A UK court has cancelled a public contract following a legal challenge from a supplier for the first time.
In December the Court of Session in Scotland ordered Inverclyde Council to scrap a deal to provide street lighting services that had been awarded incorrectly, according to a recently published judgement.
The authority had held a mini-competition for street lighting services under a Crown Commercial Service framework agreement. The deal was awarded to Amey Public Services (APS). APS was not listed as a supplier on the framework, but another part of the same group, Amey OW (AOW), was.
Lightways (Contractors), which also was not listed as a supplier on the framework, challenged the decision as an illegal direct award.
Inverclyde argued it was a simple mistake, that it had intended to make the offer to AOW. This could be easily solved by novating the contract, and cancelling the deal would be out of proportion, as the intention had been to award the comtract to Amey in line with the framework agreement.
But the court ruled it had not been a simple error of “mis-designation”, but the belief that APS was the company party to the framework.
It declared the contract ineffective, deciding this would not be disproportionate, and left the council liable for costs.
Inverclyde has said it will appeal to decision, which means the contract will remain in place until the outcome.
Paul Henty, partner at law firm Charles Russell Speechlys, said: “The decision serves as a stark reminder of the need for compliance with the procurement rules on the part of both public buyers and suppliers. In this case, the award could possibly have been safeguarded from challenge by ensuring that the relevant group company signed up to the call off.”
The discretion for a court to scrap a contract was introduced by the adoption of the European Remedies Directive in 2009.