It is not a failure to mitigate damages not to take advantage of the opportunity to stop the award of a contract in breach of procurement law. However, damages are recoverable only if the breach is “sufficiently serious”. These were the main holdings of the Supreme Court in NDA v ATK [2017] UKSC 34.

ATK brought a public procurement claim against NDA in connection with ATK’s unsuccessful bid for a contract. NDA failed wrongly to award the contract to the consortium to which ATK belonged, in breach of its obligations under the Public Procurement Regulations 2006 (“the 2006 Regulations”), which give effect in the UK to the Public Procurement Directive No 2004/18/EC (“the PP Directive”). Read more »

The Local Authorities (Standing Orders) (Wales) (Amendment) Regulations 2017, S.I. 2017/460 (W.98) amend the Local Authorities (Standing Orders) (Wales) Regulations 2006 (S.I. 2006/1275) (W. 121) to make provision about membership and the quorum for meetings of relevant authorities. “Relevant authorities” for the purpose of new Regulation 4A (1) of the 2006 Regulations, inserted by Regulation 3(3) include, in addition to county and county borough councils, joint planning boards and National Park authorities.

The Amendment Regulations apply to committees and sub-committees of relevant authorities by which a relevant function is discharged. A “relevant function” is a function exercisable in relation to an application under the Town and Country Planning Act 1990.

Regulation 2(3) of the 2017 Regulations inserts new Regulation 4A and new Schedule 2A in the 2006 Regulations, to require a relevant authority to include in their Standing Orders a requirement that the quorum for their meetings must include at least half of the committee’s members.

Standing orders must also restrict the appointment of substitute members to committees.

In R (Wylde) v Waverley Borough Council (2017) EWHC 466 (Admin) Dove J held that the claimants, who were not “economic operators” with an interest in securing the contract which was the subject of their claim, but who were a group of local councillors and residents who opposed a large scale development in Farnham Town Centre, lacked standing for a judicial review claim that the development contract had been varied, in order to decrease the sum payable by the developer to the Council for the land in question, contrary to the contracting authority’s procurement law duties.  Dove J applied the Court of Appeal decision in R (Chandler) v SoS for Children, Schools and Families (2010) LGR 1 and concluded that R (Gottlieb) v Winchester City Council (2015) EWHC 231 (Admin), the Winchester Silver Hill case, had been wrongly decided on the standing issue.  The claimants were unable to demonstrate any direct impact upon them from the variation not being regarded by the Council as a new contract and the Council’s decision that no competitive tendering exercise was required.  Any competition would be with respect to the same development that the claimants opposed.

The Council succeeded in Milton Keynes Borough Council v Viridor (2017) EWHC 239 (TCC) in obtaining rectification of a waste-recycling contract on the basis that payment terms offered in a tender had been unequivocally accepted but later the wrong tender document had been incorporated into the contract by common or unilateral mistake.

The Combined Authorities (Mayoral Elections) Order 2017, SI 2017/67, provides for the conduct of a Combined Authority Mayoral Election. The Order is modelled on the Local Authorities (Mayoral Elections) (England and Wales) Regulations 2007. An election is to be conducted in accordance with the Rules set out in Schedule 1 to the Order.

The Combined Authorities (Mayors) (Filling of Vacancies) Order 2017, SI 2017/69, provides (Article 3) for the filling of vacancies in the Office of Elected Mayor of a Combined Authority, (Article 4) for the date on which the vacancy occurs, (Article 5) for giving public notice of a vacancy, (Article 6) for by-elections, and (Article 7) for the term of office of the person filling the vacancy.

The Combined Authorities (Overview and Scrutiny Committees, Access to Information and Audit Committees) Order 2017 (SI 2017/68) makes provision for the membership and proceedings of Overview and Scrutiny Committees, and Audit Committees, of Combined Authorities. Part 1 makes general provision for overview and scrutiny provisions of a Combined Authority.  Article 3 makes provision for the membership of the Overview and Scrutiny Committee.  Article 4 makes provision for the appointment of members to an Overview and Scrutiny Committee and to a sub-committee of such a committee. Article 5 makes provision for the persons who may be Chair of an Overview and Scrutiny Committee.

