“You ought to have known”: Deeper Dive on how specific factors drove the limitation outcome in Siemens v HS2

This article is our in more depth review of the facts of the latest Siemens v HS2 judgment in which the Court provided guidance on when things about which a Claimant “ought to have known” will start the 30 day limitation clock for procurement challenges

07 November 2022

This article takes a closer look at the specific grounds upon which the court determined that Siemen’s new ‘conflict of interest’ claims were not time-barred. Our wider analysis of the tests applied and reflections on application to future procurement challenges is here.

Why Siemens new ‘pension scheme conflicts’ grounds of claim were not time-barred

On 15 August 2022, Siemens issued a further claim against HS2 based on alleged failures to properly address issue said to create actual or apparent conflicts of interest within the procuring authorities team, namely that the authority’s:

1) Head of Rolling Stock Engineering, who was involved in the evaluation of the tenders acting both as a Technical Assessor and as Lead Technical Assessor in that exercise; and

2) Director of Rail Systems, who was a member of the procurement’s Review Panel responsible for ensuring that the evaluation was conducted in accordance with the tender processes,

were former senior employees of Bombardier – the entity which was part of the consortium that won the contract for the new trains – and held final-salary pensions in one of the Bombardier UK pension schemes. It was argued the memberships of the pension scheme could give rise to a conflict of interest, since Bombardier contributed into the scheme and the scheme’s success was therefore linked to Bombardier’s success.

For the purposes of this judgment the court was not looking at whether these issues did give rise to conflicts of interest, but at whether Siemen’s was time barred from even making these arguments. The Court emphasised that it was understandable that a procuring authority might recruit individuals previously holding roles within or linked to one of the bidders: “For the Defendant to perform its role effectively it had to engage staff who had relevant industry experience. Unsurprisingly this led to the employment of staff who had previously worked for companies which would in due course seek to supply rolling stock to the Defendant.”

The crux of the Defendant’s argument as to why Siemens was time-barred from raising these issues was that Siemens had known since 2021 that these two individuals were former long standing employees at Bombardier, and that (applying the ‘enquiry’ test Limitation arguments in the context of new claims in existing procurement litigation), Siemens “knew or ought to have known that any employee of long service in a major rail company such as Bombardier would be in receipt of a company pension as also appears to be the case in relation to the Claimant's employees….[therefore it] should have asked the Defendant relevant questions in October 2021 (when it learned of [that] prior employment at Bombardier) but failed to do so until 28 July 2022 [leading to filing the claim on 15 August 2022]".

The Court – in finding that Siemen’s claim was not time barred – rejected that argument for the following reasons:

1) although long standing employees of a rival major rail company might have been part of the company’s pension scheme, an RWIND tenderer in Siemen’s position would know that there are “many possible ways in which pensions can be held and, more significantly, many ways in which a pension entitlement held in a previous employment can be transferred or cashed in. At most the Claimant's actual knowledge was to the effect that [they] would have had a pension entitlement while working for Bombardier and that it was possible that this was continuing.”

2) in the light of the first conclusion, applying the ‘enquiry’ test above, “[t]he question then becomes one of the extent to which matters in that regard should have been investigated further”. Here, in respect of one employee, Siemens had not been given his Conflict of Interest Declaration Form (COID) until July 2022, so, the Court held, it would not have had reason to make an enquiry about conflicts before then. In respect of the other employee, a decisive factor was that Siemens had made enquiries in October 2021 in which it had specifically asked the procuring authority to provide that employee’s COID andall other conflict of interest information relating to [the relevant employees]”. The authority had replied by providing only the COID – which did not mention the employee’s pension arrangements – and provided no wider response. The Court therefore concluded:

Faced with that exchange would a RWIND tenderer acting reasonably have taken the matter further? Should further enquiries have been made and more precisely should the provision of [the employee’s] COID have been met with detailed further enquiries along the line of those made in July 2022? …The Claimant could have made further enquiries: it could have pointed out that the Defendant had not said whether or not there was further documentation and could have said, as it did in July 2022, that details of the actual extent of [the employees] interests were needed. However, although that could have been done I am satisfied that in the context of the position at October 2021 those are not enquiries which it was necessary for a RWIND tenderer acting reasonably to make [(i.e. applying the above test, enquiries a Claimant should, rather than merely could, have made].

…The court has to have regard to the context of the procurement challenge with the emphasis on rapidity but also with the parties being required to have regard to the need to focus on key issues and to avoid descending into excessive detail. In the absence of any particular material to indicate that such was not the case the RWIND tenderer, and so the Claimant, was entitled to assume that there was no other relevant conflict of interest documentation in relation to [the employee] and also that the declaration that he had no relevant financial interest was correct. … so the Claimant is not to be taken to have the knowledge which it would have obtained if [a further] enquiry [testing the validity of that response or seeking further documents] had been made.”

Why Siemens new ‘TOEP’ procedural breach ground of claim was time-barred

The reasons why Siemens’ claims in respect of the employees' involvement in a pension scheme were not time-barred, can be usefully contrasted with its other new argument, which the court found was time barred. Siemens alleged that there was a potential breach of the Tender Opening Evaluation Procedure ("TOEP") drawn up to govern assessment of the rolling stock tenders. It was said that this document required record keeping of certain concerns, and it was argued that a record had not been kept of certain concerns expressed by the Head of Rolling Stock Engineering. Siemens had seen these captured in a Whatsapp message disclosed to them by HS2, but which did not appear in the relevant TOEP record.

This argument was time-barred because the authority had disclosed the Whatsapp message on 1 April 2022 and Siemens already had the TOEP so, the Court reasoned, it was “shortly after 1 April 2022 [that] the Claimant had the requisite knowledge in respect of the alleged breach”. Siemens’ argument was that time did not start running until September 2022 because it was at that point that it became aware of the precise capacity in which the maker of the Whatsapp message had been acting, and it was therefore at that point it had sufficient knowledge to put all the pieces together and run its argument.

The Court disagreed:

“I am satisfied that by shortly after 1st April 2022 the Claimant had the requisite knowledge in relation to this alleged breach. It knew that [the employee] had a significant role in the procurement exercise (indeed it had known of that from an early stage and had expressed concerns about his involvement in October 2021) and had become aware of the exchange in which he referred to concerns about the compliance of the joint venture's tender with the Defendant's requirements. The precise capacity in which [the employee] expressed those concerns and the stage at which he did so are less important than the general nature of his role and the fact of the expression of the concerns…[Alternatively] I am satisfied that the matters of which the Claimant had knowledge then would at least have caused a RWIND tenderer acting reasonably to seek clarification of the context in which the concerns were raised and the capacity in which [the employee] had been acting.”

This article was written by Lloyd Nail.

Key contact

Chris Jackson

Chris Jackson Partner

  • Infrastructure
  • Procurement and State Aid
  • Transport

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