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Public procurement case digest (February 2013)


PLC Public Sector reports:

Our February 2013 case digest includes details of the decision in Montpellier Estates Ltd v Leeds City Council, where the High Court considered a challenge to the Council’s decision to abandon its competitive dialogue and instead proceed with its public sector comparator.

Please feel free to submit a comment below or contact us at: if you have any views on the cases covered or think that we have missed a case that should be brought to the attention of public procurement practitioners.

Council’s decision to end procurement and proceed with public sector comparator made in good faith and compliance with the procurement regime (Montpellier Estates Ltd v Leeds City Council [2013] EWHC 166 (QB))

On 6 February 2013, the High Court handed down a judgment dismissing actions by Montpellier Estates Ltd (MEL) against a competition held by Leeds City Council for the development of an arena in Leeds. The High Court:

  • Rejected all allegations of fraud and dishonesty and dismissed claims based on allegations that the Council had deceived MEL into entering and/or remaining in the procurement competition, despite the fact that it allegedly always intended to build the arena itself (as LCC ultimately decided to do).
  • Also rejected claims based on alleged breaches of the Public Contracts Regulations 2006. In particular, the High Court concluded that LCC had been entitled to consider whether it would be better value for money to build the arena itself and to decide, having considered the bidders’ commercial submissions, to terminate the competitive dialogue procedure on that basis. LCC did not breach the principles of transparency or fair treatment in its conduct of the procurement.
  • Found that a number of MEL’s claims were time-barred.

While on this occasion the Council was successful, this was because the Council was held to have acted in good faith.  The case provides an important warning to any contracting authority that if a procurement process was started or continued in the knowledge that no contract would be awarded, the result may well have been different.  Further, even though the Council has been vindicated in this instance, it has still been required to defend a complex claim.  The most important lesson to learn from the decision may be that where an in-house bid is being developed, a contracting authority must do everything it can to explain to bidders on what basis it is being developed and the implications this may have on the procurement process.  The downside of this approach is that it could have an adverse effect on the level of private sector interest the authority is able to generate.

Restricting the number of other undertakings that can be relied on to fulfil selection criteria not compatible with the procurement regime (Swm Costruzionin 2 SpA and D.I. Mannocchi Luigino v Provincia di Fermo, Case C94/12) (Advocate General’s opinion))

In an opinion handed down on the issue of whether Articles 47 and 48 of Directive 2004/18 preclude national legislation that prohibits reliance on the capacities of more than one auxiliary undertaking in order to fulfil the selection criteria of an economic operator, Advocate General Jääskinen considered that:

  • Both the case law and Directive 2004/18 expressly permit reliance on third party capacities in the context of tendering for public contracts.
  • One of the primary objectives of the EU public procurement rules is to attain the widest possible opening-up to competition.

As a result, any national legislation which imposes a quantitative restriction on the number of auxiliary undertakings tenderers are allowed to rely on cannot be compatible with Directive 2004/18.

General Court update: Appeal against Publications Office procurement rejected

The General Court rejected in its entirety an appeal from a tenderer against the rejection of its bid in a public procurement process organised by the Publications Office of the EU. The court held that the Publications Office had not committed any manifest errors of assessment in the evaluation of the tender and that the statement of reasons was adequate.

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