Procurement remedies take shape

A second Scottish Government consultation on implementing the EU Remedies Directive 207/66/EC, intended to improve the effectiveness of review procedures concerning the award of public contracts, is currently underway.

The consultation, published on 3 June at www.scotland.gov.uk/ Publications/2009/06/03095738/0, sets out the Government’s intentions regarding implementation in light of responses to the previous consultation, and includes the relevant draft regulations.

Three main changes are introduced by the directive, which must be implemented by 20 December 2009:

• standstill arrangements following
• a contract award decision are harmonised;“ineffectiveness” and other special penalties become remedies for certain serious breaches of the procurement rules;
• procurement procedure is automatically suspended on a court challenge.

For contracts falling within the Procurement Directive, member states are to ensure that decisions taken by contracting authorities can be reviewed effectively, and as rapidly as possible, at the instance of any person having or having had an interest in obtaining a particular contract and who has been or risks being harmed by an alleged infringement. To avoid unduly complex procedures, ministers have opted not to require the complainer first to seek review with the contracting authority.

The draft regulations adopt the minimum “standstill” periods in the directive of 10 calendar days from the day following the date of notification of a decision, if fax or electronic means of communication are used, or 15 days if by post (the regulations propose the 15 days where at least one tenderer is notified by post). The contract may not be concluded within this period. Permitted derogations will be taken up for contracts not requiring prior publication in the Official Journal, contracts where there is only one tenderer, and contracts based on a framework agreement or a dynamic purchasing system.

Review proceedings must be brought “promptly” (which can never mean in less time than the relevant standstill period), and in any event within three months unless good reason is shown.

A breach rendering a contract “ineffective” will result, in Scotland, in prospective rather than retrospective invalidation. The court will also have a discretion not to render a contract ineffective if there are good reasons for its effects to be maintained, but in that case “effective, proportionate and dissuasive” alternative penalties must be available, such as a financial penalty on the contracting authority (also to be imposed if an order for ineffectiveness is made), or a shortened contract term. The financial penalty is to be separate from any damages awarded, and will go to public funds.

The European Commission itself may bring proceedings if, prior to a contract being concluded, it believes there has been a serious breach of Community law.

In addition to a general request for feedback on the draft regulations, the paper poses certain specific policy questions and also raises some transitional matters. The consultation runs until 21 August 2009.

• The Scottish Government has published a guide for its officials involved in the development, negotiation, implementation and monitoring of EU obligations, intended to bring clarity and transparency to the Government’s processes for the benefit of the Parliament

and all sectors affected by EU legislation: www.scotland.gov.uk/Publications/2009/06/ 04143736/2 .3

In-house team to send work overseas

UK mining giant Rio Tinto has announced a legal services outsourcing agreement with CPA Global under which a team of lawyers in India will support Rio Tinto’s in-house legal function on a global basis.

The move is projected to save Rio Tinto up to 20% annually in legal costs.

Initially, the work concerned will include contract review and drafting, legal research, and document review. However, it is anticipated that the scope of work will expand to cover other routine legal services work traditionally handled in-house by Rio Tinto or shared amongst the company’s panel of law firms.

Rio Tinto’s managing attorney, Leah Cooper, said: “We took a long hard look at our internal costs and the amount we were spending with outside counsel and saw an opportunity to make significant changes to the way we deliver legal services to the group. We have developed a groundbreaking legal model with CPA Global that will generate tremendous savings and serve the business without compromising quality.

“By shifting work to CPA Global our internal team will be freed up to get involved in some of the more complex and challenging legal matters, which in the past might have been sent to outside counsel at significant cost… We will have more time to spend with the business, develop stronger relationships and understand what we can do to prevent legal issues developing in the first place with a stronger focus on prevention rather than cure.”

Founded in Jersey, Channel Islands in 1969, CPA Global currently employs more than 1,200 people in 16 offices in eight countries.