Costs Of Interested Parties In Procurement Challenges

Under what circumstances can an interested party to a procurement challenge recover its costs, specifically where that party has not participated at all in any of the substantive hearings?

This was considered recently by the The Hon. Mr Justice Fraser upon application of the interested party in Bechtel Ltd v High Speed Two (HS2) Ltd ((No.2) Costs of the Interested Party) [2021] EWHC 640 (TCC).

Firstly, he distinguished the case of Group M UK Ltd v Cabinet Office [2014] EWHC 3863 (TCC), in which the interested party had been given permission to participate, had submitted its own evidence, and had attended and made submissions, on the substantive application to lift the automatic suspension.

“In the instant case, BBVS has not participated at all in any of the substantive hearings, and its involvement as an interested party arises (to date) as a result of the Order of 1 July 2019, and the Order that I made on 5 July 2019 (which I refer to at [13] and [15] above respectively). In my judgment therefore, the case of Group M cannot simply be generally applied to the costs application brought by BBVS, and BBVS are in a different position to that of Carat in that case. BBVS do not seek to recover costs in respect of the application to lift the suspension, which was not heard in any event.”

He then considered the principles laid down by the House of Lords in Bolton MDC v Secretary of State for the Environment [1995] 1 WLR 1176 which he considered to be of general application to costs applications by interested parties in procurement challenges…

Costs Of Interested Parties In Procurement Challenges | The Principles

1. The court evidently has power to order costs under the statute, and such costs are discretionary. The power must however be exercised in accordance with the Civil Procedure Rules, and in particular CPR Part 44 which deals with costs (and Part 44.2 dealing with the court’s discretion as to costs).

2. Ordinarily, an interested party (who for these purposes will usually be the winning bidder) must be able to show that there is a separate issue on which he was entitled to be heard, that is to say an issue not covered by the contracting authority; or that he has an interest which requires separate representation, in order to recover costs.

3. The mere fact that a party has won the bid does not automatically entitle him either to become an interested party in the litigation, or indeed, to recovery of his costs if the challenge by the claimant fails.

4. The court will, for procurement proceedings under the Regulations, when granting a winning bidder the status of interested party, have made an order in this respect. That order will clearly state the extent to which that interested party is entitled to participate. The order formalises the involvement of the interested party in the proceedings. This is a matter of active case-management. Simply because an interested party is involved at one stage of the proceedings does not entitle that party to participate in later stages of the same proceedings.

5. Simply having been made an interested party by way of such an order does not automatically, of itself, entitle the interested party to its costs.

6. There may be specific and unusual features of any particular case upon which an interested party may rely when it seeks an order for its costs in these circumstances. There can be no exhaustive list of these prescribed in advance. The court will, when exercising its discretion, take all the relevant factors into account, but the presence of one or more of these unusual features will make it more likely that an interested party can obtain a costs order in its favour.

“In my judgment (and as might be expected, given the care with which such Guides are prepared) these principles are consistent with the provisions in part 23.6 of the Administrative Court Guide. This states at 23.6.1:

“The Court does not generally order an unsuccessful claimant to pay two sets of costs of the substantive claim (typically the costs incurred by the defendant and an interested party), although the Court may order two sets of costs to be paid, in particular where the defendant and the interested party have different interests which require separate representation. If the claimant is acting in the public interest rather than out of personal gain then it is less likely that the court will order the second set of costs.”

He went on to apply these principles to the facts of the case before him.

The full decision can be found here.