NI:Litigation reveals PPP challenges

A number of decisions in the Northern Ireland High Court have been handed down recently which illustrate the challenge in managing, especially from the Public Procurement perspective, major projects including PPPs.

While these decisions are generally interlocutory (interim and pending full trial) they nevertheless provide valuable insights into the significant challenges which can face awarding authorities and also as to the thinking of the Courts in applying relevant principles in these circumstances.

Sheridan Millennium Ltd. v. Department for Social Development and Laganside Corporation

In this case, the High Court (Gillen J, 18th April 2007) granted application for leave to bring judicial review against (i) a decision by the Department for Social Development (DSD) to terminate the applicant’s appointment as a preferred developer for the Queen’s Quay urban commercial development in Belfast and (ii) a decision of Laganside Corporation that it could not make a recommendation as to whether DSD should enter into a development agreement with the applicant.

The Court was further satisfied that allegations in relation to the suitability of the applicant for the position were matters of Public Law and the fact that a due diligence examination had been prescribed did not remove the matter from the Public Law domain.  Accordingly the process was still subject to judicial review.

The Court further held (Gillen J, 13th November 2007) that where the rigour of the due diligence exercise was to be benchmarked by reference to that undertaken in another development (at Victoria Square in Belfast) then access to documentation (albeit, where appropriate, on a redacted basis) in relation to the earlier development was appropriate.

Natural World Products Limited v. ARC 21

This was a major waste project in which ARC 21, a consortium of local authorities in Northern Ireland, sought to award a contract for the provision of organic waste services including the construction of at least one waste compaction facility.

It was held by the Court (Deeny J) that, in breach of both the duties of an awarding authority to consider fairly the bids of all tenderers in a project and in breach of the specific provisions of the Public Service Contracts Regulations 1993 (transposing the Services Directive 92/50/EEC in Northern Ireland), the awarding authority had decided that it would be inappropriate to take account of an alternative facility which was available to a bidder and which the bidder alleged would be available to it to afford support in the event that the facility to be constructed on foot of the contract in question might not have been able to cope with the relevant tonnages.

On that basis, an injunction was granted requiring the awarding authority to reconsider on an appropriate basis the bid of the applicant company.

Partenaire Limited v. Department of Finance and Personnel

This concerned a project which involved the awarding of a very large contract for the refurbishment and rationalisation of a substantial part of the Northern Ireland Civil Service (NICS) properties.

The key features of the contract (Workplace 2010) were the transfer to the private sector of approximately 77 buildings in the core NICS estate, the major refurbishment of a significant number of buildings, the construction of a new building on the Stormont Estate in Belfast and the provision of a range of accommodation and facilities management services.

The competition was conducted under the Negotiated Procedure. It was envisaged that the direct running costs of the relevant part of the NICS estate to be transferred to a private sector operator would be approximately £17 million per annum and the value of the transfer payment, being the capital sum to be received by the Department on transfer of the estate, would be approximately £200 million.