Commercial
A local authority is liable for damages for abandoning a procurement process in favour of an associated company, the Court of Appeal has held, in a case which is likely to encourage more legal challenges from bidders.
In Risk Management Partners Ltd v Council of the London Borough of Brent & Ors, Brent had started a procurement process, in which Risk Management (RMP) had made the most financially advantageous bid. However, Brent abandoned the process and awarded the contract to London Authorities Mutual Ltd, of which Brent was a participating member.
RMP sued on the basis Brent had infringed the Public Contracts Regulations 2006. Brent accepted this but argued in-house awards were exempt from the regulations, on the basis of Teckal SrL v Comune di Viano [1999].
The Court of Appeal interpreted the in-house exemption strictly, ruling in favour of RMP.
Catherine Wolfenden, senior associate, Osborne Clarke, says: “This is a rare example of the court holding a public body liable for damages under the current procurement rules.
“However, the UK is due to implement the new Remedies Directive by the end of this year. This will significantly strengthen the powers of the courts where a public authority breaches the Regulations, and is likely to make this sort of decision much more common.
“The recovery of damages by RMP in this case should encourage disgruntled bidders to bring complaints before the courts where the procurement rules have been infringed.”
