Impact of EU Procurement Rules on Councils [Jan 11]

What has been reported as a ‘landmark judgement’ [Brent LB and others (Harrow LB) v Risk Management Partners Ltd 9-Feb-11] clarifies the extent to which public sector bodies need to comply with EU Regulations when placing contracts for goods and services. In particular, it rules that a contract does not need to be subjected to competitive tenders, if it is to be placed with an entity that is wholly owned by one or more local authorities and is exclusively concerned with delivering services to the local authorities involved.

The bench of five judges unanimously upheld an appeal allowing a local authority to rely on an exception (the ‘Teckal exception”) to the standard procurement procedure, overturning a Court of Appeal decision in June 2009. The Teckal exception applies where a public authority either delivers services ‘in-house’ (i.e. from its own resources) or from a source so closely connected with it that it should be regarded as being in-house.

This judgement provides local authorities with the option of joining together with their neighbouring authorities and setting up companies/partnerships to deliver shared services to their communities. Provided no private interests are involved, the Public Procurement Regulations 2006 would not apply and it would not be necessary to seek competitive tenders from private sector providers.