In Killaree Lighting Services Limited v Mayo County Council and Electric Skyline Limited [2024] IEHC 79, the High Court in Ireland considered a procurement process in which the awarding authority raised concerns that a tender included abnormally low pricing. Not satisfied with the subsequent clarificatory responses, the awarding authority ultimately wrote to the tenderer in early October 2020, eliminating it from the procurement process on the basis that its tender was abnormally low, and that the contract was not capable of being performed on the basis of the tendered rates.
The letter also stated that, following identification of the successful tenderer and observance of the standstill period, the name of the winner would be published in a contract award notice. On the same day, the successful tenderer was notified that it was successful in the competition. The contract was entered into towards the end of October 2020 and the contract award notice was published in early November 2020.
The applicant in this case challenged the decision to eliminate it from the competition and sought a declaration that the awarded contract was ineffective. The High Court agreed with the applicant that the letter it had received had not constituted a standstill letter and that this infringed the Remedies Regulations. This is an important takeaway for any entity involved in public procurement competitions. The impact of this finding could mean that a contract is declared ineffective, in other words, that it is set aside and is unenforceable.
In this case, however, the Court considered that it was not required by law to declare the contract ineffective. Notwithstanding its deficiencies, the letter made plain that the applicant was out of the competition. The letter had not come out of the blue, but rather had followed earlier correspondence which repeatedly stated that concerns around abnormally low pricing had not been addressed, and that the applicant could be excluded from the competition. The letter had made it plain that the contract would be awarded without further reference to the applicant. The Court also considered it relevant that the applicant had not given evidence as to why it did not pursue pre-contractual remedies following its receipt of the letter.
Interestingly, the outworking of the Remedies Regulation pointed to the Court being compelled to impose an alternative penalty, namely the imposition of a civil financial penalty of up to 10% of the contract value or the termination, or shortening, of the contract. However, the applicant had not sought such a remedy, and Mr Justice O'Moore concluded that "it is simply impossible for me to do so [that is, impose an alternative remedy] in any way that follows the requirements of fair procedures that apply in an adversarial system... ".
We look further at this judgment, as well as other developments in public procurement law, in our March public procurement horizon scanner.
This article contains a general summary of developments and is not a complete or definitive statement of the law. Specific legal advice should be obtained where appropriate.