Is Glasgow Uni breaching procurement law with its exclusion of Scottish PR firms?

If you are a “contracting authority”, it means you are obliged to put certain contracts (such as a contract for advertising and PR services) out to public tender. In particular, if the value of the contract in question is above £156,442 then you have to follow a prescribed procedure for that tender process, including advertising the contract in the Official Journal of the European Union (“OJEU”) and following a strict timetable for the process all as set out in the 2006 Regulations. Additionally, the University has obligations to act fairly and proportionately towards bidders under the 2006 Regulations.

In this case, the University have estimated the contract value at £50k-60k, which is below the £156,442 Threshold. However, there appears to be some suggestion from the PR industry that the real contract value is likely to be around £300,000. That is clearly above the Threshold.

Importantly, the University are not entitled to split up its requirement for PR services into separate contracts in order to bring the contract value below the Threshold. If the real value of the contract is likely to be in the region of £300,000 then the University would be in breach of the 2006 Regulations by not following a full public procurement process. That failure in itself may be challengeable in Court.

If the contract value is properly below the Threshold, then the University can use a more informal tender process, but provided the contract is of “cross border interest” (and by that I don’t mean Scotland/England cross border interest, but intra-European Union cross border interest – so if the contract would be of interest to a PR firm in Dublin, then this test would be satisfied) the University will still be required by European Law to act fairly and proportionately towards bidders.

The University is entitled to require that bidders meet certain conditions of economic and financial standing. So it is entitled to require that bidders meet a minimum level of turnover, but any minimum turnover figure must be related to and proportionate to the subject matter of the contract. It’s important to bear in mind that a minimum level of turnover should only be a way of testing the financial stability of the firm, not the technical capacity of the firm. It shouldn’t be used as a blunt instrument to exclude the smaller firms, presumably on the grounds that “bigger is better”. It should only be used to make sure that the bidders in question will be here this time next year. In this case, the PR industry in Scotland appears to be calling the reasonableness of the University’s minimum turnover figure into question. A PR firm that has been unfairly and disproportionately excluded from bidding by the University in this way may be able to mount a challenge in Court, and possibly even win an award of damages.

In particular, if the value of the contract is above the Threshold, then following some recent amendments to the 2006 Regulations would allow an aggrieved bidder could force the University to (at the very least temporarily) halt the tender procedure simply by raising Court proceedings.

Douglas McLachlan has been involved in a number of Court challenges relating to a breach of the EU Public Procurement rules (acting for both challengers and defenders) and has developed something of a reputation for this sort of work in the last few years. These sorts of cases are becoming more and more common as bidders come to realise that they have a right to challenge public bodies that breach the Procurement Rules.