R (Shasha) v Westminster City Council (2016) EWHC 3283 (Admin) concerned a grant of planning permission under delegated powers.  An issue was as to the giving of reasons. It was submitted that there was an obligation to provide reasons by virtue of Regulation 7 of the Openness of Local Government Bodies Regulations 2014 (“the 2014 Regulations”).

Part 3 of the 2014 Regulations (which contains Regulation 7) was made under Section 40(3) of the Local Audit and Accountability Act 2014. For the purposes of that Part a “relevant local government body” includes bodies which are local planning authorities.  Regulation 7(1) provides that a decision-making officer must produce a written record of any decision which falls within paragraph (2).  A “decision-making officer” is “an officer of a relevant local government body who makes a decision which falls within Regulation 7(2)”. As soon as reasonably practicable after the required record is made it must be made available to the public, together with any background papers, in accordance with the provisions of Regulation 8.  Read more »

The legislation on Combined Authorities (the Local Democracy, Economic Development and Construction Act 2009, as significantly amended by the Cities and Local Government Devolution Act 2016, requires that (1) there be “public” consultation and (2) that consultation be “in connection with the proposals” in a scheme, the consultation being a combined operation by the Combined Authority and the Secretary of State.

In R (Derbyshire County Council) v Barnsley, Doncaster, Rotherham and Sheffield Combined Authority (2016) EWHC 3355  (Admin), Ouseley J said, as regards the consultation being “public” (emphasis added):-

“38.    What the Act requires in my judgment is consultation, not with public authorities or bodies, but with the general public. The consultation must be with those who are judged to be affected to a degree which may make their views of significance to the Secretary of State’s decision. This is not a judgment with a sharp edge but involves degrees of impact on a variety of topics.

39. The question is whether the consultation was “public” in view of the geographical limit placed in reality on the areas targeted for information and response, …
40. To the extent that the Combined Authority limited the area targeted because that was the area which would constitute the new Combined Authority, and it therefore thought that it should not target residents beyond its area as a matter of law, it was wrong to do so. There is no such geographic limit. The words “public consultation” are very wide, and deliberately so. There is no purpose behind so artificial a limit in this Act.  There is no reason why a Combined Authority should not wish to find out the views of those outside the area who might be affected, now or in the future, or why the Secretary of State should not want to find out those views. …”

“43.    I also do not think that s113 requires a consultation exercise to be undertaken throughout the whole of a county council area simply because the whole county is to become a constituent member, or one of its district council is to become one, contrary to Mr Goudie’s submissions.  No such requirement is stipulated for, and again I judge that such a specific and large requirement, if intended, would have been made express by Parliament when amending the legislation to enable this sort of change to occur.”

“45.    As I have said, the words “public consultation” express a broad requirement.  This needs a judgment from the Secretary of State as to what areas or people require to be consulted for the purposes of s113, in relation to the effect of a particular scheme. The Combined Authority consultation, if it is to satisfy the Secretary of State that he need not undertake any further public consultation, needs to be based on a judgment as to the areas or people to be consulted, which is both lawful and sufficient to satisfy the Secretary of State that he need undertake no further public consultation.”

As regards consultation being “in connection with the proposals in the scheme”, Ouseley J found the Combined Authority’s consultation to have been flawed. The views of the public were not sought on the membership of the proposed expanded Sheffield City Region Combined Authority (“SCRCA”). The views of the public were not sought on whether Chesterfield Borough Council, in Derbyshire, should be a part of the Combined Authority.  Ouseley J said (emphasis added):-

“59.    … Fundamental to a consultation which would achieve the statutory purpose of s113 is that at least the major proposals in the scheme should be identified and be made the subject of consultation, with adequate, even if simplified, material provided to explain it so as to permit of sensible response. I do not think that a consultation is “in connection with the scheme”, merely because it asked questions which were connected to the proposals, if major issues were nonetheless omitted.

60. Chesterfield BC’s new role in the SCRCA is one of the fundamental proposals or changes to be wrought by the scheme. Although various questions in the questionnaire touched on Chesterfield BC becoming a constituent member, no question actually asked whether respondents supported that or not. Respondents via the questionnaire could attach additional evidence, and so express the view that that should not happen, but their mind was not directed to that issue.”

