming in this aperitif series. If you want more about the panellists or the new book that this whole conference fed into, Public Procurement and Contract Law: Exploring Intersections, Defining Boundaries, that is published by Hart and accessible in open access.

[00:21:16] It’s all linked in the show notes. I’m Marta Andhov. This has been Bestek, the public procurement podcast, and I’ll catch you on at the next aperitif. See ya.

[00:21:27] Bestek Intro/Outro: This was Bestek, the public procurement podcast. Do you want to contribute to today’s discussion? Then share your thoughts on LinkedIn or Twitter. Do you have an idea for a future episode? Write to us at www.bestekpodcast.com.

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