We reported in the last edition on the judgment in the Northern Ireland case McLaughlin and Harvey, in which a framework agreement was set aside following breaches of the Regulations around award criteria. While the judge acknowledged that, once a public contract has been entered into, the Regulations only permit the award of damages as a remedy, in McLaughlin he held that this restriction applied only to “public contracts” proper and not to framework agreements.
This precedent has been followed recently in another Northern Ireland case, Henry Bros, where a framework agreement was set aside following breaches of the Regulations. The court took the McLaughlin judgment slightly further, by distinguishing between “framework contracts” which establish all the terms binding the parties at call-off stage, and “framework agreements” in the strict sense, which leave certain of the terms to be established via a mini-competition at the call-off stage. Following guidance from the European Commission and the McLaughlin decision, the judge in Henry Bros decided that “framework agreements” which leave some of their terms undecided are not “public contracts” and so may be set aside even after they have been entered into.
Contracting authorities should once again note that there is therefore no guarantee that a framework agreement will not be set aside, even if it has been entered into. If the Henry Bros reasoning is followed, however, then it seems there is less likelihood of a court setting aside a framework if it contains all the terms that bind the parties. The judgment obviously raises questions around the extent to which “all” the terms must be contained within the framework, because in practice most frameworks leave at least some terms to be established further down the line; future case law will doubtless consider this question.
Unlike in the McLaughlin case, call-off contracts had actually already been awarded under the Henry Bros framework agreement. The court will decide how to deal with this issue at a later stage, although it is common ground that specific public contracts that have already been called off may not be set aside, and that the only remedy available if they were awarded in breach of the Regulations is the award of damages. The logical assumption would seem to be that, if the underlying framework agreement was illegally entered into without proper competition, then presumably any specific public contracts called off under it are similarly tainted. We will report further on this issue when the court has reached a judgment.