Furthermore, two days after the initial announcement, Michael Gove was forced to apologise over errors that existed in the original list of schools published.
Seven months after the Department for Education distinguished between "open", "stopped", "unaffected" or "subject to review" school projects, the decision remains controversial, not least due to the recent judicial review by the High Court in Luton Borough Council and others v Secretary of State for Education which found that the government failed "unlawfully and without justification" to consult with a number of local councils before The Secretary of State for Education made his decision to axe the BSF programme.
Many construction companies committed to the BSF programme faced potentially very large exposure to wasted costs incurred in the bidding process. Although case law exists to suggest that in certain circumstances a contractor may recover tender costs and loss of profit in relation to tender submissions (see J&A Developments Ltd v Edina Manufacturing Ltd, Armoura Ltd and others), how might a contractor avoid having to rely on the mercy of the Courts to recoup its wasted tender costs as damages?
The case of Moduleco v Carillion provides some assistance. This case saw unsuccessful bidders who had joined together to bid for a project use their collective force to try to recover their wasted tender costs from a potential employer. A number of salient points emerge from that case for teams of contractors, sub-contractors and professional consultants to consider before entering a bid.
- At the outset of the tender process, execute a formalised joint venture agreement between the parties co-operating in the bid submission identifying how a potential wasted costs claim should be handled (including which party should lead the claim, what contribution each party will make to any potential proceedings and how any recovery should be divided). This will avoid the need to instigate court proceedings against a joint venture party who withholds information which is crucial to your claim.
- Consider formalising an agreement with the employer upfront which records the basis on which any abortive costs will be awarded together with an agreement in relation to what written substantiation it will require before it will honour a claim i.e. timesheets, receipts etc.
These points might help to maximise the opportunities to claim abortive bid costs in the event that the project does not proceed.
By Pinsent Masons Associate, Julia Pulford
Winner British Legal Awards 2010-11 – Law Firm Innovation
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