Scottish courts set aside a public contract entered into prior to 20 December 2009

Earlier this month the Scottish court gave an interesting judgment in the case of Sidey Ltd v Clackmannanshire Council & Anor. Readers will probably be aware that recent amendments to the Public Contracts Regulations 2006 have implemented the EC Remedies Directive in the UK and given the courts a power to declare public contracts 'ineffective' in certain cases where there has been a breach of the procurement rules.

This Scottish decision shows that the courts may well exercise the power to declare public contract 'ineffective', even where the public contract was entered into before 20 December 2009, notwithstanding the fact that the new rules are stated not to have any effect on procurement processes commenced before 20 December 2009.

Briefly, in this case, the contracting authority voluntarily followed a procurement process, even though the contract was actually below the threshold for the application of the Regulations. There were breaches at the evaluation stage, and Sidey Ltd brought a challenge. The court upheld the challenge and ruled that the contract should be set aside, because no standstill provisions had been observed and therefore Sidey Ltd had had no opportunity to seek redress for the technical breach. As such, the court made its judgment as if the Remedies Directive were already in force.

It is true that the court was probably heavily influenced by the fact that the contracting authority admitted that there had been manifest errors at the evaluation stage which had led to the wrong result. Nonetheless the case does show that contracting authorities should not simply assume that the transitional provisions to the new rules will automatically protect public contracts dating from prior to 20 December. It also shows that if contracting authorities opt to follow a procurement process on a voluntary basis, then the courts are likely to treat the contract as if the rules applied in full.

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