SIAC Construction Ltd v Mayo County Council (C-19/00)

• Jurisdiction: Ireland
• Judge: FENNELLY J.
• Judgment Date: 09 May 2002
• Neutral Citation: [2002] IESC 39
• Date: 09 May 2002
• Court: Supreme Court
• Docket Number: [S.C.

SIAC CONSTRUCTION LTD v. MAYO CO COUNCIL

BETWEEN

SIAC CONSTRUCTION LIMITED

Applicant/Appellant

and

THE COUNTY COUNCIL OF THE COUNTY OF MAYO

Respondent/Respondent

[2002] IESC 39

Keane C.J.

Denham J.

Murray J.

Hardiman J.

Fennelly J.

Record No. 329/97

High Court Record No. 305 JR

THE SUPREME COURT

Synopsis:

CONTRACT

Public procurement

Judicial review - European law - Local authority - Tender process - Whether local authority breached EU procurement rules - Whether ultimate cost factor part of tender criteria (329/1997 - Supreme Court - 9/5/2002)

Siac Construction Ltd v Mayo County Council - [2002] 3 IR 148 - [2002] 2 ILRM 401

Facts: The applicant had responded to a tender advertised by the respondent. The applicant's tender, which was the lowest in price, was not accepted. The applicant initiated proceedings claiming that the respondent breached EU procurement rules. The applicant claimed the respondent was not entitled to take into account the ultimate out-turn of the cost of the contract. Laffoy J dismissed the proceedings in the High Court. On appeal a reference was made to the European Court which ruled that provided the ultimate cost of the contract formed part of the tender contract it was an admissible criterion for awarding the contract. On appeal the applicant contended that the ultimate cost factor was not part of the award criteria notified in the tender documents.

Held by the Supreme Court (Fennelly J delivering judgment; Keane CJ, Denham J, Murray J and Hardiman J agreeing) in dismissing the appeal. It was recognised that awarding authorities had a wide margin of discretion in the area of public procurement. Where there was a failure to respect the general principles of equality, transparency or objectivity that margin of discretion would not be permitted. The expert independent advice of the consulting engineer to the respondent was to the effect that the applicant's approach to pricing would render management and control of the contract more difficult. The respondent acted within its margin of discretion and followed objectively verified criteria.

Citations:

EEC DIR 71/305 ART 29(1)

EEC DIR 71/305 ART 29(2)

TREATY OF ROME ART 234

SIAC CONSTRUCTION LTD V CO COUNCIL OF THE COUNTY OF MAYO 2001 3 CMLR 1551

QUEEN V HM TREASURY EX-PARTE UNIVERSITY OF CAMBRIDGE ECR 2000 I-8035

COMMISSION OF THE EUROPEAN COMMUNITIES V KINGDOM OF DENMARK 1993 ECR I-3353

COMMISSION OF THE EUROPEAN COMMUNITIES V KINGDOM OF BELGIUM 1996 ECR I-2043

EEC DIR 89/440

ASSOCIATED PROVINCIAL PICTURE HOUSES LTD V WEDNESBURY CORP 1948 1 KB 223

KEEGAN, STATE V STARDUST VICTIMS COMPENSATION TRIBUNAL 1986 IR 632

O'KEEFFE V BORD PLEANALA 1993 1 IR 39

EEC DIR 89/665

ADIA INTERIM SA V COMMISSION OF THE EUROPEAN COMMUNITIES 1996 ECR II-321

GEBROEDERS BEENTJES BV V STATE OF THE NETHERLANDS 1988 ECR 4635

ABRAHAMSON ENGINEERING LAW AND THE ICE CONTRACTS 4ED 14

EUROPEAN COMMUNITIES (REVIEW PROCEDURES FOR THE AWARD OF PUBLIC SUPPLY & PUBLIC WORK CONTRACTS) REGS 1992 SI 38/1992 ART 3

EUROPEAN COMMUNITIES (REVIEW PROCEDURES FOR THE AWARD OF PUBLIC SUPPLY & PUBLIC WORK CONTRACTS) REGS 1992 SI 38/1992 ART 4

EUROPEAN COMMUNITIES (REVIEW PROCEDURES FOR THE AWARD OF PUBLIC SUPPLY & PUBLIC WORK CONTRACTS) REGS 1992 SI 38/1992 ART 8

EEC DIR 89/665 ART 1(1)

EEC DIR 89/665 ART 1(3)

EEC DIR 89/665 ART 2(1)

EEC DIR 89/665 ART 2(5)

EEC DIR 89/665 ART 2(6)

