This time Adrian Kearney hands over to one of his Co-Directors, Niall McGuinness, for a view of what is happening in Northern Ireland.

Against the backdrop of continuous doom and gloom, our sporting heroes offered a much needed lift in recent weeks.   Whether your passion be football, rugby, boxing or golf there was something to cheer everyone up momentarily.

For awhile there was good news story on the front of each broadsheet I lifted, whether at home or abroad representing Ireland North and South.  I should not have been surprised then, on my return to the office, to find our own Northern Ireland Queen’s Bench Division holding its own on the front of the March edition of the Building Law Reports.  Of the 5 cases reported therein, Mr Justice Deeny and Mr Justice Coghlin had decided on 2 of them; Henry Bros (Magherafelt) Ltd and Others v. Department if Education for Northern Ireland (No 2) and McLaughlin and Harvey Ltd v. Department of Finance and Personnel (No 2); respectively.

Having read about them elsewhere I had looked forward to reading the factual representation of the matters at hand – so what are they all about and how do they affect you?

There is commonality between the cases.  In both, the defendant is a body named the Central Procurement Directorate (CPD) of the relevant government Department.  The CPD in each instant sought to select contractors for proposed Framework Agreements (‘frameworks’).  In the case of the CPD of the Department of Finance and Personnel, a framework was sought relating to construction contracts for various types of work including urban regeneration, further education, arts and sports developments.  The CPD of the Department of Education for Northern Ireland sought a framework for construction contracts for the purposes of school modernisation.

There is also commonality with respect to the position of the claimants.  Each contractor was unsuccessful in its effort to secure a place on the relevant panel.  Although on differing basis, both claimants were successful in their actions to prevent the frameworks being concluded.  Ironically, I understand anecdotally that the successful action of Henry Bros affected McLaughlin and Harvey, an otherwise ‘successful’ tenderer to the schools framework and in kind the successful action of McLaughlin and Harvey affected Henry Bros, an otherwise ‘successful’ tenderer to Department of Finance and Personnel framework!!!  A virtuous circle??

Regarding the detail, the issue at hand in the McLaughlin and Harvey case centred on an “assessment team valuation sheet” devised and used to assess the quality element of submissions.  This sheet which contained an element of weighting was not provided to the tenderers.  It was found that the sheet contained information, particularly within the weightings which could and would have affected the preparation of tenders.  As such there was a breach by the defendant under the Public Contracts Regulations 2007.

The Henry Bros case pivoted on a similarly fine point.  As part of the commercial section, tenderers were required to submit fee percentages (direct, sub-contract and for design services) against a number of hypothetical contract values.  Regulation 30(2) of the Public Contracts Regulations 2007 requires ‘…criteria linked to the subject matter of the contract to determine that an offer is the most economically advantageous…’.  It appeared to be the assumption of the defendant that costs would always be the same in the construction industry and that consideration of a fee percentage was sufficient at this stage.  The claimant argued that any analysis of the most economically advantageous offer involves comparison of what is to be provided for, the cost to be paid, and that the fee percentage basis did not complied with the Regulations.  Coghlin J agreed.

So where does this all leave us.  I say, with a certain amount of sympathy for those procurement chiefs in the local public sector who championed radical change to procurement processes in line with best practice and modern advances elsewhere in the UK, for the rest of us the field of play has changed and opportunities arise.  The projects which were planned under the intended frameworks still need to be procured and delivered.  Many are now being procured on a more traditional basis.  ‘Traditional’ I say, but not all is lost and procurement teams are running pre-qualified invitations to be assessed both quantitatively and qualitatively using the NEC3 form.

And that is the interesting bit looking forward.  As a consequence the market is full of players to which a wholesome understanding of NEC3 and its idiosyncrasies is now of utmost importance.  Whether an unsuccessful bidder to the framework with no need to know, or a successful framework bidder with the comfort of a framework package tender being somewhere down the line, the dynamic has changed.  Tendered offers will now be on the basis of a NEC3-type contract with all the new obligations and risk allocations not to mention the “condition precedent” administrative functions.

From what I have seen so far, a word of caution must also be proffered.  NEC3 is a family of contracts; the choice of main options in the first instance controls the risk allocation between the parties.  However, and moreover, the secondary option Z allows for the inclusion of additional clauses.  Through this vehicle the form of contract, the obligations and risk allocation can be greatly tinkered with, so much so, that the resulting contract may barely resemble the righteous original NEC3 form.

As always, knowledge is king and it pays to seek good advice and training.

Niall McGuinness is a Co-Director of Kearney Consulting Ltd who are Consultants and Experts in the Built Environment - Dispute Resolution & Building Surveying.