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Procurement Law: First Ineffectiveness Order Made In Scotland

Procurement Law: First Ineffectiveness Order Made In Scotland

The first ineffectiveness order in Scotland was made by Lord Tyre on 1 December 2015 in the case of Lightways (Contractors) Limited v Inverclyde Council.

Key facts

In 2013, the Council carried out a mini-competition to award a call-off contract under a Crown Commercial Services framework agreement for street lighting services. That contract was awarded to Amey Public Services LLP. In 2015, the Council carried out a second mini-competition for further work under the same framework. The LLP was also awarded that second contract.

The award of the second contract was challenged by Lightways (Contractors) Limited on the ground that the LLP was not a party to the framework. The Council argued that the contract ought to have been awarded to Amey OW Limited, which was a party to the framework and was within the same group of companies as LLP, and that this was an error which could simply be rectified by novation of the contract.

Lord Tyre did not agree that the error was one of simple mis-designation which could be remedied by substituting OW for LLP. OW and LLP were different entities with different employees, assets and businesses. OW had no business presence in Scotland. Accordingly, he was of the opinion that the Council had intended to award the contract to LLP on the mistaken basis that LLP was a party to the framework. 

Ineffectiveness order

Lord Tyre granted the ineffectiveness order on the basis that the Council had awarded the contract to LLP which was not a party to the framework and there had been no other valid procurement exercise. This is the first ground for ineffectiveness.

When an ineffectiveness order is made, it brings the contract to an early end. The judge will determine at a later date any financial penalty to be paid by the Council and any other order to address the consequences of the ineffectiveness order for LLP.

The Council has been granted leave to appeal to the Inner House of the Court of Session.

[2015] CSOH 169 http://www.scotcourts.gov.uk/search-judgments/judgment?id=e451fca6-8980-69d2-b500-ff0000d74aa7

Graeme Palmer
Director

LChalmers