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Public works contracts

Public procurement contracts are very important. See HERE. They are usually complex and involve the expenditure of substantial sums of public money. They are regulated by EU law, the object of which was stated by Advocate General Jacobs as:

[the]…main purpose of regulating the award of public contracts in general is to ensure that public funds are spent honestly and efficiently, on the basis of a serious assessment and without any kind of favouritism or quid pro quo whether financial or political.â€?

This quote is from SIAC Construction Ltd. v Mayo County Council [2002] 3 IR 148. SIAC was one of many persons who tendered for the provision of a new sewerage system for the town of Ballinrobe. Its tender, on price, was the lowest. Mayo county Council awarded the contract to the next highest tenderer. In the judgment of the County Council’s engineer, SIAC’s tender would, in due course, be discovered not to be the cheapest.

SIAC took issue with the making of this judgment. The case was fought in the High Court. SIAC lost there. It appealed to the Supreme Court which remitted a question to the European Court of Justice (“ECJâ€?). The ECJ found the County Council procedure to be unobjectionable, saying;

…when tenders are being assessed, the award criteria must be applied objectively and uniformly to all tenderers. Recourse by an adjudicating authority to the opinion of an expert for the evaluation of a factual matter that will be known precisely only in the future is in principle capable of guaranteeing compliance with that condition.â€?

The Supreme Court (Fennelly J.) noted the difference between the basis for ordinary judicial review and public procurement review saying;

I do not think, however, that the test of manifest error is to be equated with the test adopted by the learned trial judge, namely that, in order to qualify for quashing, a decision must “plainly and unambiguously fly in the face of fundamental reason and common sense.â€? It cannot be ignored that the Advocate General thought the test should be “rather less extreme.â€? Such a formulation of the test would run the risk of not offering what the Remedies Directive clearly mandates, namely a judicial remedy which will be effective in the protection of the interests of disappointed tenderers. It is significant, I think, that Member States are required to make available, where appropriate and necessary, measures of interim relief ( i.e., potentially halting the public procurement procedure) and damages.â€?

Mayo County Council had stipulated that the tenders would be assessed on the basis of what was the most economically advantageous contract. The contract was “a measure and value contractâ€?. This meant that the contractor was free to do the work and get paid for the work on the basis of work done. Effectively, any tender was an estimate of what the work would cost.

Consequently, Fennelly J. concluded;

It is the fact that the out-turn is uncertain that is decisive. I think that the County Council acted within its margin of discretion. I do not think it exercised that discretion in an unfettered way. It followed objective and objectively verified criteria.