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Council Pays Price for Breaching Public Procurement Rules

Published: 09 July 2014, in categories: Landlord and Tenant Updates | Legal Updates | News and Updates

In a case with important implications for public procurement, a local authority which failed to publicly advertise contracts for a regeneration project will have to pay back almost £160,000 in European grants it received in respect of the development.

The Council had received grant aid from the European Regional Development Fund towards the £900,000 cost of the office and landscaping project. However, rather than advertising the contractual opportunity to all, it selected the successful tenderer from a ‘long list’ of eight contractors which it considered equipped and able to deliver the project.

The Department for Communities and Local Government decided to claw back 25 per cent of the grant money – nearly £160,000. In dismissing the Council’s challenge to that decision, the High Court found that it had breached its EU obligations to advertise the contracts in the national or local press and on its own website. The terms on which the grant had been made had also been breached.

Emphasising the ‘demanding obligations’ on public grant recipients to ‘get their own processes right’, the Court found that the claw back was proportionate even though the Council had acted in good faith and there had been no intention on its part to evade its responsibilities.

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