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Procurement Law: The Trend Continues – Scottish Court Of Session Lifts Automatic Prohibition

Procurement Law: The Trend Continues – Scottish Court Of Session Lifts Automatic Prohibition

Inez Manson

In Patersons of Greenoakhill Limited v South Lanarkshire Council the Court of Session has handed down a judgement which indicates that the reluctance on the part of the UK courts to maintain automatic suspensions in procurement challenges is set to continue.

When Patersons’ tenders to provide waste receipt and recycling services to the Council were rejected in favour of the incumbent contractor, it took the matter to court alleging that the Council had breached The Public Contracts (Scotland) Regulations 2012 on a number of grounds.  The service of court proceedings automatically suspended the procurement process, meaning that the Council was prevented from entering into the new contracts.  The Council applied to the court for an interim order under regulation 48(1) to lift this prohibition.

Applications for the automatic prohibition to be lifted have been considered by the Scottish courts recently – notably in the Shetland Line ruling and again in Amey’s challenge against Transport Scotland.  In the Patersons case, Lord Tyre continued the now established trend and lifted the prohibition.

The tests

Case law has established that there are three factors to be balanced when considering a contracting authority’s request for a prohibition to be lifted.  These are: (i) the strength of the pursuer’s case; (ii) the balance of convenience; and (iii) the public interest.

The challenge

Lord Tyre’s judgement touches on all five grounds of the challenge, but does not consider them all in detail.  The two that perhaps best illustrate the strength of Patersons’ case are:

1. The Council accepted an offer that was unsustainable with regard to ‘Guaranteed Recycling Percentage’ (GRP).  The GRP is the minimum percentage of Council waste that the tenderer would undertake to recycle.  This was a key aspect of the quality criteria in the ITT.

The court did not accept that Patersons had made out a strong case that the Council committed a ‘manifest error’ by accepting the GRP proposals submitted by the successful bidder.  Lord Tyre noted that the ITT asked bidders to provide considerable detail on their proposals in order to satisfy the Council that they were sustainable.  Patersons’ challenge was based only on the opinion of its own managers. 

2. The Council (i) took into account irrelevant and non-transparent evaluation criteria; and (ii) failed to take relevant considerations into account.  The Council differentiated between Patersons’ tender and the successful tender on the basis that the latter had been supported by evidence (or at least better evidence).  Patersons complained that the ITT had not asked for evidence.  As such, they claimed the Council had applied an undisclosed evaluation criterion.  Patersons referred to indications in the ITT that if material other than that specifically requested was submitted, no consideration would be given to it.

Lord Tyre did not accept this argument either.  He pointed to a particular section of the ITT which stated that the highest scores would be awarded to proposals which were supported by ‘comprehensive and robust evidence’. 

The ruling

While Lord Tyre did not go as far as to say that Patersons had no reasonable prospect of success, he did consider that ‘each of the grounds of challenge invoked by [them] is weak.’

He then went on to assess the balance of convenience and public interest tests together.  Balancing the parties’ competing interests, the court took the view that damages would be an appropriate remedy for Patersons, and that the Council and the public required certainty that service provision would continue. The new contracts were intended to commence as soon as the incumbent’s existing contracts ended on 31 March 2014.  Lord Tyre noted that unless the prohibition was lifted, the Council would need to negotiate service provision from 1 April onwards, and that it was likely the incumbent’s current prices would be increased for this purpose. 

Interestingly, Lord Tyre also commented that if the prohibition was maintained, the Council would suffer reputational damage and would have difficulty satisfying government recycling objectives.  To our knowledge, this is the first time that the risk of reputational damage has been taken into account when weighing up the balance of convenience.  This factor, as well as the reference to government objectives, will likely be relied upon by contracting authorities in cases to come.  In turn, this could make it all the harder for aggrieved bidders to persuade the court to keep the automatic prohibition in place.

Inez Manson
Senior Solicitor

LChalmers