Tag: European Court of Justice

Supreme Court overturns procurement case

Supreme Court logo

The Supreme Court yesterday (9th February 2011) delivered a landmark judgement in the first procurement case to reach the court, overturning previous decisions of the High Court and the Court of Appeal. Supreme Court logo

The economic downturn and the massive cuts in funding for local authorities which are now beginning to flow through will increasingly require councils to look for new and innovative ways to deliver services. In February 2007, the London Borough of Brent invited tenders in accordance with the Public Contracts Regulations 2006, (the Procurement Regulations), for the provision of insurance. The company Risk Management Partners (RMP) submitted a tender, but was informed on 7 March 2007 that Brent had decided to award the contract to London Authorities Mutual Limited (LAML) which had not taken part in the competition. LAML was formed by a group of local authorities to provide insurance to the member authorities. Brent became a member of, and helped to fund, LAML, a guaranteed indemnity mutual insurance company. There was an expected saving of 15 to 20 per cent in comparison with external insurance.

Continue reading “Supreme Court overturns procurement case”

You snooze, you lose!

If you have ever attempted to read the public procurement directives then you will know there are a number of regulations governing the advertising and award of public sector contracts. 

Contracts that fall below the EC procurement thresholds are not subject to these directives.  Below threshold contracts are subject to the rules and principles of the EC Treaty (including non-discrimination, equal treatment, transparency etc), and European Court of Justice case-law has indicated these contracts should be ‘sufficiently’ advertised.  However, aside from these rather ambiguous guidelines, there are no real rules regulating these contracts. 

OJEU tenders are required to follow specific regulations on timescales to allow suppliers adequate time to respond to tenders, not usually less than 22 days.  Below threshold tenders, however, often have much tighter deadlines.  To make this situation worse, below threshold contracts are found in literally hundreds of places, including websites, local and national newspapers, and trade journals, meaning that they cannot always be identified as soon as they are advertised.

It is therefore particularly important to respond to these contracts as soon as possible.  In fact, regardless of whether it is a below threshold or OJEU tender, it is advisable to make initial contact with the awarding authority as early as possible.  This can only increase the time you have to prepare your bid or Pre-Qualification Questionnaire.  It also means that the authority should keep you informed of any changes or further information relating to the tender.  Responding to the tender notice does not bind you to bidding for the contract, but if you miss the deadline, then you have missed your opportunity.  As the old saying goes “you snooze, you lose!”

European Commission investigates Glasgow Housing Association’s failure to openly tender

Glasgow Housing Association (GHA) is a private not-for-profit company created by the Scottish Government for the purpose of owning and managing Glasgow’s social housing stock. The housing stock, of approximately 81,000 houses and flats, was previously owned by the Glasgow City Council.

Following a poll of the Council’s tenants, the vast majority of their social housing was transferred to the ownership of the Glasgow Housing Association. The transfer was mired in controversy at the time, there was a strong No campaign backed by the Scottish Trades Union Congress (STUC) and many commentators doubted that there was a genuine desire on the part of the tenants to transfer to another landlord. However, a condition of having Glasgow’s housing debt written off was a transfer whole stock. This was initially going to be to one landlord, however, the Scottish Government intervened and introduced the concept of Second Stage Transfer (SST) to smaller Housing Associations over time.

Taroub Zahran, the Chief Executive of Glasgow Housing Association, resigned from her position at the end of Taroub Zahran Former Chief Executive - Glasgow Housing AssociationSeptember after what was believed to have been disagreements with the Scottish Government and Glasgow City Council over the slow speed of stock transfer.

A total of 322 tenants in Glasgow transferred to a new landlord at the end of July following the transfer of homes from Glasgow Housing Association (GHA) to two community-based housing associations under the Second Stage Transfer process.

Provanhall Housing Association took control of 195 homes, and another 127 houses in Hyndland were transferred to Glasgow West Housing Association.

Provanhall and Glasgow West join Shettleston, Ardenglen, Cassiltoun and Parkhead housing associations which took ownership of GHA homes in March this year.

A further 21 Local Housing Organisations who currently manage approximately 19,000 houses on behalf of GHA are still progressing through the various stages of the SST process. Ballots for a further four potential transfers are planned for this calendar year, with transfer potentially by the end of the financial year.

The European Commission, who will have begun their investigation following a complaint, has asked the UK Government to provide further information on how these contracts were awarded as it believes that they were public service contracts and as such should have been awarded on the basis of an open and transparent tendering process. If the European Commission is correct that no open tendering process was conducted, the UK will have failed to fulfill its obligations under the Public Procurement Directive 2004/18/EC.

The penalty for failing to fulfill such obligations is often simply that the relevant member state has to demonstrate that it has taken measures to rectify the situation and to prevent a future re-occurrence. Although sometimes, if it is not satisfied with the action that has been taken, the Commission will ask the European Court of Justice to impose a financial penalty.

In 2004 the Commission sought to impose daily fines against Germany for two long term (30 years) waste contracts that had not been correctly tendered.The fines sought were €31,680 per day for the City of Bockhorn contract and €126,720 per day for the City of Brunswick contract, which would be payable until the illegal contracts had been cancelled. That’s €58 million per year for 30 years!

The German government were in a bit of a sticky situation here, as it was the City authorities that had entered into the contracts and so the Government had no direct authority. Fortunately they managed to negotiate an agreement annulling the contracts.

%d bloggers like this: