Regulating Government by Contract: Towards a Public Law Framework?
| DOI | http://doi.org/10.1111/1468-2230.00400 |
| Date | 01 July 2002 |
| Published date | 01 July 2002 |
REVIEW ARTICLE
Regulating Government by Contract: Towards a Public
Law Framework?
Peter Vincent-Jones*
A.C.L. Davies,Accountability: A Public Law Analysis of Government by
Contract, Oxford: Oxford University Press, 2001, xxii + 224 pp, hb £45.00.
Government contracting in the United Kingdom has traditionally been equated
with public procurement, contract being ‘the instrument by which the goods and
services required by government departments are procured from the private
sector’.1Despite concerns about the lack of effective accountability,2the
development of a separate body of government contract law has been widely
regarded as unnecessary.3Over the past twenty years ‘government by contract’ has
assumed new forms. Contractual mechanisms were deployed by the Conservatives
in the drive for efficiency within government and to reform the public sector and
local government. A fresh impetus was thereby given to public law debates.
Doubts were raised about the absence of a framework of legal principles governing
the growing role of contract in public administration.4A ‘public law contract’, with
its own principles regarding formation and dispute resolution, was argued to be
necessary to enhance government accountability.5In the mid-1990s, Treasury
pressure for the private financing of major public infrastructure projects gave a
new twist to traditional procurement, leading to renewed calls for government
policy and practice to be placed in a public law frame.6Far from diminishing
following Labour’s victory in the 1997 general election,7government by contract
has been vigorously extended across a wide range of economic and social relations
in new private-public partnership initiatives and in a variety of legislative
schemes.8
ßThe Modern Law Review Limited 2002 (MLR 65:4, July). Published by Blackwell Publishers,
108 Cowley Road, Oxford OX4 1JF and 350 Main Street, Malden, MA 02148, USA. 611
* Lancashire Law School, University of Central Lancashire.
1 C. Turpin, Government Procurement and Contracts (Harlow: Longman, 1989) ix.
2 H. Street, Governmental Liability: A Comparative Study (Cambridge: CUP, 1953); T. Daintith,
‘Regulation by Contract: The New Prerogative’ (1979) Current Legal Problems 41.
3 n 1 above, 114.
4 M. Freedland, ‘Government by Contract and Public Law’ [1994] Public Law 86.
5 I. Harden, The Contracting State (Buckingham: Open University Press, 1992).
6 M. Freedland, ‘Public Law and Private Finance – Placing the Private Finance Initiative in a Public
Law Frame’ [1998] Public Law 288.
7 The NHS internal market has survived with minor revisions. In local government, the spirit of CCT
lives on in more voluntary guise in the best value regime: see P. Vincent-Jones, ‘Central-Local
Relations under the Local Government Act 1999: A New Consensus?’ (2000) 63 Modern Law Review
84.
8 For recent adaptations of the contract mechanism see: Access to Justice Act 1999 (funding and
provision of legal services); School Standards and Framework Act 1998 (the control of behaviour
among school pupils); Youth Justice and Criminal Evidence Act 1999 (sentencing of young
offenders). For a discussion see P. Vincent-Jones, ‘Contractual Governance: Institutional and
Organisational Analysis’ (2000) 20 Oxford Journal of Legal Studies 317.
As the title implies, this book follows in the critical public law tradition. The
stated aim is to develop a ‘more specific understanding of the content that might be
given to a public law of contract in relation to one particular group of government
contracts, those ‘‘internal’’ to the government itself’ (p ix). In contrast to ‘external’
transactions involving procurement, contracting out, or private-public partnerships,
none of these arrangements is legally enforceable at private law. Such relationships
at central government level include ‘framework documents’ linking departments
and Next Steps agencies, and public service agreements (PSAs) between the
Treasury and spending departments. Examples in the public services field are
contracts between Purchasers and Providers of healthcare in the NHS, and
contracts between local authority clients and in-house teams that have bid
successfully against private sector competition for the right to provide a wide range
of manual and professional services. Davies’ focus on internal government
contracts as a category is distinctive. A further welcome feature (and one hitherto
almost completely absent in the work of public lawyers) is the reference to socio-
legal studies of contract undertaken in a number of sectors and from a variety of
disciplinary perspectives during the 1990s. The real originality of Davies’
contribution, however, lies in the use made of a detailed empirical study of
contracts in the NHS as a means both of identifying contractual issues and
problems, and suggesting normative solutions to them (p x).
Debates and controversies
Chapter 1 provides a useful summary of current legal debates and controversies
surrounding government by contract. The problem with constitutional law is that it
fails to control the government’s decision either to provide a service through
contract with a private body or to restructure its internal relationships along
contractual lines: ‘contractualization is a matter for the government . .. no
parliamentary authority is required’ (p 9). Where there is legislation on
government contracts, this amounts to only a partial constitutional law check.9
The result is limited opportunity for public debate about the merits of government
by contract ‘either as a policy or in specific instances’, and a general lack of
democratic legitimacy (p 11). Administrative law fails subsequently to provide an
adequate framework for the regulation of government contracts. There are two
main problems with the law regulating external government contracts. The first is
that the ultra vires doctrine unfairly places risks on the contractor: the government
can avoid liability by arguing that its discretion has been fettered by the contract,
and can escape a bad bargain by arguing lack of contractual capacity.10 Here
Davies follows established public law arguments as to how unfairness to the
contractor can be prevented. The capacity issue might be addressed by allowing the
court discretion whether or not to enforce the contract.11 In relation to fettering of
discretion, although the problem can partly be resolved through contractual price
9 The Deregulation and Contracting Out Act 1994 empowers the government by allowing ministers to
delegate discretions to the contracting partner in the same way that delegation to civil servants
operates under the Carltona doctrine, but without imposing any significant constraints; s 72 appears to
provide that in cases of contracting out the department continues to be legally responsible, although
the Act will not apply in all cases and the common law is uncertain (pp 23–24).
10 Cre
´dit Suisse vBorough of Allerdale [1997] QB 306 CA.
11 P. Craig, Administrative Law, 4th ed (London: Sweet and Maxwell, 1999) 150. In local government
the problem has been partly mitigated through the Local Government (Contracts) Act 1997.
The Modern Law Review [Vol. 65
612 ßThe Modern Law Review Limited 2002
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