Eurotunnel Procurement Settlement

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Commercial Article

01 March, 2019

The importance of transparency and openness in public works procurement has made headlines with the £33 million settlement between UK Government and Eurotunnel after the former awarded contracts for a no-deal Brexit ferry service in a "secretive" manner.

In December 2018, the Department for Transport awarded three suppliers with contracts for the provision of additional freight capacity. After these contracts were announced, including the now infamous £13.8 million contract with Seabourne Freight which had no ships whatsoever at the time of the award nor had it ever run a ferry service, Eurotunnel complained to the Transport Minister, Chris Grayling, that it had been left out of the process and that the Government should have approached Eurotunnel as it had a history of providing similar services.

Condemnation of the situation has been wide spread from the public, the media as well as opposition parties. The Shadow Transport Minister, Andy McDonald, remarked that Mr Grayling had shown "misjudgement" in how the contracts were awarded.

The key takeaway for public bodies offering contracts, as third party service providers bidding for them, is that the process did not follow the correct procurement rules as set out in the Public Procurement Regulations 2015. Unless an exemption applies, the procurement regulations require an open and transparent procurement process to be carried out before any contracting authority awards a contract above the relevant threshold (see below).

Threshold from 1st January 2018

Supplies and Service Contracts Works Contracts Social and other specific services
Central Government* £118,133 £4,551,413

£615,278

Other public sector contracting authorities £181,302 £4,551,413 £615,278
Small Lots £65,630

£820,370

N/A

Although there are exemptions for when a public body may choose to not publically notify bidders of a public procurement contract, the Eurotunnel settlement highlights that such decisions need to be carefully considered by contracting authorities to avoid potential challenges by aggrieved economic operators. Forbes Solicitors regularly advise contracting authorities and economic operators alike on the application of procurement regulations, the running of compliant procurement procedures, and also on potential and actual procurement challenges.

For more information contact Dan Crayford on 01254 222451 or email dan.crayford@forbessolicitors.co.uk.

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