All’s fair under EU law
Make sure you don’t fall foul of EU laws in offering tenders for public works, says Philip Heath
After overcoming uncertainty and tough inter-party negotiations, a new coalition government has formed for the first time since World War II. But while the Conservatives and Liberal Democrats have successfully hammered out their policies in parliament, housing still has its own uncertainties to sort out: the issue of public procurement remains a thorn in the side of those on the ground involved in local government. This is particularly so for housing departments following a slap on the wrist from the European Commission this month.
A scolding
In 2008, the EC started proceedings against the UK over the award of a contract to a housing trust by York Council, relating to the residential development of a piece of land. The council had awarded a contract for the residential development of the land directly to the Joseph Roundtree Housing Trust. The contract failed to comply with the EU public procurement rules as an EU-wide tender process had not been undertaken and, therefore, certain companies could have been denied the possibility to bid for the contract.
The European Commission stated that it was one of a number of development agreements made in the UK which should have been procured in accordance with public procurement rules because they were public works or had characteristics of public works.
The legal proceedings against York Council were, thankfully, halted earlier this month, once the responsible authorities re-opened the contract to competition and made changes to ensure that these procedures matched EU rules. The development project will now be carried out in four phases on the basis of a commitment that the construction contract phase will be awarded following a separate tendering process complying with European law.
Lucky escape
While this was a lucky escape for York Council, there is still a degree of uncertainty among local authorities as to what constitutes a public works contract. Development agreements arise where a contracting authority seeks to enter into an arrangement for a mixed scheme which involves the development of land or buildings which may or may not be caught by the regulations. The key question for each agreement is whether the contract is one that would be caught by the EU regulations such as a works, services or works concession contract or whether it is outside - such as a land transfer.
In October 2009, the Office of Government Commerce published a procurement policy note on the application of the public procurement rules to development agreement which offers a list of characteristics to determine whether a development comprises a public works or works concession contract.
Looking to the future, it is clear that not all development contracts will be caught in the commission’s net, but housing departments need to step carefully and consider all the possible alternatives for procurement when considering such projects.
Philip Heath is a partner at Weightmans LLP
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