Our city centre estate agency offices

For-sea-able urgency?

Much has been said recently about the Department for Transport’s decision to award a £13.8million ro-ro freight ferry service contract to Seaborne Freight (UK) Ltd.

If you cut through the political hyperbole, however, that procurement does highlight the issue of foreseeability of potential outcomes in the Brexit process.

The contract was awarded to Seaborne Freight — along with much larger contracts awarded to Bretagne Angleterre Irlande SA and DFDS A/S for ro-ro freight ferry services between other ports — without any competition.

Usually, all public procurements need to go through some sort of competitive process advertised throughout the European Union, the ins and outs of which usually mean things aren’t likely to be finalised in less than three months, even with a fair wind.

But there is an exception.

Justification of extreme urgency

Where there is extreme urgency, brought about by unforeseeable events, a public body can make a direct award of a contract to a provider without any competition taking place.

The Department for Transport (DoT) argues such extreme urgency exists in the case of the procurement of freight ferry services “by virtue of the UK leaving the EU on 29.3.2019 and the prospect that this exit may be on a no-deal basis.”

It is hard to see how the DoT could justify its position based simply upon the UK exiting on the 29 of March, something that has been foreseeable for at least two years.

The key justification must, presumably, then be that there is only now a ‘prospect’ that this exit may be on a no-deal basis.

The European Court of Justice (ECJ) has, to date, viewed the extreme urgency exception very narrowly. Given its track record, it’s far from certain it would agree that the extreme urgency exception should apply here.

In short, there is a high chance the ECJ may decide the DoT should have anticipated the need (or potential need) earlier and run an advertised competition in advance.

Interestingly, however, if the UK does leave the EU without a deal, the likelihood is that the ECJ will have no jurisdiction to sit in judgment over UK Government decisions after 29 March 2019. Consequently, in the event of a no deal exit where the ferry services could be in high demand, and therefore be a profitable business proposition, there may not be a non-domestic watchdog to police such decisions.

It is possible then DoT’s lawyers assessed the risks of potential non-compliance with the procurement regulations and took the view that “nobody is effectively going to care.”

More to come?

A further interesting point is that these ferry service contract awards would appear (at the time of writing) to be the only Brexit-related procurement where the extreme urgency exception has been used.

This may mean that a. these particular ferry services fell through the advanced planning net or b. there will soon be a deluge of urgent procurements following the same route.

I do not, however, think these ferry contract awards indicate a complete side-lining of the procurement regulations.

Those regulations were originally introduced to ensure a level playing field throughout the European Union for all providers and suppliers, wherever they were based. Now they are established, however, the regulations provide protections within the UK domestic market and ensure that even domestic only competitions are seen to be conducted fairly.

Even if the ECJ ceases to have jurisdiction, therefore, UK domestic courts are likely to continue to enforce the regulations and quite where that leaves the DoT’s award decisions here remains to be seen.

The broader take away message from this is perhaps that we should view a no-deal exit as being, at the very least, a prospect; as being foreseeable.

On that basis, it would be prudent for businesses who haven’t done so already to urgently start planning for a no-deal scenario, and that includes giving thought to —

  • Where materials are coming from; how they are being transported and when they are needed by?
  • What personnel resourcing issues might arise after 29 March (including within your supply chain)?
  • Will the terms on which you contract be properly relevant post 29 March (check, for example, how many references there are within terms to “European Union” rather than “United Kingdom”?

And of course, even if withdrawal terms are ultimately agreed between the EU and the UK, the above issues will still need to be kept under review as the UK’s future relationship with the EU becomes more firmly established.

Jennifer Young

Jennifer was elected chairman in January, 2012, and became managing partner in June, 2020.

Posted, 08 January 2019 by Jennifer Young
Categories: Commercial contracts | Construction | Employment