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Turning out the lights for unsuccessful public contracts tenderers

Monday November 17th, 2014

Once again, the Scottish courts have demonstrated the difficulties faced by unsuccessful tenderers seeking to challenge the award of public contracts. The Street Lighting Supplies & Co case concerned a framework agreement for street lighting which was established by Scotland Excel on behalf of all 32 Scottish councils. An unsuccessful tenderer challenged the contract awards made in respect of two of the lots on the basis of: (1) alleged errors in the specifications; (2) the specification favouring a competitor; (3) the number of successful contractors; and (4) failure to provide reasons. In accordance with the procurement regulations, the framework agreements could not be entered into until the challenge was considered by the courts.

The court decided that the balance of convenience and the public interest clearly favoured lifting the automatic suspension of the framework agreements and allowing them to be concluded.  Factors which the court considered in reaching this conclusion were the significant financial savings which the public bodies could make under the new framework agreement, as well as the fact that the new framework agreement would allow the councils to meet operational needs and maintain effective street lighting. The unsuccessful tenderer’s case was considered to be weak.

This case is a further example of a growing body of Scottish case-law which very much favours contracting authorities rather than the unsuccessful bidders challenging contract award decisions.

Call-off concerns
Of interest are some of the comments made in relation to the alleged errors in the specifications.  The specification required “ultra heavy duty aluminium columns”. The unsuccessful tenderer had argued that, in practice, councils would require columns which were of a different specification and that to procure such columns of a different specification using a call-off contract would be to substantially amend the terms of the framework agreement and so would breach the regulations.  The extent to which terms in call-off contracts can vary from those in the framework agreement can be difficult to manage in practice. Although the court in this case did not find errors in the specification at framework agreement level, it did note that in certain circumstances, if the terms of a call-off contract varied from those in the framework agreement, such call-offs may be open to separate challenge.

This is a reminder to public bodies that use of a properly procured framework agreement is not risk-free; the use of the framework must be in accordance with the procurement regulations as well as the terms of the framework itself.

Jill is an associate with Harper Macleod LLP and can be contacted at jill.fryer@harpermacleod.co.uk

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Gov Opps’ training partner, PASS (Procurement Advice Support Service) runs procurement training courses for both the public and private sector, including Writing a Tender Specification, Ensuring Compliance with the New Tender Process and Preparing Perfect Tenders. For a full list of events, click HERE.

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