TREATY OF ROME ART 230

ALSACE INTERNATIONAL CAR SERVICE (AICS) V EUROPEAN PARLIAMENT ECR 2000 II-2849

EEC DIR 92/50

AGENCE EUROPEENE D'INTERIMS V COMMISSION OF THE EUROPEAN COMMUNITIES 1978 ECR 2215

EMBASSY LIMOUSINES & SERVICES V PARLIAMENT 1998 ECR II-4239

UPJOHN LTD V LICENSING AUTHORITY 1999 ECR I-0223

ETABLISSEMENTS CONSTEN SARL & GRUNDIG-VERKAUFS-GMBH V COMMISSION OF THE EUROPEAN ECONOMIC COMMUNITY 1996 ECR 1

BALKAN- IMPORT EXPORT V HAPUTZOLLAMT BERLIN-PACKHOF 1976 ECR 19

OHRGAARD & DELVAUX V COMMISSION OF THE EUROPEAN COMMUNITIES 1983 ECR 2379

MARTA V COMMISSION OF THE EUROPEAN COMMISSION 1993 ECR I-3203

QUEEN V MIN OF AGRICULTURE EX-PARTE NATIONAL FARMERS UNION & ORS 1998 ECR I-2211

EEC DIR 65/65

1 9th day of May, 2002 by FENNELLY J. (nem diss)

2 This appeal concerns the public procurement rules of the European Union. The European Court of Justice has answered a question referred to it by this Court, in 1999. The judgment of the European Court was given in 2001. The parties are not agreed on the extent to which that judgment determines the issues on the appeal. The respondents complain, in particular, that the appellant (for brevity hereafter described as "SIAC") seeks to rely on parts of the judgment of the European Court to pursue issues which had not previously figured in the appellant's appeal from the judgment of the High Court.

3 In 1992, the respondent County Council, (for brevity described as "the County Council"), advertised for tender a major sewerage works at Ballinrobe. The award was, as advertised, to go to the "most economically advantageous" tender and not to be made on the basis of "lowest price only." These are the two alternative bases for advertising public works contracts under EU procurement rules.

4 The price submitted by SIAC was the lowest after mathematical adjustment. However, the consulting engineer engaged by the County Council reported that the competing tender of Pat Mulcair might prove "at the end of the day to be the lowest." SIAC claimed in its High Court proceedings that the County Council, by relying on this conclusion, breached the EU public procurement rules. In particular, it submitted that it was not permissible to take into account the likely ultimate out-turn of the cost of the contract: SIAC's tender, being the mathematically adjusted lowest, had to be accepted. This argument failed in the High Court. On appeal to this Court, the question whether the ultimate cost to the County Council was an admissible criterion for awarding the contract was referred to the European Court, which ruled in substance that, provided it formed part of the tender criteria, it was.

5 At the resumption of the appeal, the appellant has argued that the possibility of awarding the contract on this basis was not part of the award criteria notified in the tender documents. The County Council objects that this is a new argument: it was not advanced in the High Court. Though it was advanced on the appeal at the earlier stage, the County Council had always objected. Indeed, it was implicit in the form of the questions referred to the European Court that the criteria covered this possibility. Furthermore, they did in fact do so.

6 In these circumstances, the European Court has left it to this Court to assess, in accordance with national law, the scope of the award criteria, specifically whether they should be interpreted as notifying tenderers that the County Council would decide on the basis of the ultimate out-turn cost. In doing so, I will consider in detail those parts of those documents which bear on that issue. The objection taken by the County Council requires also consideration of the nature of the case made in the pleadings, heretofore, by SIAC.

THE INVITATION TO TENDER

7 On 20th February 1992, the County Council advertised an open tender procedure in the Official Journal of the European Communities for the construction of a sewerage and sewage disposal scheme for the town of Ballinrobe. It was to consist of pipelines for sewers, storm water drains, rising mains, water supply pumping stations and waste treatment works together with a detailed list of fittings such as manholes, storm overflows and drains, ventilating columns, and gullies. The notice named the Consulting Civil Engineer as Patrick J. Tobin and Company. Mr Downes of that company ("the Engineer") was the responsible engineer, from whom documents were to be obtained. It also specified dates for completion of the works as well as for steps in the tender procedure. The award criteria insofar as they were stated in the notice were:

"The contract shall be awarded to the competent contractor submitting a tender which is adjudged to be the most advantageous to the council in respect of cost and technical merit, subject to the approval of the Minister for the Environment."

8 The relevant directive then in force was Council Directive 71/305/EC of 26 July 1971 concerning the co-ordination of procedures for the award of public works contracts (OJ, English Special Edition 1971 (II), p. 682), as amended (hereinafter "directive 71/305"). Essentially, the present case is concerned only with Article 29(1) and (2):

9 1. The criteria on which the authorities awarding contracts shall base the award of contracts shall be:

10 • either the lowest price only;

11 • -or, when the award is made to the most economically advantageous tender, various criteria according to the contract: e.g. price, period for completion, running costs, profitability, technical merit.

12 2. In the latter instance, the authorities awarding contracts shall state in the contract documents or in the contract notice all the criteria they intend to apply to the award, where possible in descending order of importance."

13 It is clear that the County Council opted for the second indent of Article 29(1), i.e., that it would choose "the most economically advantageous tender" and not award on the basis of the "lowest price only." The set of tender documents was complex, as one would expect where a local authority organises a large civil engineering project.

14 The "Instructions to Tenderers," which were accompanied by other documents required that the instructions themselves be read carefully and that the "whole of these documents should be read and their true intent and meaning ascertained..." The contract was described as being "in the category of measure and value contracts." The tender procedures...