Does A Contracting Authority Owe Procurement Duties Even When Regulations Don’t Apply? Ecolog International FZE v Secretary Of State For Defence

Can a contracting authority owe duties under procurement regulations to entities that have no rights under those regulations? Yes, said the High Court in England when it handed down judgement in the case of Ecolog International FZE v Secretary of State for Defence [2026] EWHC 2154 (TCC) last month.

Factual background

Ecolog concerned a tender exercise carried out by the Ministry of Defence (“MOD”) under the Defence and Security Public Contracts Regulations 2011 (the “2011 Regulations”). The 2011 Regulations contain the same principles of equal treatment, transparency and non-discrimination that are contained in the Public Contracts Regulations 2015 and their Scottish equivalent, the Public Contracts (Scotland) Regulations 2015. These principles are also broadly reflected in the Procurement Act 2023, which has now repealed and replaced the 2011 Regulations and the 2015 Regulations in England, but not for devolved authorities in Scotland.

The MOD had advertised the tender opportunity by a contract notice which stated that procurement would be conducted in accordance with the 2011 Regulations. The contract that it sought to procure was for “soft facilities management services” at a British base in Cyprus. A negotiated procedure was followed: interested parties were required to respond to a pre-qualification questionnaire (“PQQ”), utilised by the MOD to select suppliers to invite to tender. An invitation to negotiate (“ITN”) was then issued inviting certain bidders to tender. Two final bids were submitted, one by the claimant, Ecolog, and the other by the incumbent UK supplier, Sodexo Limited, with the contract ultimately awarded to Sodexo.

Ecolog sought explanation of the reasons for the scores that had been awarded and then brought proceedings, making a number of allegations including that: (1) Sodexo’s bid was abnormally low; (2) the MOD failed to neutralise Sodexo’s incumbency advantage; (3) bids were unfair and erroneously scored; and (4) the MOD acted unequally in further negotiations with Sodexo after rival bids had been submitted.

The 2011 Regulations required the contracting authority to treat tenderers from “eligible states” (i.e. EU Member States, Norway and Iceland), in addition to UK tenderers, equally. The 2015 Regulations in Scotland, and the 2023 Act, similarly extend rights to EU suppliers and specified others pursuant to the UK’s international trade deals. However, as a United Arab Emirates company, Ecolog did not qualify for express protection under the 2011 Regulations and could not bring a claim directly under them. This was common ground between the parties.

The question that the High Court was asked to consider was whether any obligations were nonetheless owed by the MOD to Ecolog in respect of the procurement process and, if so, the nature and extent of those obligations. Ecolog sought to argue that the MOD voluntarily took on contractual obligations to bidders, whether or not the 2011 Regulations applied, when it advertised the procurement opportunity and issued tender documentation and Ecolog responded by participating in the process. Their position was that this implied contract required the MOD to consider bids submitted in good faith, including an obligation to carry out the procurement fairly, equally and transparently (and/or in accordance with the terms of the ITN and certain of the 2011 Regulations). The MOD had made clear it would comply with the 2011 Regulations and any reservations in the tender documentation, read in context, did not negate that position.

The MOD’s position was that Ecolog’s attempt to rely on an implied contract was intended to avoid the reality that it was not owed any duties under the 2011 Regulations. The fact that the MOD had said the procurement would be conducted in accordance with the 2011 Regulations did not mean that it voluntarily extended the benefit of those regulations to those third country suppliers that had no rights under them. The MOD had also reserved the right to change the procurement process and reissue the ITN in the procurement documents, which meant it was not possible to establish the necessary common intention to imply a contract. The MOD’s alternative position was that, if an implied contract did exist, it went no further than to impose a duty to consider tender responses in good faith.

The High Court’s judgement

In its judgement, the High Court considered the key precedents of Blackpool and Fylde Aero Club v Blackpool BC [19990] 1 W.L.R 1195 (“Blackpool”) and JBW Group Ltd v Ministry of Justice [2012] EWCA Civ 8 (“JBW”).

