£800m build deal scrapped

24 November 2008
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24 November 2008

A High Court judge in Northern Ireland has ordered the cancellation of an £800 million construction framework agreement after buyers broke procurement rules.

It follows a legal challenge by builders McLaughlin & Harvey (M&H), who came sixth in a tender to find five suppliers for a four-year framework to provide construction services for urban regeneration, further education, arts and sports developments.

If the Department of Finance and Personnel (DFP) re-tenders the deal one expert estimated it could mean costs in the "hundreds of thousands" and long delays - although judge Mr Justice Deeny believed it will be "a matter of months rather than years".

He had already ruled the Central Procurement Directorate, who ran the tender process on behalf of DFP, broke the rules by not disclosing to suppliers the sub-criteria and weightings it used to evaluate the bids.

He said M&H were entitled to a "substantive remedy", because even a modest improvement to the score of their bid could have affected the outcome of the tender.

But he rejected M&H's request to be added to the framework because it would dilute competition between the other five suppliers. He also refused the DFP's suggestions that damages would be the most appropriate remedy, arguing not only would they be difficult to assess, but it would be a "a waste of money" to pay a supplier for construction and at the same time damages to M&H.

Rupert Choat, construction partner at CMS Cameron McKenna, said it was now "clear cut" that framework agreements had a "second-class status" compared to contracts, where the only remedy for a breach is damages.

Paul Donnelly, construction partner at solicitors Weightmans, said he did not think the judgment would put off suppliers mounting future challenges, since damages are still a remedy for contracts. Choat added the result would be a "real kick in the shins" for the other suppliers on the deal, who now face re-tendering for an opportunity they had already secured.

The DFP has six weeks to appeal against the decision. A spokesman for the department said it was currently "considering" the judgement and its implications, and has not yet decided whether it will re-tender the framework.

SMnov2008

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