Sidey Limited V. Clackmannanshire Council And Another

Pursuers: M. Ross; Macroberts LLP Solicitors

First Defenders: Clark QC, MacGregor; Brodies LLP Solicitors

Second Defenders: I.G. Mitchell QC, Lindhorst; Maxwell MacLaurin Solicitors

9 December 2009

Introduction

[1] In January 2009 Clackmannanshire Council ("the Council") issued an invitation to tender notice providing information about a proposed public works contract for the replacement of kitchens and bathrooms in council houses in Alloa and Tillicoultry. The notice was published on the Public Contracts Scotland Website. The approximate cost of the works was £2,500,000, and the type of procedure was specified as "restricted-purchaser will invite tenders from a selection of providers who have expressed interest in the contract." Thereafter a tender questionnaire was sent, with guidance notes, to selected contractors. The guidance notes stated that the Council aimed to obtain the most economically advantageous tender, and that they would allocate 30% of evaluation marks to price and 70% to quality.

[2] The pursuer and the second defender each submitted tenders to the Council in respect of this contract, as did two other contractors. On 19 June 2009, following an evaluation process, the Council decided to accept the second defender's tender. The Council did not inform the pursuer of its decision until 29 June 2009; before this date the pursuer had received no information about the result of the procurement process or the date on which such a result would be issued. On 29 June 2009 the pursuer's commercial sales manager spoke to an officer of the Council to ask whether a decision had been made, and was told that the Council had made its decision on 19 June 2009 and had sent notification by fax. It transpired that this had been sent to the wrong fax number. The Council notified the pursuer on 29 June 2009 that the pursuer had been unsuccessful and gave a summary of the pursuer's score, together with some comments explaining how it had been reached.

[3] On 2 July 2009 the Council wrote to the second defender to accept the second defender's offer. The Council did not inform the pursuer that it had done so. On 3 July 2009 the pursuer wrote to the first defender to appeal the award decision on the basis that the summary of the points awarded to the pursuer disclosed errors. On 6 July 2009 the Council's officer telephoned the pursuer's commercial sales director and advised him that the appeal had been received and that the Council had put a stop to the award of the contract pending investigation. On 7 July 2009 the Council wrote to the pursuer acknowledging receipt of the pursuer's appeal and confirming that progress on the contract had been halted. On 28 July 2009 a meeting took place between representatives of the pursuer and the Council, and on 11 August 2009 an officer of the Council wrote to the pursuer stating that he had investigated the position in relation to the award of the contract, that he considered that the points which the pursuer had raised had been substantiated, and as a result he proposed to recommend that the contract be awarded to the pursuer. At a meeting on 25 August officers of the Council explained to representatives of the pursuer how the Council's system for evaluation of tenders operated, that the review of the procurement process carried out by the Council following the pursuer's appeal had revealed and error in the transposition of the pursuer's score, and that the pursuer's tender was the most economically advantageous tender received by the Council.

[4] This action was raised on 18 September 2009. The pursuer seeks various remedies. For present purposes only two of these remedies are relevant. The first conclusion seeks an order in terms of Regulation 47(8)(b)(i) of the Public Contracts (Scotland) Regulations 2006 to set aside the Council's decision to award the contract to the second defender. The third conclusion seeks suspension and reduction of the purported contract entered into between the Council and the second defender, constituted by the second defender's tender and the letter from the Council to the second defender dated 2 July 2009. (The pursuer also has a conclusion for damages against the Council in the event that the contract between the Council and the second defender is not reduced and the pursuer is not awarded the contract.)

[5] I heard a debate which lasted five days on the issues of the competency of the pursuer's claim, the applicability of the 2006 Regulations to this contract, and whether any remedy other than damages was open to the pursuer. In the course of this debate the Council was represented but took no active part. The position adopted by the Council in its defences and its note of argument was broadly that it admitted that it committed breaches of the Public Contracts (Scotland) Regulations 2006, that it made errors when evaluating the score of the pursuer's tender and that in failing to award the contract to the pursuer the Council acted in error. The Council did not oppose the orders sought by the pursuer (with the exception of a conclusion for interdict and interim interdict, with which this opinion is not concerned).

Directives and regulations

[6] There were several passages of EU Directives and domestic regulations to which reference was made in the course of the debate. It is convenient to set out at this stage those passages to which most frequent reference was made (although the following excerpts are not exhaustive).

Directive 2004/18/EC

The preamble provides inter alia as follows:

"Whereas:

(2) The award of contracts concluded in the Member States on behalf of the State, regional or local authorities and other bodies governed by public law entities, is subject to the respect of the principles of the Treaty and in particular to the principle of freedom of movement of goods, the principle of freedom of establishment and the principle of freedom to provide services and to the principles deriving therefrom, such as the principle of equal treatment, the principle of non-discrimination, the principle of mutual recognition, the principle of proportionality and the principle of transparency. However, for public contracts about a certain value, it is advisable to draw up provisions of Community coordination of national procedures for the award of such contracts which are based on these principles so as to ensure the effects of them and to guarantee the opening-up of public procurement to competition. These coordinating provisions should therefore be interpreted in accordance with both the aforementioned rules and principles and other rules of the Treaty.

(46) Contracts should be awarded on the basis of objective criteria which ensure compliance with the principles of transparency, non-discrimination and equal treatment and which guarantee that tenders are assessed in conditions of effective competition. As a result, it is appropriate to allow the application of two award criteria only: 'the lowest price' and 'the most economically advantageous tender'.

To ensure compliance with the principle of equal treatment in the award of contracts, it is appropriate to lay down an obligation - established by case-law - to ensure the necessary transparency to enable all tenderers to be reasonably informed of the criteria and arrangements which will be applied to identify the most economically advantageous tender. It is therefore the responsibility of contracting authorities to indicate the criteria for the award of the contract and the relative weighting given to each of those criteria in sufficient time for tenderers to be aware of them when preparing their tenders. Contracting authorities may derogate from indicating the weighting of the criteria for the award in duly justified cases for which they must be able to give reasons, where the weighting cannot be established in advance, in particular on account of the complexity of the contract. In such cases, they must indicate the descending order of importance of the criteria.

Where the contracting authorities choose to award a contract to the most economically advantageous tender, they shall assess the tenders in order to determine which one offers the best value for money. In order to do this, they shall determine the economic and quality criteria which, taken as a whole, must make it possible to determine the most economically advantageous tender for the contracting authority. The determination of these criteria depends on the object of the contract since they must allow the level of performance offered by each tender to be assessed in light of the object of the contract, as defined in the technical specifications, and the value for money of each tender to be measured."

"Article 2

Principles of awarding contracts

Contracting authorities shall treat economic operators equally and non-discriminatorily and shall act in a transparent way.

Article 7
Threshold amounts for public contracts

This Directive shall apply to public contracts which are not excluded in accordance with the exceptions provided for in Articles 10 and 11 and Articles 12 to 18 and which have a value exclusive of value-added tax (VAT) estimated to be equal to or greater than the following thresholds:

(c) EUR 6 242 000 for public works contracts.

Article 28
Use of open, restricted and negotiated procedures and of competitive dialogue

In awarding their public contracts, contracting authorities shall apply the national procedures adjusted for the purposes of this Directive.

They shall award these public contracts by applying the open or restricted procedure. In the specific circumstances expressly provided for in Article 29, contracting authorities may award their public contracts by...