Building and civil engineering contractor McLaughlin and Harvey did not make the shortlist of five preferred bidders for a series of public tenders but argued successfully that the process was unfair – opening the possibility of a series of legal challenges to the framework process.
McLaughlin’s claim was that tenders for the Stormont Executive’s Department of Finance and Personnel had been marked using a methodology which hadn’t been disclosed in advance, leaving the firm unable to bid for a series of proposed urban regeneration, further education, arts and sports projects.
The High Court has now ruled the DFP’s process was flawed and in breach of European law. A hearing will be held next month to decide upon damages, which judge Mr Justice Deeny ruled could even include access to the framework’s tender process.
A construction partner with law firm Weightmans, Paul Donnelly, said he expected any damages to be “sizeable”, adding the case had the potential to cause a future influx of similar claims.
Mr Donnelly said: “Failures like this probably happen more than you might think – but some are more willing to go after the Government over here. It is a very small market, so in terms of numbers were are talking about an awfully big deal.”
The total framework has been valued at between £500-£800 million. The contractor was initially aiming for an injunction to suspend the Government’s final decision on the framework agreement, although its application was not successful.
Halliwells construction partner Karen Kirkham said the decision not to grant an injunction showed that court procedures were “a blunt instrument” when dealing with complex European procurement issues.
She said: “In deciding whether damages [versus an injunction] would be an adequate remedy for the alleged breach of tendering rules it faced the difficulty that the framework agreement which the contractor hoped to enter into with a government department did not bring with it a guaranteed value of work, or indeed of any work.
“In hearing the contractor’s case for damages the court will now find itself faced with exactly the same difficulty. At a time when the industry is looking to the public sector to fill the gap left by private sector schemes it will be especially interesting to see how it approaches this.”
The hearing is listed for 2 October. McLaughlin and Harvey and the DFP both declined to comment on the case.
Analysis: Plaintiff could be added to framework
By Martin Baker
This judgement seems to suggest the Government department could be ordered to add the plaintiff to the framework.
A lot of contracts are going to be let to those successful applicants – that’s what McLaughlin wanted to be a part of.
Damages are notoriously difficult to assess, so normally when there is a dispute on an immediate contract the push is to ensure you get an injunction.
Even though that was unsuccessful here, it was clear that the plaintiff was looking to get on that list.
If the judge holds the view that the department was in breach, in brings in the potential for people to be added to a framework, then this could become a very significant case.
Martin Baker is the head of the UK Competition, Regulation and Trade division at law firm Taylor Wessing