Main Work Requirement

December 2nd, 2016 by James Goudie KC in Decision making and Contracts

Case C-298/15, UAB “Borta”, in which Advocate General Sharpston gave her Opinion to the CJEU on 1 December 2016, concerns a tender specification for the award of a public works contract for constructing a quay at the port of Klaipėda (Lithuania). The specification in question contains provisions governing tenders submitted by joint-activity partners. These require each partner to perform a proportion of the contract equivalent to its contribution to establishing the partnership’s professional experience, at the level of the award of the public contract.

The Lithuanian Court asked whether EU law precluded a provision, such as Article 24(5) of the Lithuanian law on public procurement, referred to in the specification, which required that, in the case of public works contracts, the tenderer should itself carry out the “main work”, as identified by the contracting authority.

Advocate General Sharpston said:-

“43.    According to settled case-law, Articles 49 and 56 TFEU preclude any national measure which, even though it is applicable without discrimination on grounds of nationality, is liable to prohibit, impede or render less attractive the exercise by nationals of the European Union of the freedom of establishment and the freedom to provide services guaranteed by those provisions.

  1. As regards public contracts and the freedom of establishment and the freedom to provide services, the European Union is concerned to ensure the widest possible participation by tenderers in a call for tenders, even where directives on public procurement are not applicable.

That is in the interest of the contracting authority itself, which will thus have greater choice as to the most advantageous tender which is most suitable for its needs.

One of the principal functions of the principle of the equal treatment of tenderers and the corollary obligation of transparency is thus to ensure the free movement of services and the opening-up of undistorted competition in all the Member States.

  1. Subcontracting contributes to those objectives as it is likely to encourage small and medium-sized undertakings to get involved in the public contracts procurement market and therefore to increase the number of potential candidates for the award of public contracts.
  2. In the present case, a provision such as Article 24(5) of the Law on public procurement clearly limits the possibility for undertakings established in other Member States to exercise their rights under Articles 49 and 56 TFEU, in so far as it precludes them, if they tender for the contract, from either subcontracting all or part of ‘the main work’ as defined by the contracting authority or proposing their own services as subcontractors for that part of the contract. As the Commission correctly submits, Article 24(5) of the Law on public procurement therefore restricts the freedom to provide services and the freedom of establishment.
  3. However, such a restriction may be justified in so far as it pursues a legitimate objective in the public interest, and to the extent that it complies with the principle of proportionality in that it is suitable for securing the attainment of that objective and does not go beyond what is necessary in order to attain it.”

“49.   A contracting authority may legitimately seek to ensure that a public work contract will be effectively and properly carried out.

That applies in particular where the works in question are deemed necessary for safeguarding national security, which, according to Article 4(2) TEU, is among the essential State functions that the European Union must respect.

Thus, a tenderer may be required to produce evidence that it actually has available to it the resources of the entities or undertakings on which it relies, which it does not itself own, and which are necessary for the performance of the contract.

Accordingly, the contracting authority is entitled to prohibit the use of subcontractors whose capacities could not be verified during the examination of tenders and selection of the contractor for the performance of essential parts of the contract.

  1. However, the restriction on the freedom to provide services and freedom of establishment that Article 24(5) of the Law on public procurement involves does not appear proportionate to that objective.
  2. First, that restriction applies even where the contracting authority is in fact in a position to verify the technical and economic capacity of subcontractors during the contract award procedure. An alternative to that restriction would (for example) have been to require the main contractor to identify subcontractors when submitting his tender and to demonstrate both that he will actually have available to him the resources of those subcontractors necessary for the performance of the contract and that those subcontractors are suitable for carrying out the tasks he intends to entrust to them.
  3. Second, Article 24(5) is also both too rigid and too vague to satisfy the proportionality test. Although contracting authorities appear to enjoy flexibility when defining, for each contract, what ‘the main work’ is, the restriction on subcontracting resulting from that provision is defined in particularly broad terms. It applies regardless of the subject matter of the public works contract and is binding upon contracting authorities when they conclude any type of public works contract, even when they may consider that there is no obvious reason for imposing such a restriction at all.
  4. As the Commission submits, the restriction on subcontracting in Article 24(5) of the Law on public procurement differs in that regard from Article 79(3) of Directive 2014/25. That provision merely enables a contracting authority, in particular, to require that certain critical tasks be performed directly by the tenderer itself. Contracting authorities may thus assess whether such a limitation is opportune, depending on the circumstances. It follows that, even if, as the Lithuanian Government submits, Article 24(5) of the Law on public procurement were to be regarded as transposing Article 79(3) of Directive 2014/25 into Lithuanian law, that transposition would be incorrect.”

