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Can you use procurement law to halt development?

When deciding to redevelop a vacant or run down part of town, procurement law is just one of the many factors a local authority will need to consider. Large construction contracts usually fall within the procurement regime, so a local authority contemplating redevelopment of a site will need to comply with various requirements with regards to advertising the tender, evaluating the bids, and entering into the contract with the winning bidder. If the local authority does not comply, one or more of the unsuccessful bidders may have grounds to challenge the award of the contract.

But what about non-bidders? Can local residents who are opposed to the proposed development rely on a local authority’s breach of procurement law in order to prevent the development going ahead?

The case of Gottlieb v Winchester City Council in 2015 suggested that they could. It concerned a challenge to Winchester City Council’s decision to authorise significant variations to a development contract for the construction of a mixed retail and residential development.  Generally, once a contract has been entered into following a regulated tender, it can be varied if the contract permits this, but not so significantly that what it really amounts to is a new contract – in that case, the correct course of action is to re-tender.  The court found that the variations in Gottlieb were too significant and that the Council should have retendered a new contract.

The case was unusual though because the claimant, Mr Gottlieb, was not an unsuccessful bidder but a local councillor who fiercely opposed the development and was looking for avenues to halt it.  The court decided that Mr Gottlieb was permitted to bring a judicial review claim to challenge the Council’s decision, even though he would not have been able to bring a claim under the relevant Procurement Regulations, because he was not a bidder.  The judge said that he had sufficient interest to bring the claim as a council tax payer and local councillor, notwithstanding the fact that his real motive was not to ensure that public procurement regulations were complied with but to prevent the development.

In January 2017, however, the court decided that a group of claimants in almost identical circumstances did not have sufficient standing to bring a claim. In Wylde v Waverley Borough Council, the Council varied a contract for the redevelopment of an area in Farnham. There were five claimants, including two local councillors and three others who were members of a local public interest group which opposed the development. All were council tax payers. The court decided that the claimants’ motive – to prevent the development – was unrelated to the aims and purpose of the public procurement regime, which is to provide a transparent system for the competition for public contracts, and to secure a fair and efficient market for them. The decision of the court in Gottlieb, the judge said, was wrong.

When deciding to redevelop a vacant or run down part of town, procurement law is just one of the many factors a local authority will need to consider.

The judge also noted that even if a tender had been carried out, it would not have had any direct impact on the claimants, and would not have produced a different outcome for them.

For now, then, it looks as though local residents and councillors cannot use procurement law to prevent development, but Gottlieb and Wylde are both decisions of the lower courts and since they conflict with each other, further guidance from the higher courts will be needed before the question can be finally determined.

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This information is for guidance purposes only and should not be regarded as a substitute for taking legal advice. Please refer to the full General Notices on our website.

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