In Blackpool, the Court of Appeal recognised that an implied contract governing the conduct of a procurement exercise can arise in certain circumstances. The Court held that, where a contracting authority makes an express request for a tender, and a bidder submits a tender by the deadline which conforms to the terms set by the contracting authority, that may create an implied contractual obligation on the contracting authority to at least consider that tender. The Court was careful to note that this was a limited duty and that contracts were not to be “lightly implied”. Subsequent case law has made clear that the Blackpool case did not create a general rule about the implication of contracts in procurement processes, and this will be dependent on the facts of each case (see for example Adferiad Recovery Ltd v Aneurin Bevan University Health Board [2021] EWHC 3049 (TCC)).

In the later case of JBW, the Court of Appeal considered an argument that, by offering a contract to tender, the Ministry of Justice had impliedly entered into a contract obliging it to treat all tenders equally, transparently and in accordance with the terms of the tender document. The Court of Appeal was prepared to recognise the Blackpool implied obligation to consider the tender, and that such obligation should be exercised in good faith, but rejected the argument that the implied contract went so far as to impose an obligation on the contracting authority to comply with procurement principles. The Court noted that a contracting authority could choose to comply with public procurement regulations and agree contractual terms reflecting that if it wished, but that this would need to be the clear common intention of the parties. In JBW, the Court considered that the Ministry of Justice had evidently been acting on the assumption that the relevant regulations did not apply, so no such common intention had arisen.

Ecolog pointed to Blackpool and JBW to support its argument that an implied contract had arisen. It argued that this case was if anything stronger than JBW and other cases where only a limited contract was implied, on the basis that those cases involved scenarios where procurement regulations did not (or were assumed not to) apply at all. This case, said Ecolog, was novel as the MOD was bound to comply with the procurement regulations in its conduct of the procurement, it just did not owe that duty to one of the tenderers.

The High Court rejected that argument. It found that the fact that some tenderers may enjoy the protection of procurement regulations, whilst others will not, is inherent in the fact that “economic operators” (i.e. the category of persons entitled to protection under the 2011 Regulations) are defined by reference to where their businesses are established. A statement in tender documentation that a contracting authority intends to comply with the law in conducting a procurement exercise is unlikely, of itself, to demonstrate that the authority intended to extend the protection of regulations to those who are not entitled to it.

The Court considered that the MOD could not competently extend the reach of the 2011 Regulations but accepted that, as a matter of contract law, it could invite tenders on the basis that it would deal with third-country tenderers as if the 2011 Regulations applied to them. However, it did not find that the MOD had done so in this case. Statements by the MOD about compliance with the 2011 Regulations did not go far enough to evidence a contractual intention, on the part of the MOD, to be bound to treat Ecolog as if it were protected by the 2011 Regulations.

The Court was prepared to find that the issue of the ITN to Ecolog constituted an implied offer to consider any tender that they submitted, which would encompass a duty to consider the tender in good faith (following Blackpool and JBW). Ecolog accepted this offer when it submitted its tender response. However, the MOD’s duty went no further than this. In particular, the MOD’s statutory duty to Sodexo to treat it equally to Ecolog did not extend to a duty to Ecolog to treat it equally to Sodexo.

What are the implications for contracting authorities?

As a rule, public procurement regulations, like any statutory duty, either apply or they do not. However, Ecolog is the latest in a line of cases which confirm that in certain circumstances an implied contract can arise imposing a duty on a contracting authority to consider a tender response in good faith. Contracting authorities should therefore be mindful that, even where regulations do not as a matter of law apply to a procurement exercise, choosing to behave as if they do may mean that they could still be subject to a duty towards bidders to consider any tender that is submitted (and to act in good faith in doing so).

Whilst Ecolog did not go beyond recognition of the well-established Blackpool and JBW duty to consider tenders in good faith, the High Court has left the door open for a potential future case which, with the right facts and circumstances, may persuade the courts to recognise a broader implied duty to treat tenderers to whom procurement regulations do not apply in accordance with those regulations (including the principles of equal treatment, transparency and non-discrimination).