“57.   The principles that I have set out above regarding subcontracting are equally relevant to joint-activity partners pooling their capacities.

  1. As I see it, a requirement such as that laid down in paragraph 4.3 of the tender specifications is liable to limit the flexibility of joint-activity partners. It not only affects how they agree to share responsibilities at the time of submitting their common tender but also precludes them from modifying each partner’s contribution to the works contract at a later stage if the contract is attributed to them.
  2. Thus, the requirement in paragraph 4.3 of the tender specifications is capable of having a dissuasive effect on economic operators established in other Member States. It will affect operators wishing to establish themselves in the Member State concerned through the establishment of a permanent consortium, possibly composed of national and foreign companies. It will also affect operators wishing to offer their services by joining consortia of that kind already in existence, in order to be able to participate more easily in public tendering procedures launched by the contracting authorities of that Member State.

Such specification therefore constitutes a restriction within the meaning of Articles 49 and 56 TFEU.”

“61.   I have already indicated that the objective of ensuring proper performance of a public contract can justify a (non-discriminatory) restriction to the freedom to provide services and freedom of establishment.

Partners acting under a joint-activity agreement may be able to satisfy collectively the condition(s) relating to professional capacity (including professional experience) stipulated by the contracting authority when they submit a tender. That however offers no guarantee that each partner will then actually be entrusted with those specific tasks for which its professional capacity has been verified prior to the award of that contract. Articles 49 and 56 TFEU do not therefore in principle preclude a contracting authority from requiring tenders submitted under joint-activity agreements to specify how the various tasks will be distributed among the partners, from verifying the capacity of each partner to carry out the tasks for which it will be responsible and from monitoring that, following the award of the contract, each partner duly performs those tasks for which its professional capacity has been demonstrated.

  1. However, paragraph 4.3 of the tender specifications at issue here is not suitable for ensuring attainment of that objective.
  2. That paragraph requires there to be an arithmetic correspondence between the contribution of each partner to the professional experience requirement in paragraph 3.2.1 and the ‘volume’ (or money value) of tasks effectively carried out by that partner when performing the contract.
  3. As the Commission correctly submits, that specification is unrelated to the specific works or services required to perform the public contract at issue properly. For example, each partner under a joint-activity agreement might be able to demonstrate that it has acquired experience in seaport quay construction or reconstruction over the last 5 years. Collectively, the partners thus fulfil the professional experience requirement in paragraph 3.2.1 of the tender specifications. However, each of them might specialise in a different aspect of seaport quay construction, such as dredging harbour basins, laying foundation works, building grooved steel walls, or supplying and installing seaport quay equipment. The requirement set out in paragraph 4.3 does not preclude an individual partner from carrying out specific tasks for which it actually has no such experience (although, in arithmetical terms, those tasks might correspond to its contribution in fulfilling the requirement in paragraph 3.2.1 of the tender specifications and thus comply with paragraph 4.3 thereof).
  4. I therefore consider that the objective of ensuring proper performance of the public contract cannot, in a situation such as that in the main proceedings, justify the restriction on freedom to provide services and freedom of establishment which results from paragraph 4.3 of the tender specifications. That is all the more the case since even tasks which represent a small proportion of the total value of the contract may be critical to its proper performance.”

