Outer House case in which the Scottish Ministers sought an interim order bringing to an end a prohibition under regulation 47(10) of the Public Contracts (Scotland) Regulations 2006. The prohibition prevented the Ministers from entering contracts relating to the provision of services in relation to trunk roads.
In November 2010, the Ministers (acting through Transport Scotland) advertised two contracts for the management, maintenance and improvement of trunk roads. After adopting the competitive dialogue procedure the Ministers invited tenders. Amey and three other operators submitted tenders. However, the Ministers wrote to Amey advising that they considered Amey’s tender to be abnormally low. They stated that this presented them with unacceptable financial, operational and reputational risks in fulfilling their statutory duties. They considered that Amey had manipulated the prices and rates and explained their concerns in some detail. Correspondence followed in which Amey argued that it had taken a “holistic approach to the tender” and provided price and other information. However, the Ministers rejected Amey’s bid concluding that the offer: (a) carried significant unacceptable risks; (b) was neither economically viable nor sustainable; and (c) was not genuine.”
Noting that Courts function was limited reviewing the Ministers’ decision solely to see whether or not there is a manifest error and/or whether the process was in some way unfair, Lord Hodge saw no legal basis on which Amey could challenge the Minister’s conclusion that its offer (a) carried unacceptable risks for them and (b) was neither economically viable or sustainable. However, if by concluding that the offer was not genuine, the Scottish Ministers were suggesting that the offer was a sham that was more problematic. Lord Hodge though did not consider that that was what was meant. The bids were assessed on the “Comparative Cost of Tender” which was a figure based on prices and rates entered by the tenderers. Lord Hodge interpreted the use of the word “genuine” as referring to the way in which Amey chose to present its offer, noting that the prices and rates Amey provided bore little relationship to the turnover that Amey expected from the contract. However, even the Ministers’ use of the term ‘genuine’ had been incorrect, that would not have undermined their conclusions about the risk, economic viability and sustainability of the bid.
With regard to the limited scope of the court’s review, Lord Hodge found that Amey had at best a weak prima face case (for continuing the prohibition). That was an important factor when considering the balance of convenience. Lord Hodge also took account of the need to avoid delay in the process which would in turn lead to mobilisation issues for the successful contractors and increased costs for both the successful contractor and the Scottish Ministers. On the other hand, if the contract went ahead and Amey subsequently successfully challenged the Ministers decision, it would then have a remedy in damages. Taking these factors into account, Lord Hodge found that the balance of convenience favoured lifting prohibition. He also found that consideration of the public interest favoured lifting the prohibition (noting the need for an effective and non-discriminatory procurement process but also taking account of the need for economic and efficient operation of the procurement process and the need for proper provision of the required services to Scotland’s trunk roads).
Consequently, Lord Hodge granted the Scottish Ministers’ motion and lifted the prohibition preventing Transport Scotland entering the proposed contracts with other contractors.
The full judgement is available from Scottish Courts here.