“69.    For a consultation to be lawful, if questions are asked, they must be ones which can be properly understood by the general body of consultees and can therefore generate answers, which the consulting body can properly understand in its decision-making process. …”

“72.    … As the questionnaire was the major vehicle for public response, it ought to cover the major proposals of public controversy in the scheme. Put another way, the public were not in substance consulted about a major proposal of the scheme.”

“74.    The Secretary of State does not know the views of the public on whether Chesterfield BC should be part of the SCRCA in the same way he does of the public views given in response to the questionnaire on other topics. In my judgment something has gone seriously wrong with the consultation process in this respect because the major vehicle for public response arbitrarily omitted one of the major controversial proposals in the scheme.”

Ouseley J also considered the fairness of the consultation.  He distinguished the Supreme Court decision in R (Moseley) v Haringey LBC (2014) UKSC 56, [2014] 1 WLR 3947 (“Moseley”).  With regard to there being no reference in the consultation to the proposed North Midlands Combined Authority, Ouseley J said:-

“88.    … there was no need for the North Midlands proposal to be referred to as an alternative.  I see nothing in Moseley which, on either of the two approaches it contains, goes beyond requiring the consulting body to explain alternatives or possible alternatives which it itself has discarded. There is no suggestion of any obligation on the consulting body to put forward ways in which a different objective could be achieved by another body. The North Midlands proposal is not one which the Combined Authority could bring about.  It is not an alternative to the proposed scheme for the Combined Authority.  It is not an alternative way of achieving the same objective for the Combined Authority; it is not even a different objective for it. It would provide for participation in a different regional body for those proposed for inclusion in the Combined Authority. It is not incumbent, whether under the heading of fairness, or for specific compliance with s113, for the possibility of Chesterfield BC joining that other authority to be raised for consideration as an alternative in this consultation, or even mentioned as a basis for rejecting the proposed scheme. That possible option is one upon which an opponent can encourage opposition, but that does not make it an alternative of the sort envisaged by Moseley, which the proponent of a scheme should identify and refer to in the consultation about another proposal.”

The chief claim to fame of the Italian municipality of Sulmona was that it was the birthplace of Ovid. Moving from Roman times to now, and from poetry to prose, and indigestible prose at that, it is now the subject of a Judgment of the ECJ on 8 December 2016 in Undis Servizi Srl v Comune di Sulmona, Case C-553/15.

The case concerns the award of a public contract, to Gogesa Spa, without any public tendering procedure, on the basis that it was an “in-house” award. That exemption is of course subject to two conditions, first that the local authority exercises over the contractor control similar to that which it exercises over its own departments, and, second, that the contractor carries out the “essential part of its activities” with the authority or authorities to which it belongs, the two Teckal conditions.

By decision of 30 September 2014, the municipal council of the Municipality of Sulmona awarded the contract for management of the integrated cycle of municipal waste to Cogesa, a wholly public capital company owned by several municipalities of the Regione Abruzzo (Abruzzo Region, Italy), including the Municipality of Sulmona. The latter holds 200 shares out of the 1,200 representing the company’s total share capital, that is to say, a holding of approximately 16.6% of that capital.

On 30 October 2014, although the contract for services with Cogesa had not yet been concluded, the local authorities with shares in Cogesa entered into an agreement to exercise jointly over that body a control similar to that exercised over their own departments (“the Agreement of 30 October 2014”).

By Integrated Environmental Authorisation No 9/11, the Abruzzo Region required Cogesa, in accordance with the principles of self-sufficiency, proximity and subsidiarity, to treat and recover the urban waste of certain municipalities of that region which were not shareholders of that company.

Undis, a company with an interest in the contract for services at issue, brought proceedings against the decision to award that contract for services and against the decision approving the inter-municipal agreement project. Undis claimed that the two conditions required for that contract of services to be awarded on an “in-house” basis had not been met.