“69.    Did the principles of equal treatment and of non-discrimination on grounds of nationality flowing from Articles 49 and 56 TFEU, and the consequent obligation of transparency, preclude the Seaport Authority from modifying clause 4.3 of the tender specifications as it did?

  1. The Court’s case-law interpreting Article 2 of Directive 2004/18 offers useful guidance to answer that question. According to that provision, ‘contracting authorities shall treat economic operators equally and non-discriminatorily, and shall act in a transparent way’. That provision is therefore based on the principles of equal treatment and non-discrimination and the obligation of transparency which arise from the TFEU.
  2. Thus, the Court has held that both the principle of equal treatment and the obligation of transparency which flows from it require the subject matter of each contract and the criteria governing its award to be clearly defined from the beginning of the award procedure.

Equal treatment requires tenderers to be afforded equality of opportunity when formulating their bids. That implies that the bids of all tenderers must be subject to the same conditions.

Furthermore, the obligation of transparency is intended to preclude any risk of favouritism or arbitrariness on the part of the contracting authority. It means that all the conditions and detailed rules of the award procedure must be drawn up in a clear, precise and unequivocal manner in the contract notice or specifications so that, first, all reasonably informed tenderers exercising ordinary care can understand their exact significance and interpret them in the same way and, second, the contracting authority is able to ascertain whether the bids submitted satisfy the criteria applying to the contract in question.

  1. Therefore, a contracting authority cannot, even by means of corrections, change the meaning of the essential contractual conditions as they were formulated in the specifications, upon which the economic operators concerned legitimately relied in taking the decision to prepare to submit a tender or, on the other hand, not to participate in the procurement procedure concerned.
  2. The same principles apply where a contract not governed by Directive 2004/18 has a clear cross-border interest. …”

“78.    In the circumstances of the present case, I … conclude that the prohibition on discrimination on the grounds of nationality and the obligation of transparency which flow from Articles 49 and 56 TFEU preclude changes of the tender specifications such as those at issue in the main proceedings, which introduce restrictions concerning the demonstration of professional capacity by joint-activity partners that were plainly not included in the original version of the specifications.

  1. That conclusion is not called into question by the fact that the changes took place before any tender was submitted or by the fact that the Seaport Authority both published the changes in the Official Journal of the European Union and extended the deadline for submitting tenders. As I have explained, the successive amendments of paragraph 4.3 of the tender specifications by the Seaport Authority entailed an essential modification of the conditions under which a tender could be submitted by joint‑activity partners, without objective justification.
  2. Finally, I would emphasise that the analysis I offer here flows from the specific situation in the main proceedings. It therefore does not in any way prejudge how the principles of equal treatment and non-discrimination and the obligation of transparency arising from the TFEU would apply in different circumstances.”

 

 

Equal and Non-Discriminatory Treatment

December 2nd, 2016 by James Goudie KC in Decision making and Contracts

The Advocate General’s Opinion on 1 December 2016 in Case C-296/15, Medisanus v Murska Sobota, restates the requirement for contracting authorities to treat economic operators equally and non-discriminatorily. The Advocate General said:-

“76.    Under Article 2 of Directive 2004/18, the contracting authorities are required to treat economic operators equally and non-discriminatorily.

  1. According to the Court’s case-law, in application of the principle of equal treatment as between tenderers, the aim of which is to promote the development of healthy and effective competition between undertakings taking part in a public procurement procedure, all tenderers must be afforded equality of opportunity when formulating their tenders, which therefore implies that the tenders of all competitors must be subject to the same conditions.
  2. Strictly speaking, the national origin requirement distinguishes not between economic operators but between products, by excluding medicinal products not manufactured on the basis of Slovenian plasma.
  3. Nonetheless, it has consistently been held that the principle of equal treatment, of which Article 2 of that directive is a particular expression, prohibits not only overt discrimination based on nationality but also all covert forms of discrimination which, by applying other distinguishing criteria, in fact achieve the same result.
  4. A clause requiring that a medicinal product be manufactured on the basis of plasma collected in the national territory is liable to operate mainly to the detriment of economic operators of other Member States, since they will find it more difficult to have access to plasma collected in the national territory than the economic operators of the Member State concerned.
  5. In the circumstances of the main proceedings, the discriminatory effects of that national origin requirement are all the more apparent because the ZTM, a Slovenian body, is in practice the only economic operator capable of supplying medicinal products manufactured on the basis of Slovenian plasma, which precludes all operators in other Member States.
  6. I conclude from the foregoing that Article 2 of Directive 2004/18 of Directive 2004/18 must be interpreted as meaning that it precludes the national origin requirement.”

