On 20 December 2009, new regulations implementing the Remedies Directive entered into force in Scotland. The Remedies Directive aim to provide more effective remedies for firms which suffer as a result of breaches of the public procurement rules by contracting authorities.
The Public Contracts and Utilities Contracts (Scotland) Amendment Regulations 2009 mark a significant departure from the previous position under which aggrieved bidders were restricted to damages once a contract was awarded in breach of the rules.
Key changes
Ineffectiveness
The most significant change in the rules is the introduction of the new remedy of ineffectiveness, which may be sought after a contract has been entered into. The courts are now empowered to make a declaration of ineffectiveness and set aside contracts awarded in breach of certain procurement rules, in addition to imposing a financial penalty on the contracting authority. The grounds on which a declaration of ineffectiveness may be made are as follows:
- a direct award of contract without prior publication of an OJEU contract notice where required;
- a contract is entered into in breach of the mandatory standstill period or following the start of proceedings in respect of a contracting authority's decision and, together with a further breach of the procurement rules, the breach has affected the bidder's chances of winning the contract; or
- a contract is awarded under a framework agreement or dynamic purchasing system in breach of the procurement rules.
Legal proceedings for a declaration of ineffectiveness must be brought within 6 months of the day on which the contract was entered into, but in cases where a contract award notice has been published in OJEU or the contracting authority has notified the claimant of the decision, the time period is reduced to 30 days.
Where legal proceedings are commenced alleging a breach of the procurement rules in relation to a contract award but prior to the signing of the contract, there is an automatic suspension of the contract award which continues until the court makes an interim order lifting the suspension or until the proceedings have been determined or discontinued.
Courts have the discretion not to grant a declaration of ineffectiveness where there are overriding reasons in the general interest to maintain the contract. However, where no such declaration is made, the court must make an order to either shorten the duration of the contract or impose a financial penalty on the contracting authority (or both).
Notification and Standstill Provisions
The regulations also introduce a new obligation requiring the contracting authority to notify applicants of their exclusion at the stage of the process they are excluded and to provide reasons for the award decision at the start of the standstill period, rather than on request.
The new regime also increases the level of detail required. Notices must now include details of the award criteria, the applicant's score, the name and score of the successful applicant and a summary of the relevant reasons for the decision, together with a precise statement of the standstill period. Failure to do so may lead to a challenge for a declaration of ineffectiveness on the grounds of failing to comply with the standstill requirements.
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