Liability for pre-contract working - Balancing the risks in technology procurements

Pre-contract working is commonplace in large scale technology procurements since the parties assume that potentially it may benefit (or certainly is unlikely to harm) either side. On the one hand, the customer perceives a benefit because pre-contract working is likely to ensure that milestones are met once the contract is signed and customers assume that a supplier who has been actively involved in its business before contract signature is likely to have a better understanding of its business. For a supplier too there are benefits; it obtains greater familiarity with the customer and the key personnel involved. It also means that the supplier may have the “inside track” in respect of any competitive procurement exercise that the customer may wish to hold. However, there are also potential risks to this approach for both parties. While pre-contract working may also give rise to risks for a public authority under applicable procurement legislation, the focus of this article is the risk of uncertainty facing both parties arising from the ability of the supplier to claim a quantum meruit for work completed.