The national origin requirement was also contrary to Article 34 TFEU, as was a priority supply requirement.

The Advocate General also stated that the Hamburg Waste exemption was not applicable.  The Advocate General said:-

“72.    That judgment concerned a contract concluded for a period of 20 years between the City of Hamburg (Germany) and four Landkreise, for the purpose of establishing long-term cooperation between those local authorities for reciprocal treatment of waste. Thus, that contract, which had been concluded without launching a call for tenders, formed both the basis and the legal framework for the future construction and operation of facility intended to perform a public service, namely thermal incineration of waste. The Court held that such a contract was not required to be the subject matter of a prior call for tenders.

  1. Admittedly, the circumstances of the main proceedings bear certain resemblances to those of the judgment in Commission v Germany, and in particular the public nature of the contracting parties, namely Murska Sobota general hospital and the ZTM. However, in that judgment it was not the Court’s intention to exclude all contracts between public entities from the rules applicable to public contracts, but only those forming both the basis and the legal framework for long-term co-operation with the intention of carrying out a public service. That is not the case of the contract at issue in the main proceedings, the object of which is limited to the occasional supply of medicinal products manufactured on the basis of human plasma.
  2. Consequently, I consider that the contract at issue in the main proceedings does not come within the exception established by the Court in the judgment in Commission v Germany.”

 

 

 

 

Legitimate expectation

October 25th, 2016 by admin in Decision making and Contracts

In Infinis Energy Holdings Ltd v HM Treasury (2016) EWCA Civ 1030 the Court of Appeal held that the decision to remove the exemption for renewable source energy from the climate change legacy did not breach the EU principles of legitimate expectation and proportionality. In order to give rise to a legitimate expectation there had to be an undertaking, or an assurance that was precise, unconditional, consistent and lawful, not a vague indication, and the expectation had to be reasonable.

 

Management & Investment of Pension Funds

September 26th, 2016 by James Goudie KC in Decision making and Contracts

The Local Government Pension Scheme (Management and Investment of Funds) Regulations 2016, S.I. 2016/946, made 21 September 2016, coming into force 1 November 2016, make provision, by Regulations 2 & 3, that restrictions imposed by the Regulations bind authorities which have the General Power of Competence (under Section 1 of the Localism Act 2011 or Section 5A (1) of the Fire and Rescue Services Act 2004) in the exercise of that power.

 

 

Abandoning Statutory Rights

July 20th, 2016 by James Goudie KC in Decision making and Contracts

With respect to contracting out of or waiving statutory rights, the Privy Council per Lord Clarke, enunciated the following principles in Bahamas Oil Refining Co v The Owners of the Cape Bari [2016] UKPC 20:-

  1. Someone may by their conduct contract out of or waive a provision of an Act of Parliament intended for their benefit and exclude a legal right: paragraph 23;
  2. For a party to be held to have abandoned or contracted out of valuable rights arising by operation of law the contractual provision relied upon must make it clear that this is what was intended: paragraph 31;
  3. This principle applies in very many contexts: paragraph 32;
  4. A Court is unlikely to be satisfied that valuable rights arising by operation of law have been abandoned unless the terms of the contract make it sufficiently clear that that was intended: paragraph 33;
  5. The more valuable the right, the clearer the language will need to be: ibid.

