In a decision dated 9 December 2009 – Sidey Limited v Clackmannanshire Council and Pyramid Joinery and Construction Limited [2005] CSOH 166, the Court of Session set-aside a contract which had been concluded between a local authority and a bidder following a public procurement process. This is the second time in 2009 a Scottish Court has set-aside such a contract.http://www.scotcourts.gov.uk/opinions/2009CSOH166.html

The Facts

By an administrative error in issuing notices, the contract award decision was not sent to all bidders and the authority failed to provide a standstill period prior to contract award. In addition errors were made in transposing the evaluation scores of bidders into the authority's records of the procurement.

The authority proceeded to award the contract to the bidder who, on the basis of erroneous scores, was in first position. On learning of the outcome bidder questions arose and the scores were checked. Legal proceedings were raised successfully on the basis of the actual evaluation scores, by the challenging bidder .

There are a number of interesting aspects to the case. As soon as it came to light, the contracting authority fully and transparently accepted it had made errors in applying the Public Contract (Scotland) Regulations (the Regulations), having not properly provided a stand-still period and not awarding the contract to the bidder who had properly submitted the most economically advantageous tender.

In addition the case involved a below-threshold procurement for which the authority chose to conduct a restricted procedure under the Regulations. Submissions were made in relation to the applicability of the Regulations and the obligations on the contracting authority in that situation. Regulation 8(21) of the Regulations sets out obligations on contracting authorities for certain below threshold procurements, including requirements in relation to advertising and following a procedure.

The Decision

Lord Menzies found that in all the circumstances the Regulations did apply for a number of reasons, including that the contracting authority had expressly indicated to bidders that it was conducting itself in accordance with the Regulations.

Lord Menzies heard submissions on the need for cross-border interest in order for Regulation 8(21) to be engaged but was not required to decide whether or not the general obligations under European law, including transparency and equal treatment, are only engaged in procurements where there is likely to be cross-border interest, or alternatively that they may be engaged even where there is no such interest.

It remains to be seen whether any changes will require to be made to the Scottish Procurement Directorate's guidance on below threshold procurements in light of the decision and/or the comments in relation to cross-border interest.

The decision is being appealed.

Commentary

In the meantime, points to note for both contracting authorities and bidders are that:-

  • where a contract is beneath threshold, the contracting authority ought to apply its mind to the question of whether or not it is proceeding on the basis of Regulation 8(21) applying (and if there is a cross-border interest); and
  • as with other aspects of procurement, it is generally sensible to make clear to bidders the basis on which a contracting authority is proceeding.

Separately, relevant to the setting-aside of contracts under the Regulations, bidders and contracting authorities should be aware that the Public Contracts and Utilities Contracts (Scotland) Amendment Regulations 2009 come into force on 20 December 2009. Under the amendments, statutory provision is made for the setting aside of contracts entered into following procurements in certain circumstances. Previously, courts were often reluctant to set-aside concluded contracts as this required relying on a line of case-law authorities based on the case of Alcatel. Once the courts can apply new statutory powers to set-aside contracts in certain circumstances - i.e. from next Monday, it may be that there will be an increasing number of actions requesting the courts to do just that.