Out-Law News 2 min. read
12 Oct 2012, 3:14 pm
Transport Secretary Patrick McLoughlin said earlier this week that it could take up to 18 months before the retendering of the West Coast Main Line contract takes place. Virgin currently runs the line, but its contract to do so expires from 9 December.
The Department for Transport (DfT) had announced that, following a tendering process, rival network operator FirstGroup had been awarded preferred bidder status over Virgin for a new 15-year contract to operate the Scotland-London link. However, earlier this month the DfT announced that it had cancelled the competition for the new contract after discovering "significant technical flaws" in the way the procurement process was conducted by officials.
McLoughlin is expected to announce next week who will run the West Coast Main Line from 9 December during the transitional period before the new tendering process begins. However, infrastructure law specialist Patrick Twist of Pinsent Masons, the law firm behind Out-Law.com, said that simply asking Virgin to continue to run the operation in the short term could see the Government in breach of EU law.
Under EU law member state Governments are generally required to advertise their tendering of major contracts in the Official Journal of the EU in order to allow companies from across the single market equal opportunity to bid and obtain work.
Twist said, though, that there is an argument that the Government's tendering of the West Coast Main Line franchise "was never governed by the procurement rules", but said that Department for Transport (DfT) had always "proceeded as if it were". "There is an argument one way or another," he added.
"Assuming that the procurement rules on advertising contracts do apply the DfT would, by law, be required to open up the transitional franchise contract to bidders," Twist said.
He said that this was despite the existence of an exception to the EU procurement rules whereby, in cases of extreme urgency, the procuring authority can avoid having to advertise contract tenders. DfT was unlikely to be able to look to this exception, despite the imminence of the ending of the current Virgin franchise, because it can only be relied upon in circumstances where the extreme urgency is "not attributable to the contracting authority". Clearly the urgency has arisen from DfT's decision to terminate the franchise re-procurement as a result of its own errors, Twist said.
However, the expert said that both the European Commission and rivals to Virgin would be unlikely to challenge the Government if it decided to ask Virgin to run the West Coast Main Line during the transitional period whilst a new tendering process is established.
"The potential bidders who might otherwise have tendered for the contract would have a case for challenging the Government if it proceeds with Virgin from 9 December without having advertised the contract," Twist said. "However, it is unlikely they would present such a challenge. This is because it would be difficult for any individual potential bidder to establish with any degree of certainty that it had suffered a material loss, but primarily because potential bidders would not want to run the risk of prejudicing relationships with DfT ahead of any tendering process for franchise contracts in the future."
"Whilst the European Commission would be likely to view the issue on a plain reading of the law, it really would be unlikely that it would take action against the UK. It does not have the resources to pursue all of these kinds of cases and there is really no practical merit in it doing so," Twist added.