 

Equal treatment

July 18th, 2016 by James Goudie KC in Decision making and Contracts

In Gallaher Group Limited v Competition and Markets Authority (2016) EWCA Civ 719 the Court of Appeal considered the application of the EU and common law principle of equal treatment.  Lord Dyson MR said, at paragraph 39: “In my view, the fact that one party (A) has made a request for more favourable treatment and another party (B) has not done so will rarely amount to a good reason for not treating them as being in a relevantly comparable position for the purposes of equal treatment if they are in fact otherwise in relevantly comparable positions”.

On the matter of objective justification for not replicating in favour of the appellants the approach adopted in relation to another because that approach had been mistaken, the question (paragraph 53) is whether the difference in treatment is “fair in all the circumstances”. “The fact that a decision by a public authority is mistaken is not a “trump card” which will always carry the day so as to permit the authority not to replicate the mistake regardless of the circumstances. …  the question is whether there has been unfairness on the part of the authority having regard to all the circumstances. The fact that there has been a mistake may be an important circumstance. It may be decisive. It all depends.”

Lord Dyson continued, at paragraph 54: “The law relating to legitimate expectation is of some assistance here. It is well established that a legitimate expectation cannot be relied on to require a public authority to act in breach of its statutory duty or to do something ultra vires. … But the courts have considered whether a public authority may defeat a legitimate expectation where the expectation has been created by mistake. In R v Department for Education and Employment, ex p Begbie [2000] 1 WLR 1115, 1127B-D, Peter Gibson LJ said that, where the court is satisfied that a mistake has been made, the court should be slow to fix the public authority permanently with the consequences of a mistake. But importantly, he went on to say that the question of whether the authority should be permitted to resile from a mistaken statement depends on whether that would give rise to unfairness amounting to an abuse of power. The law relating to legitimate expectation is grounded in fairness.” Longmore and Lloyd Jones LJJ agreed.

 

Public contract award procedures

July 15th, 2016 by James Goudie KC in Decision making and Contracts

In Case C-6/15, TNS Dimarso NV v Vlaams Gewest, Judgment on Bastille Day 2016, the ECJ has held that Article 53(2) of Directive 2004/18/EC on the coordination of procedures for the award of public works contracts, public supply contracts and public service contracts, read in the light of the principle of equal treatment and of the consequent obligation of transparency, must be interpreted as meaning that, in the case of a public service contract to be awarded pursuant to the criterion of the most economically advantageous tender in the opinion of the contracting authority, that authority is not required to bring to the attention of potential tenderers, in the contract notice or the tender specifications relating to the contract at issue, the method of evaluation used by the contracting authority in order to specifically evaluate and rank the tenders. However, that method may not have the effect of altering the award criteria and their relative weighting.

The ECJ stated the principles as follows:-

“… it should be noted that where the contracting authority decides to award a contract to the most economically advantageous tender, under Article 53(2) of Directive 2004/18, it must specify in the contract notice or the tender specification the relative weighting it gives to each of the award criteria chosen in order to determine the most economically advantageous tender. That weighting may be expressed by providing for a range with an appropriate maximum spread. Where, in the opinion of the contracting authority, weighting is not possible for demonstrable reasons, the contracting authority shall indicate in the contract notice or tender specifications or, in the case of a competitive dialogue, in the descriptive document, the criteria in descending order of importance.

As stated in recital 46 of Directive 2004/18, the purpose of those requirements is to enable all tenderers to be reasonably informed of the criteria and arrangements which will be applied to identify the most economically advantageous tender. In addition, they reflect the duty of the contracting authorities under Article 2 of the directive to treat economic operators equally and non-discriminatorily and to act in a transparent way.

