By Joanna Frost
1st Mar 2016
In 2015 Inverclyde Council held a mini-competition for street lighting services under a framework agreement and awarded the contract to Amey Public Services LLP, however it was Amey OW Ltd that was party to the framework agreement. Lightways (Contractors) Ltd (not a supplier on the framework) challenged the award on the basis that this was unlawful direct award made without advertisement in the OJEU.
The Council thought this error could have easily been remedied by a novation of the contract to the correct supplier, however the Courts had a different view. The Court concluded that the Council had no defence to Lightways’ challenge based on breach of Regulations and therefore allowed for an ‘ineffectiveness order’ invalidating the call-off contract. The Court are also obliged to fine the contracting authority when a contract is held ineffective. The level of fine in this case has not yet been fixed.
This case highlights the importance of ensuring that contracts awarded under a framework agreement reflect the terms of the agreement, particularly with regard to the identity of the suppliers appointed to the framework. It is also interesting to note that even though the claimant was not party to the framework, they were still found to have standing to challenge the award.