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Fri October 23 2020

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Challenges to public contracts under the European threshold.

11 May 10 Clackmannshire Council, advertised contract worth £2.5m for replacement of kitchens and bathrooms in council houses in Alloa and Tillicoultry.

Clackmannshire Council, advertised contract worth £2.5m for replacement of kitchens and bathrooms in council houses in Alloa and Tillicoultry. The value of the contract was below the threshold applicable at the time to the advertisement of public tenders.

Regulation 8(2) of the Public Contracts (Scotland) Regulations 2006 provides that where an authority wishes to advertise a contract below the threshold value, or which is otherwise exempt from the public procurement regulations, the authority must ensure that the contract is advertised in such a way as to facilitate open competition and ensure fairness and transparency.

The contract was published on the Public Contracts Scotland website, and informed tenderers that it was to be awarded under the restricted procedure. On 19 June 2009, Pyramid Joinery’s tender was accepted. Sidey was not, however, informed until 29 June during a conversation between its commercial sales manager and a council officer. The council explained that it had sent a fax to Sidey on 19 June, but it had been sent to the wrong number. The council wrote to Pyramid accepting their offer, but did not inform Sidey that they had done so.

On 3 July, Sidey wrote to the council seeking to appeal the decision, alleging that there had been errors in the evaluation of the tenders. The council suspended the contract process. In August, a council officer informed Sidey that it considered their complaint to be well founded, and that he was going to propose that they be awarded the contract. Following a review, the council found an error in the evaluation process which made Sidey’s tender the most economically advantageous.

In the present proceedings, Sidey sought an order that the council’s decision to award the contract to Pyramid be set aside, and an interim suspension of the contract which the council had entered into with Pyramid. Sidey sought remedies not only for alleged breaches of the Scottish Regulations but also irrationality and manifest error. They sought specific performance of an alleged statutory duty.

It was common ground that the contract value was below the threshold; therefore, as a matter of law, the provisions of the Directive and the Scottish Regulations did not apply. European law was clear that, in relation to below threshold public procurement contracts, principles of community law may (emphasis) be engaged and may, therefore, require to be observed by contracting authorities in the public procurement activities involving below threshold contracts.

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This raised a number of difficult questions of jurisprudence, and the court went on to consider its jurisdiction in such cases.

What was clear to the court was that when a party, in Scotland, wants to a challenge the acts and decisions of a contracting authority, they must do so by resorting to the domestic law procedures and remedies and not by relying on the procedures and remedies provided by the relevant European Directives and the Scottish Regulations. This will be so even when the contracting authority has elected voluntarily to follow, in relation to below threshold contracts, procedures for placing of the contract apparently either identical or similar to those provided for in those statutory instruments. The remedial and procedural regime prescribed by those Regulations and Directive have no effect in relation to such a voluntary adoption of contractual procedures and aggrieved parties must resort to the remedies and procedures provided by domestic law. In certain cases there might be a place for recourse to the ordinary law of contract but, in cases such as the present one, where the aggrieved person has not concluded a contract with the contracting authority, and the complaint is as to how the authority went about awarding the contract it, then recourse should be made to the supervisory jurisdiction of the court by way of a petition for judicial review, relying upon the well established principles of administrative law. This is what should have been done in this case and that proceeding by way of commercial action was incompetent.

Sidey v Clackmannshire Council, and Pyramid Joinery and Construction Ltd.; 5 March 2010

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