According to settled case-law, the principle of equal treatment and the obligation of transparency entail, in particular, that tenderers must be in a position of equality both when they formulate their tenders and when those tenders are being assessed by the contracting authority …

Thus, the Court has held that the subject matter of each contract and the criteria governing its award must be clearly defined from the beginning of the award procedure … and that a contracting authority cannot apply, by way of award criteria, sub-criteria which it has not previously brought to the tenderers’ attention … Similarly, the contracting authority must interpret the award criteria in the same way throughout the procedure …

Those requirements apply, in principle, mutatis mutandis to contracting authorities’ obligation to indicate, in the contract notice or the tender specifications, the ‘relative weighting’ of each of the award criteria. Thus, the Court has held that a contracting authority may not, in principle, apply weighting rules which it has not previously brought to the tenderers’ attention …

In particular, the relative weighting of each of the award criteria must, subject to the third subparagraph of Article 53(2) of Directive 2004/18, be clearly defined from the beginning of the award procedure, thus enabling tenderers to establish objectively the actual importance given to an award criterion relative to another during their subsequent evaluation by the contracting authority. Similarly, the relative weighting of each of the award criteria cannot be changed throughout the procedure.

Nonetheless, the Court has accepted that it is possible for a contracting authority to determine, after expiry of the time limit for submitting tenders, weighting factors for the sub-criteria which correspond in essence to the criteria previously brought to the tenderers’ attention, provided that three conditions are met, namely that that subsequent determination, first, does not alter the criteria for the award of the contract set out in the tender specifications or contract notice; secondly, does not contain elements which, if they had been known at the time the tenders were prepared, could have affected their preparation; and, thirdly, was not adopted on the basis of matters likely to give rise to discrimination against one of the tenderers …

However, neither Article 53(2) of Directive 2004/18 nor any other provision thereof lays down an obligation on the contracting authority to bring to the attention of potential tenderers, by publication in the contract notice or in the tender specifications, the method of evaluation applied by the contracting authority in order to effectively evaluate and assess the tenders in the light of the award criteria of the contract and of their relative weighting established in advance in the documentation relating to the contract in question.

Nor is such a general obligation apparent from the case-law of the Court.

The Court has held that an evaluation committee must be able to have some leeway in carrying out its task and, thus, it may, without amending the contract award criteria set out in the tender specifications or the contract notice, structure its own work of examining and analysing the submitted tenders …

That leeway is also justified by practical considerations. The contracting authority must be able to adapt the method of evaluation that it will apply in order to assess and rank the tenders in accordance with the circumstances of the case.

In accordance with the principles governing the award of contracts provided for in Article 2 of Directive 2004/18 and in order to avoid any risk of favouritism, the method of evaluation applied by the contracting authority in order to specifically evaluate and rank the tenders cannot, in principle, be determined after the opening of the tenders by the contracting authority. However, in the event that the determination of that method is not possible for demonstrable reasons before the opening of the tenders … the contracting authority cannot be criticised for having established it only after that authority, or its evaluation committee, reviewed the content of the tenders.

In any event, pursuant to the principles governing the award of contracts … the determination by the contracting authority of the method of evaluation after the publication of the contract notice or the tender specifications cannot have the effect of altering the award criteria or their relative weighting.”

 

Contracts

July 4th, 2016 by James Goudie KC in Decision making and Contracts

There have been a number of important recent Court of Appeal decisions on the law of contract, including in relation to the following propositions: (1) if a party to an agreement promises to make extra payment in order to secure the other party’s promise to perform his existing contractual obligation to provide services and, as a result, secures a benefit, then the benefit is capable of constituting consideration for the promise: MWB Business Exchange Centres v Rock Advertising (2016) EWCA Civ 553 (“MWB”); (2) the fact that a contract contains a clause requiring any amendment to be in writing and signed by both parties does not prevent them from later making a new contract varying the contract by an oral agreement, or by conduct: Globe Motors v TRW Lucas Varity Electric Steering [2016] EWCA Civ 396, MWB; (3) a contract may be concluded where there is acceptance by the claimant by conduct of a written agreement signed by the defendant stated to be binding only after signature by the claimant: Reveille Independent LLC v Anotech International (2016) EWCA Civ 443.

