Biggart Baillie Solicitors

Below the Thresholds but not Beyond Challenge

Public procurement procedures are more and more commonly being subject to challenge, and a recent decision has highlighted the care which public authorities need to take in awarding contracts even when The Public Contracts (Scotland) Regulations 2006 (the “2006 Regulations”) do not apply because the value of the contract in question falls below the applicable financial Threshold.

Judicial review of below Threshold cases

The decision in the appeal in Sidey v Clackmannanshire Council has confirmed that even if the 2006 Regulations do not apply because the value of the contract in question falls below the applicable Threshold, the award of the contract may still be subject to judicial review.  To succeed in judicial review proceedings it would generally be necessary to show the actions of the authority were unreasonable.

Judicial review proceedings are required to be brought in the Court of Session (rather than the Sherriff court which has jurisdiction under the Regulations) which has implications for costs on both sides.

Below Threshold contracts with a Community dimension. 

The fact that the contract to be awarded is of a value falling below the applicable Threshold (generally £156,442 for contracts for Services and for Supplies; and £3,927,260 for contracts for Works), may lead an authority to conclude that the EU public procurement regime does not apply. 

However, the case law of the European Court of Justice (“ECJ”) makes it clear that a contract of any size below the Threshold which has a “Community dimension” (i.e. that it may be of interest to a firm based in another EU Member State) must always subject to an advertised procurement procedure.  This does not need to be a full OJEU procedure, but it does have to meet minimum EU standards such as fairness, transparency, non-discrimination and proportionality.

Scottish Government Guidance states that contracts for Services and for Supplies of a value of £50,000 or more should be advertised and follow some form of procurement procedure.  However, that is an oversimplification of the legal position.

Examples of where a Community dimension might exist are where the contract services are to be provided near the border between Northern Ireland and the Republic of Ireland; or where interest might come from firms from other EU Member States that are already active in the UK market, or are likely to become active in the market because of the particular contract opportunity. 

Commenting on the recent developments, Douglas McLachlan of Biggart Baillie LLP said:

“Contracting authorities should put in place procedures to identify in all cases whether there are any potential cross border elements in all contracts, even where the contract value below the Scottish Government’s suggested £50,000 figure.

If in doubt, take external legal advice; because it will be harder for a challenger to show that you’ve acted unreasonably if you’ve followed external legal advice on the subject.”

For more information, please contact:

Glasgow:  Colin Miller or Douglas McLachlan - tel:  0141 228 8000