REUTERS | Mike Blake

Public procurement case digest (February 2014)

In this month’s digest another automatic suspension is lifted, the courts consider the best value requirements when taking a service in-house and the Advocate General has again been considering the in-house exception.

Please feel free to submit a comment below or send us an Ask query 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.

 Another automatic suspension lifted (Patersons of Greenoakhill Ltd v South Lanarkshire Council [2014] ScotCS CSOH_21)

Applying principles now well established both north and south of the border, the Scottish Court of Session has granted an application by South Lanarkshire Council to lift the prohibition (in regulation 47(9) of the Public Contracts (Scotland) Regulations 2012) on the council entering into a contract following a challenge by an unsuccessful bidder. The court concluded that each of the challenges to the council’s procurement procedure were weak. Further, it held that the balance of convenience and public interest lay in lifting the prohibition, so that the council could enter into new contracts for the provision of municipal waste services when the existing contracts expire.

 Decision to bring co-mingling waste collection in-house did not breach best value requirements (In the matter of an application by Bryson Recycling Ltd for judicial review and in the matter of a decision by Banbridge District Council [2014] NIQB 9)

In a decision that will be of interest to public authorities wishing to take tendered services back in house, the High Court of Justice in Northern Ireland dismissed a judicial review application for the quashing of the decision of Banbridge District Council to adopt a co-mingled recyclables collection system run by its own staff. The challenge was brought by the contractor that had previously held the contract for the collection of dry recyclables. Its contract had run out and the council had decided not to re-tender, but instead to take the service in-house. The former contractor challenged the decision on several grounds, including that the council failed to comply with the provisions of the Local Government (Best Value) Act (Northern Ireland) 2002.

The court ruled that the council’s decision not to re-tender was not amenable to judicial review and that although the Best Value Act places on district councils a general duty to continuously improve the exercise of their functions and to consult on how they do so, it does not require consultation on operational decisions about how a local authority delivers these functions. Significant changes in strategy would have to be consulted on, but changes in how this strategy is achieved would not. The current case did not require consultation, in contrast to Nash v Barnet London Borough Council [2013] EWHC 1067.

 Private interests (even if they are charitable) rule out the in-house exception (Centro Hospitalar de Setúbal, EPE Serviço de Utilização Comum dos Hospitais (SUCH) v Eurest Portugal – Sociedade Europeia de Restaurantes Lda (Case C 574/120 (Advocate General’s opinion)))

Advocate General Mengozzi has handed down an opinion on a reference from a Portuguese court on the application of the in-house exception. In the Advocate General’s view, the in-house exception cannot apply where the tenderer to whom the contracting authority intends to award the contract directly (without carrying out a public procurement procedure under EU legislation) is a private entity whose members include, even to a minor extent, persons with private interests, including non-profit organisations pursuing charitable interests or solidarity objectives.

This was because the current state of the law excludes a contracting authority from exercising control similar to that which it exercises over its own departments, over a non-profit organisation whose members include (albeit to a minor extent) people who are not subject to public law but to private law and who hold private interests, no matter how laudable these may be.


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