On 4 May 2012, Transport Scotland announced that it intended to award a contract to run ferry services from the Scottish mainland to Orkney and Shetland to Serco Ltd. Shetland Line (1984) Limited ('Shetland Line'), challenged the award following a dispute about the 'standstill period'. The Scottish Government defended the action on the basis that Shetland Line did not provide the necessary notification that they intended to challenge the award. On 28 January 2014, Lord Woollman determined that Shetland Line had given notice as required.

The Facts

On 27 September 2011, the Scottish Government invited tenderers to bid for a six year contract to run ferry services between the Scottish mainland and Orkney and Shetland. Shetland Line tendered for the contract, but Transport Scotland awarded it to Serco Ltd on 4 May 2012.

As Monday 7 May was a bank holiday, on Shetland Line instructed solicitors on 8 May. They wrote to Transport Scotland on 9 May advising them that they had appointed solicitors with directions to instruct Counsel to challenge the procurement process on the basis that Transport Scotland had breached various parts of the Public Contracts (Scotland) Regulations 2006 ("the Regulations").

On 11 May, Shetland Line's solicitors sent two e-mails to Transport Scotland. The first e-mail contained a letter stating that if an undertaking not to award the contract to Serco Ltd. without giving Shetland Line seven days notice was not given by 14.30, Shetland Line would take 'immediate court action'. This specific undertaking was not provided by Transport Scotland. The second e-mail stated that due to time bar issues, Shetland Line would serve a summons that afternoon, which Shetland Line duly did.

The Notification Requirement

The Scottish Government contended that the two e-mails of 11 May did not constitute the necessary notice. Regulation 47(6)(a)(ii) of the Regulations requires a party bringing proceedings to inform the contracting authority of its intention to do so. The Scottish Ministers argued that the e-mails were merely conditional threats.

The Decision

Lord Woolman held that both e-mails sent on 11 May fulfilled the notification requirement. In an earlier hearing, Lord Malcolm had lifted the automatic standstill that was brought about by Shetland Line bringing proceedings and on 1 June 2012 the Scottish Ministers entered into a contract with Serco Ltd. As such, Lord Woollman found that Shetland Line's only claim against the Scottish Ministers was now in damages.

New Procurement Legislation

The 2006 Regulations have since been replaced by the Public Contract (Scotland) Regulations 2012, governing all procurements begun after 1 May 2012. Also, three new procurement directives were passed by the European Parliament on 15 January 2014, to be transposed into UK law within two years. The Public Sector Directive (Directive 2004/18/EC) and the Utilities Directive (Directive 2004/17/EC) have been replaced, and a directive on concessions has been introduced. These new Directives represent an ambitious procurement reform, which includes introducing new procedures, the introduction of full e-procurement, and a focus on strategic use of procurement. The full text of the new directives is available here.

© MacRoberts 2014

Disclaimer

The material contained in this article is of the nature of general comment only and does not give advice on any particular matter. Recipients should not act on the basis of the information in this e-update without taking appropriate professional advice upon their own particular circumstances.