Open season
Disappointed public contract tenderers will soon have their chances of legal redress expanded, says Andrew Harbourne
New regulations that apply to public contracts remedies will take effect from 20 December 2009. They will increase litigation against social landlords that breach the procurement rules. Similar changes in Germany have seen actions by disappointed tenderers leap from just a few to around thousand a year.
At present, before a contract is entered, suing to have the award of a tender halted requires an agreement to pay the public authority’s costs and damages if the action is lost. In future, such agreements will not be required and if the aggrieved tenderer serves proceedings within 30 days of being notified of the award to another contractor (or six months if there was no proper procurement process) the court can, in the case of serious breaches, stop the award process or even terminate a dated contract.
Especially where tenants are paying for the contract via service charges, social landlords may want to extend the proposed 11 to 16 day minimum standstill period between an award and the dating of contracts to more than 30 days. This would mean that when the contract is dated (assuming it is not an illegal direct award without advertisement) there is no risk of it being set aside and the duty to consult the tenants can be satisfied.
Where risk remains, contracts should say what happens if they are set aside. Otherwise, the social landlord could be without ownership of materials on a site exposed to the elements, as well as without a contract and with the prospect of paying penalties to the court and damages to the disappointed tenderer and to the terminated contractor.
Andrew Harbourne is a partner at Dawsons
a.harbourne@dawsonsllp.com
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Readers' comments (1)
Hunter | 21/08/2009 12:20 pm
I think you have the article title spot on, with regards to this EU Procurement Remedies directive.
Uncertainities will increase from the part of the "successful" bidders + subcontractors because while lawyers are in court trying to prove there was/wasn't any breach, everyone will be holding their breath! I also envisage some new terms and conditions will need to be drawn up.
Also, I wonder if the "succesful bidder" will be allowed to sue if it does turn out that the breach was severe enough to lead to termination of a signed & dated contract. Even despite Alcatel, all this litigation game is bound to last several months, during which that bidder would have presumably gone ahead and started honouring the contract!!
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