More specifically, Undis claimed that the condition requiring the contracting authority to exercise over the successful tenderer, legally separate from that authority, control similar to that which it exercises over its own departments had not been met. It argues that the Municipality of Sulmona is a minority shareholder of Cogesa, that the Agreement of 30 October 2014 was entered into after the decision to award the contract for services at issue, and that that company’s statute confers on the company’s constituent bodies a degree of independence incompatible with the concept of ‘similar control’. Undis added that the condition requiring the successful tenderer to perform the essential part of its activities with the contracting authority or authorities had also not been met. According to Undis, Cogesa’s financial statements covering the years 2011 to 2013 indicated that only 50% of its overall activity had been performed with shareholder local authorities, given that activities carried out for the benefit of non-shareholder municipalities had to be included in that overall activity.

The Italian Court referred the following questions to the ECJ for a preliminary ruling:-

(1)      When the essential activity undertaken by the controlled body is assessed, must an activity imposed on it by a non-shareholder public administration and undertaken in favour of non-shareholder public bodies also be taken into account?

(2)      When the essential activity undertaken by the controlled body is assessed, must the contracts awarded to shareholder public bodies before the requirement of similar control became applicable also be taken into account?

On the first question, the ECJ said:-

“In accordance with the case-law of the Court, the main objective of the rules of EU law in the field of public contracts, namely the free movement of goods and services and the opening-up of undistorted competition in all the Member States, implies the obligation to apply the rules regarding the procedures for the award of public contracts provided for by the relevant directives, where a contracting authority, such as a local authority, is planning to enter into a written contract for pecuniary interest with a separate legal body, whether or not that body is itself a contracting authority (see, to that effect, judgments of 18 November 1999, Teckal, C‑107/98, EU:C:1999:562, paragraph 51, and of 11 January 2005, Stadt Halle and RPL Lochau, C‑26/03, EU:C:2005:5, paragraphs 44 and 47).

The Court has emphasised that any exception to the application of that obligation must be interpreted strictly (judgments of 11 January 2005, Stadt Halle and RPL Lochau, C‑26/03, EU:C:2005:5, paragraph 46, and of 8 May 2014, Datenlotsen Informationssysteme, C‑15/13, EU:C:2014:303, paragraph 23).

Given that a public authority has the possibility of performing the tasks conferred on it in the public interest by using its own administrative, technical and other resources, without being obliged to call on outside entities not forming part of its own departments (see, to that effect, judgment of 11 January 2005, Stadt Halle and RPL Lochau, C‑26/03, EU:C:2005:5, paragraph 48), the Court justified the recognition of the exception for so-called ‘in-house’ awards, by the existence, in such a case, of a specific internal link between the contracting authority and the contractor, even if the latter is an entirely separate legal entity (see, to that effect, judgment of 8 May 2014, Datenlotsen Informationssysteme, C‑15/13, EU:C:2014:303, paragraph 29). In such cases, it may be considered that the contracting authority, in actual fact, uses its own resources (see, to that effect, judgment of 8 May 2014, Datenlotsen Informationssysteme, C‑15/13, EU:C:2014:303, paragraph 25) and that the contractor is almost part of its internal departments.

That exception requires, in addition to the contracting authority exercising over the contractor a control similar to that which it exercises over its own departments, that that contractor performs the essential part of its activities for the benefit of the contracting authority or authorities which control it (see, to that effect, judgment of 18 November 1999, Teckal, C‑107/98, EU:C:1999:562, paragraph 50).

Thus, it is essential that the contractor’s activity be principally devoted to the controlling authority or authorities; the nature of any other activity may only be marginal. In order to determine whether that is the case, the court having jurisdiction must take into account all the facts of the case, both qualitative and quantitative. In that regard, the relevant turnover is the turnover that that contractor achieves pursuant to the award decisions taken by that or those controlling authorities (see, to that effect, judgments of 11 May 2006, Carbotermo and Consorzio Alisei, C‑340/04, EU:C:2006:308, paragraphs 63 and 65, and of 17 July 2008, Commission v Italy, C‑371/05, not published, EU:C:2008:410, paragraph 31).

