Readers will probably be aware that certain categories of public contracts, or “Part B” services contracts, are not subject to the full rigour of procurement law. This is on the basis that they are for services which are less likely to be of interest to the wider European market. Notwithstanding this, however, established EU guidance and case law does still require contracting authorities to respect the general EU Treaty principles of equality of treatment, transparency and non-discrimination when awarding Part B services contracts. Contracting authorities and their legal advisers have up to now usually worked on the basis that, according to the strict letter of the Regulations, there is no requirement to hold a standstill period prior to awarding contracts for Part B services; see Regulation 5(2). However, this approach may well need to change in the light of this recent Northern Ireland case.
The case involved a tender by the Northern Ireland Police Service to renew a contract for various security services (ie, “Part B” services). The Police Service ran a tender, and decided to award the new contract to a new supplier, Resources Group, and made the award immediately without holding any standstill period. Even though the contract had already been entered into, the unsuccessful incumbent supplier, FSS, applied for, and got, an injunction preventing the implementation of the awarded contract.
FSS quoted Regulation 47(1) which requires contracting authorities to comply with “any enforceable community obligation in respect of a public contract”, and argued that this meant that the Regulations contemplated that public bodies were to be subject to wider obligations than just those listed out in the Regulations themselves, namely the general EC Treaty obligations of equality of treatment, transparency and non-discrimination. FSS argued that this contract was high value and had attracted cross-border interest (foreign suppliers had also submitted bids) and therefore that these general EC Treaty principles required use of a standstill period in order to give unsuccessful bidders an opportunity to challenge prior to award.
The court agreed, and granted the injunction preventing the implementation of the contract, notwithstanding that the Regulations state that once a contract has been awarded (as this one had) the only remedy a court may grant is damages. At this stage it is unclear whether the Police Service will appeal the decision, and whether the successful bidder, Resource Group, will be able to bring any kind of action for breach of contract or for compensation for its loss. We will report further in due course.
This was an exceptional case where there was a high value contract with demonstrable cross-border interest, and the case certainly doesn’t mean that all Part B services must only be awarded after a standstill period has been held. However it does demonstrate the importance of considering all Part B services contracts on their own merits, and designing the procurement process appropriately. In particular, if bids are received from cross-border suppliers (whether suppliers based in the EU or UK subsidiaries of the same), contracting authorities are well advised to include a standstill period. Indeed, rather than trying to assess the risks on each Part B services contract, the easiest approach may simply be to automatically adopt a standstill period for all Part B services contracts, regardless of cross-border interest.