Council breaks purchasing laws

18 June 2008
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19 June 2008

Brent Council's participation in an insurance buying group could be disallowed after the high court ruled it broke procurement laws by abandoning its tender process for insurance services.

But both the council and the insurance group are set to appeal against this decision and an earlier ruling that could affect Brent's permission to join the group.

Last month the High Court awarded costs to insurance services provider Risk Management Partners (RMP), ruling Brent Council had breached contract regulations by joining the London Authorities' Mutual (LAML) and abandoning its tender process for insurance services.

The council acknowledged it did not follow procurement regulations, but said it was not required to because its relationship with the mutual satisfied the "Teckal exemption". This allows regulations to be "side-stepped" under certain circumstances (See News focus, page 14).

But the High Court judge said Brent "has not satisfied me that the first Teckal condition was or is satisfied". The case is believed to be the first where this exemption has been tested in the UK.

Jolyon Patten, partner at law firm Halliwells and representing RMP, said: "The judgement is a tremendous success and will be a relief to all those providing insurance services to local government." He added RMP would be happy to compete against LAML for the contract but needed a fair competition to do so.

Nathan Elvery, chair of LAML and director of finance and resources at the London Borough of Croydon, said: "This is a very disappointing judgement and once again we intend to appeal because it runs counter to the legal advice, both before the creation of LAML and more recently as local authorities joined the mutual."

A spokesman for the council also said it was "disappointed with the outcome".

SMjun2008

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