 

Local authorities, procurement and not profit organisations

June 2nd, 2016 by Peter Oldham QC in Decision making and Contracts, Judicial Control, Liability and Litigation, Land, Goods and Services

Local authorities often procure contracts from non-profit organisations (NPOs). Assume an NPO brings a claim under the Public Contracts Regulations 2015 claiming that something went wrong in a procurement, such that there is an automatic suspension preventing the contract being entered into. Say the authority then applies to Court to set the suspension aside.  How does the American Cyanamid test apply where the claimant is an NPO?  In A v B TCC 27 May 2016, the Technology & Construction Court returned to this question.

Readers will recall that on an application to lift the suspension under the PCR, Cyanamid means that the Court will consider whether there is a serious issue to be tried; whether damages are an insufficient remedy; and whether the balance of convenience lies with maintaining the suspension. The modern trend is to see the adequacy of damages as one of the factors relevant to the balance of convenience, rather than as a separate stage.

In Bristol Missing Link Ltd v Bristol City Council [2015] PRST 1470, the claimant was an NPO providing domestic violence and abuse support services to the local authority. Its tender made no allowance for any profit, so that damages would be nominal at most. The suspension was not lifted. Coulson J said at [55]:-

 “In my view, a non-profit-making organisation, which has bid for a contract making no allowance for profit at all, and a minimal amount for overheads, is entitled to say that, in such circumstances, damages would not be an adequate remedy.”

In A v B, the claimant was an NHS trust, and so also an NPO.  The defendant was a procuring CCG. On the CCG’s application to set aside the suspension, Stuart-Smith J distinguished Bristol. He said that the mere fact that the Trust was an NPO did not mean that damages would be an inadequate remedy.  Moreover in Bristol, the claimant’s business stood to be wiped out if it lost the tender.  Here by contrast, the Trust stood to lose only 10% of its work.  After considering other factors relevant to the balance of convenience, the judge set the suspension aside.

So the first point to take away is that merely because the claimant is an NPO will not mean that it gets over the hurdle of showing that damages would be an insufficient remedy. As ever, it is a question of fact.

And as to that, the Courts have recently made it clear that, on an application to discharge the suspension, simple assertions, by either party, about where the balance of convenience lies will not be enough to make their case. Solid evidence is normally needed e.g. OpenView Ltd v Merton LBC [2015] BLR 735; Counted4 CIC v Sunderland CC 164 Con LR 230. And that’s the second point to take away.

Peter Oldham QC

 

 

Concession Contracts

April 7th, 2016 by James Goudie KC in Decision making and Contracts

On 18 April 2016 the Concession Contracts Regulations 2016, S.I. 2016/273 (“the Concessions Regulations”), come into force. They implement the 2014 Directive, 2014/23/EU, on concession contracts (“the Concessions Directive”). They extend to England and Wales, and Northern Ireland.

The Concessions Regulations impose obligations on “contracting authorities” (and utilities) concerning the award of “concession contracts”. “Contracting authorities” include local authorities. “Concession contracts” embrace both works and services concessions. They are contracts for “pecuniary interest” concluded in writing under which the consideration consists either solely in the “right to exploit” the works/services or in that right together with payment, and that meet a risk requirement.  That is that the award of the contract shall involve the transfer to the concessionaire of an “operating risk” and that the risk transferred shall involve “real exposure to the vagaries of the market”.

There is a high threshold: £4,104,394. However, below the threshold general EU Treaty principles will apply if the low threshold of a cross-border interest is applicable.

Parts 1 and 2 of the Concession Regulations set out their scope and principles. Part 3 contains rules on the award of concession contracts. Chapter 1 contains obligations relating to the publication of concession notices and concession award notices (Regulations 31 to 33), the electronic availability of concession documents (Regulation 34) and the prevention of corruption and conflicts of interest (Regulation 35). Chapter 2 of Part 3 contains provisions relating to technical and functional requirements of concession contracts (Regulation 36), the selection and qualitative assessment of candidates (Regulation 38) and award criteria (Regulation 41).

Part 4 contains rules on the performance of concession contracts, including provisions relating to subcontracting (Regulation 42), the modification and termination of concession contracts (Regulations 43 and 44) and reporting requirements (Regulation 45). Part 5 contains provisions about remedies.