High Court rules against Siemens in HS2 public procurement challenge

The High Court handed down the approved judgment on Monday 6 November 2023 in the case between Siemens Mobility Limited (“Siemens”) and High Speed Two (HS2) Limited (“HS2”). Siemens challenged the lawfulness of the public procurement process carried out by HS2 under the Utilities Contracts Regulations 2016 (“UCR”), and the resulting award of a manufacture and supply agreement and a train maintenance and services agreement to a joint venture between Bombardier Transportation UK Limited and Hitachi Rail Limited (“JV”).

Siemens issued multiple claims from June 2021 up to January 2023 and the grounds of challenge were as follows:

1. HS2 took into account undisclosed matters and there were manifest errors in its assessment of the bids at Stages 2 and 3;
2. HS2 wrongly exercised its discretion in permitting the JV to continue to Stage 5 of the procurement exercise despite submitting a Shortfall Tender;
3. HS2 wrongly consented to a change of control of the JV, following the acquisition of Bombardier by Alstom, permitting a change of circumstances, sharing confidential and commercially sensitive information with Alstom and the JV, and giving them an unfair advantage;
4. the Stage 5 WLV evaluation was flawed in that: (a) there were manifest errors and HS2 failed to take into account the impact of modifications necessary to rectify the JV design issues concerning dwell time; and (b) HS2 wrongly concluded, following an abnormally low tender review, that the JV’s pricing was explained and justified;
5. the decision by HS2 to award the contract to the JV was manifestly erroneous because: (a) HS2 wrongly failed to verify whether the JV met the relevant mandatory TTS requirements and/or other threshold requirements; and (b) HS2 failed to carry out adequate pre-contract checks as to the JV’s ability, resources and financial standing to perform the contract;
6. a conflict of interest arose by reason of membership of a Bombardier pension scheme by Mr Sterry (Lead Technical Assessor) and Mr Williamson (member of a review panel), both of HS2; further, during the procurement Mr Sterry had informal contact with ex-colleagues at Bombardier.

The High Court found against Siemens in respect of every ground, finding that Siemens has not established that its alleged breaches of the UCR and neither has HS2 acted in breach of the public procurement principles of equal treatment, non-discrimination and transparency.

There will follow a hearing to deal with consequential matters such as permission to appeal and any application for costs. With Siemens not succeeding in any of the grounds it put forward and the prospect of having a significant order for costs to pay, it remains to be seen whether any application for permission to appeal will be made. This judgment, which can be found here should be considered by potential challengers to procurements carried out under the UCR and will likely reverberate around the rail sector.

The findings reached in this judgment are relevant for other procurements carried out under the UCR. Once the Procurement Act 2023 comes into force which is expected later in 2024, contracting authorities will have the flexibility to design their own procedures and there will be different overarching objectives (delivering value for money and maximising public benefit) compared to the principles that underpin the current regime, e.g. equal treatment and non-discrimination, and so the grounds for challenge and the way challenges are dealt with is likely to change in the future.