Procurement in a Nutshell – Court analyses use of VEAT notice
14th December, 2018
In the recent Faraday case, in which a contract was awarded without the prior publication of an award notice, the Court of Appeal made the first declaration of ineffectiveness since the remedy was introduced.
Click here to read the judgement in the Faraday case.
The Contracting Authority sought, unsuccessfully, to refute this claim on the basis that it had published a Voluntary ex ante Transparency (VEAT) notice which, in turn, prevented such a finding being made.
However, finding against this and in arriving at its conclusion, the Court outlined a number of important factors to be taken into account by a Contracting Authority when it seeks to rely on a VEAT notice.
What is a VEAT notice?
Regulation 99 of the Public Contracts Regulations explains that a VEAT notice is a notice containing the following information:
- The name and contact details of the Contracting Authority;
- A description of the object of the contract;
- A justification of the decision of the Contracting Authority to award the contract without the prior publication of a contract notice;
- The name and contact details of the economic operator to be awarded the contract; and
- Where appropriate, any other information which the Contracting Authority considers it useful to include.
Furthermore, the same Regulation states that a finding of ineffectiveness cannot be made where all of the following apply:
- The Contracting Authority considered that the award of the contract without prior publication of a contract notice was permitted by the Public Contract Regulations;
- The Contracting Authority had published a VEAT notice in the Official Journal, expressing its intention to enter into the contract; and
- The contract had not been entered into before the end of a period of at least 10 days beginning with the day after the date on which the VEAT notice was published.
Was the Contracting Authority’s VEAT notice satisfactory?
The Claimant alleged that the Contracting Authority’s VEAT notice failed to provide a satisfactory description of the object of the contract, and included a justification that the Contracting Authority was permitted to award the contract without the publication of a contract award notice which was “well below the standard of diligence required”.
Referring to previous case law, the Court of Appeal explained that in order for the VEAT notice to be adjudged adequate:
“[the VEAT notice] should provide enough by way of relevant objective detail about the contract to enable the third party to decide, in the short period allowed to him, whether to launch proceedings challenging the authority’s decision to go ahead with a regulated procurement.”
In this instance, the description of the contract provided by the VEAT notice stated:
“[the development agreement] relates to the development of the London Road Industrial Estate… for the purposes of regeneration and maximising income to [the Contract Authority].”
Furthermore, with regard to the justification for not having to publish a contract notice, the Contracting Authority sought to rely solely on the fact that the development agreement was ‘an exempt land transaction’.
Considering both the definition and the justification, Lord Justice Lindblom said that the VEAT notice was more than merely over-simplified – indeed “It was incorrect or at best misleading” given that it made no reference to the various obligations which arose from the development agreement. Consequently, it did not alert a third party to the real nature of the transaction.
Consequently, the effect of this was that the VEAT notice was invalid and did not prevent the Court from making a declaration of ineffectiveness.
Why is this important?
The judgment provides a very useful overview of the considerations which should be taken into account by a Contracting Authority when it seeks to rely on the protections provided by a VEAT notice. In particular, parties should be certain to ensure that they are: (1) able to rely upon such a notice; and (2) adequately set out the justifications for this, in addition to complying with the other requirements for a VEAT notice to be considered valid – such as providing an adequate description of the contract.
How can I find out more?
If you have any queries on the issues raised or on any aspect of procurement, please contact us via our procurement hotline on 0191 204 4464.
Please note that this briefing is designed to be informative, not advisory and represents our understanding of English law and practice as at the date indicated. We would always recommend that you should seek specific guidance on any particular legal issue.
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