The way in which public sector bodies procure legal services could be set to come under closer scrutiny as the European Commission proposes the adoption of a new directive which will, for the first time, allow national courts to overturn contracts awarded in breach of Community procurement law.
The type of contracts that could have been affected by this proposed vehicle include the contract for construction of the Scottish Parliament building, and the contract for the operation of ferry services in the Western Isles.
Under the current rules, the only remedy available to aggrieved tenderers is a claim for damages.
The Commission\'s proposal develops the principle articulated by the European Court of Justice in the landmark Alcatel ruling from 1998, in which it was held that contracting authorities have an obligation to \'stand still\' during the period between announcing the selection of a successful bidder and entering into a contract. This stand-still obligation is designed to permit aggrieved parties to challenge the decision before the deal is signed. This proposal, for the first time, sets out a formal means of penalty.
Under the new proposal, if a contracting authority breaches the stand-still requirement then the courts would have the right to cancel the offending contract. It is proposed that the contract would remain \'at risk\' in this way for at least six months after it was entered into, after which point it may be possible to protect it from further annulment challenge.
Commenting on the proposal, Gordon Downie, head of Shepherd and Wedderburn\'s Competition, Regulation and Public Law Group, said: \"This is a major development in the procurement remedies field. It closes a potential loop-hole in the stand-still rules, i.e. how is the stand-still obligation effectively enforced? However, it also risks seriously undermining contractual certainty for successful bidders.”