Education Update - Procurement
Published: 20th January 2010
"Sustainable procurement" back on the agenda.
Coming soon to a procurement process near you? Although only released in Scotland to date, a new agenda for sustainable procurement may well make an appearance in the rest of the UK.
The Scottish Sustainable Procurement Action Plan details how the Scottish Government intends to organise sustainable procurement by helping organisations in the public sector deliver more sustainable conclusions in their procurement activities. The Action Plan provides for a three-tier approach to sustainable procurement: social (supporting fair trade and the third sector), economic (supporting businesses in Scotland) and environmental (recycling, waste avoidance and energy efficiency).
Details are at http://www.scotland.gov.uk/Publications/2009/10/sspap although we would strongly recommend taking legal advice before implementing any provisions of this kind as the over-arching EU procurement commitment to "non-discrimination" could easily be breached by this approach.
Voluntarily following a process requires caution
In Sidey Ltd v Clackmannanshire Council & Anor [2009] ScotCS CSOH 166, the Court of Session built on it's earlier decision in the DR Plumbing case in finding that contracts can be set aside for breach of the standstill without waiting for the new Remedies Directive.
In January 2009, Clackmannanshire Council (Council) issued an invitation to tender notice on the Public Contracts Scotland Website providing information about a proposed public works contract for the replacement of kitchens and bathrooms in its Council houses. The approximate cost of the works was stated to be £2,500,000 and the notice stated that the type of procedure to be used was:
"restricted-purchaser will invite tenders from a selection of providers who have expressed an interest in the contract."
A tender questionnaire was sent to selected contractors stating that the contract would be awarded to the contractor providing the most economically advantageous tender, with 30% of the marks being awarded to price and the remaining 70% to quality.
Four contractors submitted tenders, the pursuer, the second defender and two other parties. On 19 June 2009, following an evaluation process the Council decided to accept the second defender's tender.
On 19 June 2009, the Council sent a notification of its decision by fax to the pursuer, but to an incorrect fax number. On 29 June 2009, the pursuer contacted the Council and was informed of the Council's decision, why it had been unsuccessful and given a summary of its score. The letter communicating this information was headed:
"Dear sir, in accordance with the Public Contracts (Scotland) Regulations 2006 ..."
On 2 July 2009, the Council wrote to the second defendant and accepted its offer.
On 3 July 2009, the pursuer wrote to the Council to appeal the award decision on the basis that the summary of its score disclosed errors.
On 7 July 2009, the Council wrote to the pursuer acknowledging the pursuer's appeal and confirming that progress on the contract had been halted pending the outcome of the appeal.
On 11 August 2009, the Council informed the pursuer that its appeal had been substantiated and that the pursuer should have been awarded the contract. At a subsequent meeting between the Council and the pursuer, it was confirmed that the mistake in contract award was due to an error in the transposition of the pursuer's score.
On 18 September 2009, the pursuer issued court proceedings seeking various remedies, including:
- An order setting aside the Council's contract award decision set out in the terms of Regulation 47(8)(b)(i) of the Regulations.
- The suspension and reduction of the contract between the Council and the second defender constituted by the second defender's tender and the Council's letter dated 2 July 2009 accepting the second defender's offer.
The second defender argued:
- The Regulations did not apply to this contract, as the contract value was below the applicable threshold.
- There was no cross-border interest in this contract, therefore the EU Treaty principles did not apply.
- Regulation 47(9) meant that even if the Regulations did apply, damages were the only remedy available to the pursuer.
The Court of Session held that:
- The contract did fall below the applicable threshold, but there was nothing stopping the Council from following the Regulations in any event. By advertising the tender as using the restricted procedure and referring to the Regulations in correspondence, it had clearly done so.
- Whether or not there was a cross-border interest was not important. What mattered was that the Council had considered that there was. Even if there was no cross-border interest, it would still have been open to the Council to run the procurement in accordance with the Regulations.
- As a result of the Council's actions, the Regulations (including Regulation 47) did apply.
- The Council's decision to award the contract to the second defender should be set aside under Regulation 47(8).
- While the New Remedies Directive was not yet in force, the Court was under an obligation to interpret Regulation 47(9) purposively. Therefore, Regulation 47(9) should only apply where an aggrieved tenderer had had the opportunity to seek an effective remedy, that is, where the standstill provisions had been observed. In this case, due to the mistake sending the fax to the pursuer, the full standstill period had not been observed.
- The contract should subject to a "decree of reduction (but not suspension) in terms".
This case is interesting for a number of reasons:
- It highlights the importance of following the Regulations in full where a contracting authority decides to use them for an excluded contract. Authorities should not expect to be able to dip in and out of the Regulations, without making it completely clear to tenderers what approach they are taking to a procurement. This does not mean that authorities should never seek to use the Regulations for an excluded procurement, just that when they do, they must comply with all of the applicable obligations.
- Where contracting authorities undertake an excluded procurement and do not intend to follow the Regulations, they should be careful in their use of terminology to the Regulations, as if they follow a similar process and use similar terminology, it appears that the Regulations may be applied by the Courts.
- It highlights the importance of getting evaluation and debrief processes correct.
