After what has been a relatively quiet month, our public procurement case law digest for June 2012 looks at cases on the defence derogation and automatic suspension.
Please feel free to submit a comment below or contact us at: feedback@practicallaw.com 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.
Defence derogation only applies to products designed and developed for military purposes (Insinööritoimisto InsTiimi Oy (Case C-615/10))
The ECJ has handed down a judgment on the scope of the defence derogation from the public procurement rules for objects which have a specific military purpose, but can also be used for largely identical technical applications in the civilian market. The ECJ found that that the defence derogation can apply to such items, but only if the items in question have been specifically designed and developed for specific military purposes, this being a matter for a national court to decide.
It should noted that since this case was commenced, the landscape for defence procurement has changed with the coming into force of Directive 2009/81 on 21 August 2011.
Ferry contract given the green light to launch (Shetland Line (1984) Ltd v Scottish Ministers [2012] ScotCS CSOH_99)
North of the border, the Court of Session has lifted the automatic suspension of a decision to award a contract for the provision of ferry services to the Northern Isles. The court considered that the unsuccessful bidder had, at best, put forward a weak prima facie case. One of its main arguments rested on the fact that the tender documents left it to the bidders to assess demand for services in developing their bid proposals. The court noted that the approach taken by the contracting authority in this case appeared to be permissible under the competitive dialogue procedure. The court also concluded that the balance of convenience lay in removing the automatic suspension and allowing the contract to be entered into. The services concerned are “lifeline services” and delay and uncertainty would have a detrimental impact on important interests, including the welfare of the Northern Isles communities.
The decision sees contracting authorities maintain their near 100% success rate in lifting automatic suspensions. For a discussion of the early case law on this issue and a consideration of whether the courts have been getting it right, see The suspense isn’t killing me … have the courts misunderstood automatic suspension?.
Change to PFI grant payments an “abuse of power” (R (Dudley Metropolitan Borough Council) v Secretary of State for Communities and Local Government [2012] EWHC 1729 (Admin))
In this slow news month, we finish with a case on public law principles in a public procurement context. Following the hefty slap on the wrist the government received for the way that Michael Gove went about the cancellation of the Building Schools for the Future programme, the High Court has again found a secretary of state guilty of an abuse of power for the way that a the government has altered its stance on a local authority project. In this case the court held that Eric Pickles had failed to consult with a local authority about a decision to alter the way that a PFI grant was paid to the authority. However, the court rejected several substantive grounds of challenge, in particular that there was a legitimate expectation that once a particular method of government finance had been agreed, this would bind successive governments. This means that this decision is likely to be nothing more than another slap on the wrist, with the probable outcome being that the same decision will be reached by the government following a consultation exercise.