As the Local Government Procurement Expo (LGPE) approaches, the Court of Appeal has found that one local authority acted unlawfully by failing to perform due procurement procedures. West Berkshire Council had awarded a contract to St Modwen Developments to undertake a mixed-use regeneration scheme on a disused industrial site in Newbury.
The Court of Appeal found that the contract was awarded in the absence of a lawful procurement procedure under the 2004 European directive and the 2006 European regulations. The Council argued that the agreement fell beyond the scope of both as there was no binding obligation on St Modwen to conduct any development and the council had made no specifications on prospective works and would exert no influence on the design of such work. But the Court of Appeal found that the development agreement included a ground lease that St Modwen signed up to, which included an unqualified obligation to conduct the works, an obligation that would be present in the development agreement.
The Court said that the Council, while not acting in bad faith, had proceeded with the development agreement “without a public procurement process, and without affording any opportunity for such a process to be gone through before the ‘public works contract’ materialises.” The ruling has stirred significant concern among other local authorities as they try to understand what it means for their development plans. Legal expert, Katherine Eddon, of the law firm Womble Bond Dickinson, said: “It’s likely to lead to a more cautious approach by authorities on regeneration projects which are felt to be ‘close to the line’, or are particularly complex, meaning more put out to tender under the procurement rules.”
Having legal penalties imposed for breaching procurement rules thwarts efforts to achieve sourcing savings and cost-reduction targets. While many procurement pros will be thinking, “LGPE show 2018 – what to expect?”, their counterparts in West Berkshire will be licking their wounds.
Ed founded Odesma in 2014 with the explicit intent of creating a new kind of procurement consultancy founded entirely on cloud principles. Deploying best-of-breed subject matter experts alongside the best on demand technology to deliver rapid and effective change for customers.