A recent Court of Appeal decision contains a useful review of the law relating to the award of 'concession contracts' a type of contract excluded from the main operative parts of the procurement regulations. It also considers the extent to which implied duties to consider a tender can be imposed on a contracting authority where the contract falls outside the scope of the procurement regime.
The case concerned the Ministry of Justice's decision to award contracts to bailiffs for recovery of unpaid magistrates' court fines. The MoJ does not pay bailiffs for this service. Their fees are added to the fine and recovered from the defaulter; the bailiff carries the risk of non-recovery. JBW Group were unsuccessful in tendering. They claimed a breach of the procurement regulations and alleged that the MoJ had provided improper assistance to a rival bidder. The MoJ defended the claim on the basis that the contract was a service concession contract.
The judgment summarised the paradigm case of a concession as being:
"where the applicant is put in possession of a business opportunity which he can exploit by providing services to third parties and charging them directly for those services. The contractor then bears the risks of running the business which are typically greater than those involved in performing a contract for a fixed fee."
Whilst Elias LJ commented that he found the question of whether the bailiff contracts were a concession 'very difficult' he nonetheless held that the requirements of a concession were met. Accordingly the procurement regulations did not apply.
JBW's alternative argument was that the MoJ was bound by an implied contract to consider all tenders in accordance with EU principles of equality and transparency.
The Court considered this argument in light of the earlier Blackpool Aero Club decision. The Court was prepared to hold an implied contract existed which imposed duties on the MoJ to consider the tender in good faith both as a matter of public and private law. However it was not prepared to impose wider duties such as equality or transparency since they were not necessary to give efficacy to the implied contract.
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