The Court of Session has refused summary decree to dismiss a challenge to a call-off contract made under a Crown Commercial Services (“CCS”) Framework Agreement; in doing so making an “ineffectiveness order” invalidating the call-off contract. This judgment (Lightways (Contractors) Limited v Inverclyde Council ) is the first application of the "ineffectiveness" remedy in respect of an awarded contract, highlighting the importance of ensuring that contracts awarded under a framework agreement must reflect the terms of the framework agreement, particularly with regard to the identity of the suppliers appointed to the framework.
In 2015, Inverclyde Council held a mini-competition for street lighting services under a CCS Framework Agreement and awarded the contract to Amey Public Services LLP, a joint venture between Amey and North Lanarkshire Council. However, it was not the Amey JV (Amey Public Services LLP, “LLP”) that was party to the CCS framework agreement, but Amey OW Ltd (“OW”) a wholly-owned Amey Group company. The Council submitted that the same offer would have been made to OW as was made to LLP in error, an error that could be easily remedied by a novation of the contract.
The claimant (Lightways (Contractors) Limited) was not one of the suppliers appointed to the CCS framework, but sought to challenge the award on the basis that the award of the contract was an unlawful direct award made without advertisement or prior intimation in the OJEU.
It was accepted that the contract was awarded to LLP erroneously, in breach of reg 19(3) Public Contracts (Scotland) Regulations 2012, which states that where the contracting authority awards a specific contract based on a framework agreement, it must (1) comply with the procedures set out in the 2012 Regulations; and (2) apply those procedures only to the economic operators which are part to the framework agreement.
The court concluded that the Council had no defence to Lightways’ challenge based on breach of Regulation 19(3), therefore allowing for an “ineffectiveness order” in respect of the Council's decision to award a call-off contract to LLP. Three factors were fundamental to the court’s decision:
- The principle of proportionality was not applicable to the facts of this case. The principle is concerned with the imposition of onerous conditions or requirements by a public authority. It cannot be relied upon by a contracting authority which has failed to act within its statutory powers.
- It could not be said that it was the Council's intention to award the call off contract to OW, or that there was consensus between the Council and OW that OW should become a party to a contract (an intention on the part of the Council to award the contract to an entity entitled to be awarded it under the Framework Agreement could not be equated with an intention to award the contract to OW).
- The error made by the Council was not one of mis-designation; the Council proceeded on the mistaken basis that LLP was a company within the Amey group which was a party to the CCS Framework Agreement.