The recent ruling of the Court of Session in respect of the
judicial review of a decision by a local authority to award a
contract following a competitive tender has shed some light on when
contracts valued below the procurement thresholds may be considered
as having cross border interest.
Sidey Limited, one of the bidders for Clackmannanshire
Council's 2009/2010 kitchen and bathroom replacement programme
contract, was unsuccessful at tender stage and raised proceedings
to set aside the Council's decision to award the contract on
the basis that the Council's evaluation of tenders had been in
error.
The petition for judicial review came about following the decision
of the Inner House of the Court of Session in 2010 which held that
any action challenging a tender process for a below-threshold
contract could only be competently brought as a judicial review
application since the 2006 Regulations did not apply to the
contract in question.
Sidey subsequently petitioned the Court for a declaration that the
Council acted in error of law and in breach of its general European
Community obligations in awarding the contract to a rival
firm.
In reaching its decision, the Court observed that in order for
Community obligations to be engaged in respect of a below-threshold
contract, there must be a cross-border interest in the contract.
The Court gave careful consideration to the attitude and actions of
the Council's employees responsible for placing the contract as
they would be familiar with the nature and scope of the
contract.
Notwithstanding that the tender documentation contained certain
features which might suggest some cross-border interest in the
contract, the Court found it persuasive that the Council's
employees did not consider the question of cross-border interest.
This failure to even consider that matter indicated to the Court
that there would almost certainly be a lack of cross-border
interest, particularly given the low value of the contract and the
nature of the labour intensive work at the heart of the contract.
In the absence of finding a cross-border interest, Community
obligations were not engaged and so there could be no breach by the
Council.
With very little judicial authority to date on what might
constitute "cross-border interest", this decision may
prove to be influential.
Commenting on the decision, Douglas McLachlan, an Associate in
Biggart Baillie LLP's Procurement Team said:
"The Court's reasoning that there was no cross border
interest in the contract because the Council's employees
didn't think to look for one seems circular, so the decision is
probably open to appeal."
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