A recent public procurement ruling by the High Court in Belfast in the case of Henry Brothers (Magherafelt) Ltd. and Others v. Dept. of Education highlights the obligations on contracting authority to ensure an objective and fair evaluation of cost and the potential for framework agreements to be set aside where procurement rules are breached.
In the Henry Brothers case, construction firm Henry Brothers had been excluded from a £650 million Schools Modernisation Programme to be undertaken in the context of a four-year framework shared by eight separate contractors. Henry Brothers argued that the system devised by the Department to assess the most economically advantageous tenders was flawed insofar as the Department's financial assessment of tenders was by reference to fee percentages only, i.e. tenderers were not required to submit costs samples. They further claimed that the Department was wrong to assume that costs would be the same across the entire construction industry.
Delivering its judgment in October 2006, the Belfast High Court agreed that to rely solely on fee percentages was fundamentally flawed and held that an objective assessment of economic advantage necessitated some indication of price and/or cost. Accordingly, the Court held that the procedure adopted was contrary to the UK Public Contracts Regulations 2006.
The parties returned to Court in December to resolve the issue of remedies. The Department argued that the Court's jurisdiction was limited to an award of damages on the basis that under the UK Public Contracts Regulations, once a contract has been concluded, damages are the only available remedy. However, this argument was rejected by the Court on the grounds that a framework agreement did not constitute a public contract for the purposes of the Regulations. Accordingly, the Court ordered that the framework agreement should be set aside. It is likely that the parties will return to Court in 2009 in regard to remedies available to the plaintiff for specific contracts already entered into by the Department under the framework agreement.