The requirement that the person at issue performs the essential part of its activities with the controlling authority or authorities is designed to ensure that Directive 2004/18 remains applicable in the event that an undertaking controlled by one or more authorities is active in the market, and therefore liable to be in competition with other undertakings. An undertaking is not necessarily deprived of freedom of action merely because the decisions concerning it are controlled by the controlling municipal authority or authorities, if it can still carry out a large part of its economic activities with other operators. By contrast, where that undertaking’s services are mostly intended for that authority or those authorities alone, it seems justified that that undertaking should not be subject to the restrictions of Directive 2004/18, since they are in place to preserve a state of competition which, in that case, no longer has any raison d’être (see, by analogy, judgment of 11 May 2006, Carbotermo and Consorzio Alisei, C‑340/04, EU:C:2006:308, paragraphs 60 to 62).

It follows from that case-law that any activity of the contractor which is devoted to persons other than those which control it, namely persons without any relationship of control in regard to that entity, including public authorities, must be regarded as being carried out for the benefit of a third party.

Consequently, in the light of that case-law, in the dispute in the main proceedings, the local authorities which are not shareholders of Cogesa must be regarded as third parties. According to the information in the decision to refer, there is no control relationship between those local authorities and that company, with the result that the specific internal link between the contracting authority and the contractor, which according to the case-law of the Court justifies the exception for “in-house” awards, is lacking.

Therefore, in order to determine whether Cogesa performs the essential part of its activity with the local authorities which control it, the activity which that company devotes to non-shareholder local authorities must be regarded as being carried out for the benefit of third parties. It is for the referring court to examine whether that latter activity can be regarded as merely marginal in comparison with the activity of Cogesa with the controlling local authorities, in accordance with the Court’s case-law on so-called “in-house” awards.

That finding cannot be invalidated by the fact, mentioned by the referring court, that Cogesa’s activity carried out for the benefit of the non-shareholder local authorities is imposed by a public authority, which is also not a shareholder of that company. Although it imposed that activity upon Cogesa, it is apparent from the information in the decision to refer that that public authority is not a shareholder of that company and does not exercise any control over it within the meaning of the Court’s case-law on so-called ‘in-house’ awards. In the absence of any control by that public authority, the activity which it imposes on Cogesa must be regarded as an activity carried out for third parties.”

On the second question, the ECJ said:-

“By this question, the referring court asks in essence whether, for the purpose of determining whether the contractor performs the essential part of its activity for the shareholder local authorities which jointly exercise over it control similar to that which they exercise over their own departments, the activity of that contractor performed for those local authorities before such joint control took effect must also be taken into account.

In that regard, it must be noted that, according to the case-law of the Court, in order to assess the condition concerning the performance of the essential part of the activity, the national courts must take into account all the facts of the case, both qualitative and quantitative (see, to that effect, judgment of 11 May 2006, Carbotermo and Consorzio Alisei, C‑340/04, EU:C:2006:308, paragraphs 63 and 64).

In the present case, it follows from the information in the decision to refer that Cogesa had already carried out activities for the local authorities which control it prior to the conclusion of the Agreement of 30 October 2014. Those activities must certainly be taken into consideration when they are still in existence at the time of the award of a public contract. Furthermore, activities completed before 30 October 2014 may also be relevant for the purpose of assessing whether the condition concerning the performance of the essential part of the activity is met. Past activities may be indicative of the importance of the activity that Cogesa is planning to carry out for its shareholder local authorities after their similar control has taken effect.

In the light of the foregoing, for the purpose of determining whether the contractor carries out the essential part of its activity for the shareholder local authorities which jointly exercise over it control similar to that which they exercise over their own departments, account must be taken of all the circumstances of the case, which may include the activity carried out by that contractor for those local authorities before such joint control took effect.”

The ECJ ruled as follows:-

“In the context of the application of the Court’s case-law on direct awards of so-called “in-house” public contracts, in order to determine whether the contractor carries out the essential part of its activity for the contracting authority, including local authorities which are its controlling shareholders, an activity imposed on that contractor by a non-shareholder public authority for the benefit of local authorities which are also not shareholders of that contractor and do not exercise any control over it must not be taken into account, since that activity must be regarded as being carried out for third parties.

For the purpose of determining whether the contractor carries out the essential part of its activity for the shareholder local authorities which jointly exercise over it control similar to that which they exercise over their own departments, account must be taken of all the circumstances of the case, which may include activity carried out by that contractor for those local authorities before such joint control took