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The Public Contracts (Scotland) Regulations 2012

Changes over time for: Section 49

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Ineffectiveness ordersS

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49.—(1) Without prejudice to all rights and obligations in respect of the period leading up to the date of the order, an ineffectiveness order made in relation to a contract renders unenforceable all rights and obligations directly arising from the contract in respect of the period commencing on the date of the order.

(2) Subject to any order made under paragraph (10)(b), obligations rendered unenforceable by an ineffectiveness order made in relation to a contract must not be performed by the parties to the contract.

(3) Without prejudice to any power of the Court to make an ineffectiveness order in relation to a contract based on a framework agreement in accordance with this Part, an ineffectiveness order made in relation to a framework agreement prohibits, with effect from the date of the order, the awarding of contracts based on the framework agreement.

(4) Subject to paragraphs (12) and (18), the Court must make an ineffectiveness order where one of the grounds for ineffectiveness set out in paragraphs (5), (7) and (8) applies.

(5) The first ground for ineffectiveness is that the contracting authority has entered into a contract or has concluded a framework agreement without sending a contract notice to the Official Journal in circumstances where the contract or framework agreement was not exempt from the requirement for prior publication of a contract notice.

(6) The first ground for ineffectiveness does not apply where—

(a)the contracting authority sent to the Official Journal a notice in the form of the voluntary ex ante transparency notice in Annex XIV to Commission Regulation (EC) No 1564/2005, expressing its intention to enter into the contract or to conclude the framework agreement and containing—

(i)the name and contact details of the contracting authority;

(ii)a description of the object of the contract or framework agreement;

(iii)a justification of the decision of the contracting authority to award the contract or conclude the framework agreement without prior publication of a contract notice;

(iv)the name and contact details of the economic operator to be awarded the contract or to become party to the framework agreement; and

(v)any other information which the contracting authority considered useful; and

(b)the contracting authority allowed a period of at least 10 days to elapse between the date of publication in the Official Journal of the notice referred to in sub-paragraph (a) and the date on which the contracting authority entered into the contract or concluded the framework agreement.

(7) The second ground for ineffectiveness is that—

(a)the contracting authority has breached regulation 32(1) (requirement to send decision notice to all tenderers and all candidates concerned) or (3) (requirement to delay entering into a contract or concluding a framework agreement for an applicable standstill period) or 47(9) (prohibition on entering into a contract or concluding a framework agreement when proceedings are brought);

(b)the contracting authority's breach prevented the economic operator from bringing proceedings or obtaining a remedy before the contract was entered into or the framework agreement was concluded;

(c)in awarding the contract or concluding the framework agreement there has been another breach of these Regulations, other than a breach of regulation 4(3) (in the case of a Part B services contract), 8(21), 32(1) or (3) or this Part; and

(d)the breach referred to in sub-paragraph (c) has affected the chances of the economic operator bringing proceedings under this Part to obtain the contract or become a party to the framework agreement.

(8) The third ground for ineffectiveness is that—

(a)the contract is a contract based on a framework agreement or a contract awarded under a dynamic purchasing system;

(b)the contract was awarded in breach of—

(i)regulation 19(7)(b) or (8), in the case of a contract based on a framework agreement (rules governing the award of contracts based on a framework agreement); or

(ii)regulation 20(11), (12), (13) or (14), in the case of a contract awarded under a dynamic purchasing system (rules governing the award of contracts under a dynamic purchasing system); and

(c)the estimated value of the contract at the relevant time is not less than the relevant threshold.

(9) The third ground for ineffectiveness does not apply where—

(a)the contracting authority has by notice in writing informed the economic operators that submitted tenders of its decision in relation to the award of the contract in accordance with regulation 19(9)(e) or 20(15), and the notice includes the information referred to in regulation 32(2)(d); and

(b)the contracting authority allowed a period of at least the relevant standstill period to elapse between the date of sending of the notice referred to in sub-paragraph (a) and the date on which the contracting authority entered into the contract.

(10) If an ineffectiveness order is made, the Court must, without prejudice to the other powers of the Court—

(a)order the payment by the contracting authority of a financial penalty; and

(b)make such other order as the Court considers appropriate to address the consequences of the ineffectiveness order on the rights and obligations of the parties to the contract or framework agreement.

(11) Before making an order under paragraph (10)(b), the Court must have regard to any terms of the contract or framework agreement relating to the rights and obligations of the parties should an ineffectiveness order be made in relation to the contract or framework agreement.

(12) The Court may decline to make an ineffectiveness order where the Court is satisfied that overriding reasons relating to a general interest require that the enforceability of the rights and obligations arising from the contract or framework agreement should be maintained.

(13) For the purposes of paragraph (12)—

(a)economic interests directly linked to the contract or framework agreement do not constitute overriding reasons relating to a general interest; and

(b)economic interests in the effectiveness of the contract or framework agreement may only be considered as overriding reasons relating to a general interest in exceptional circumstances where ineffectiveness would lead to disproportionate consequences.

(14) For the purposes of paragraph (13)(a), economic interests directly linked to the contract or framework agreement include the costs—

(a)resulting from the delay in the performance of the contract or framework agreement;

(b)resulting from the commencement of a new procurement procedure;

(c)resulting from the change of the economic operator performing the contract or framework agreement; and

(d)of legal obligations resulting from an ineffectiveness order.

(15) Where the Court declines to make an ineffectiveness order under paragraph (12), the Court must, without prejudice to the other powers of the Court, order—

(a)the payment by the contracting authority of a financial penalty; or

(b)the shortening of the duration of the contract or framework agreement.

(16) In determining what order to make under paragraph (10)(a) or (15), regulation 48(4) applies and, in the case of an order made under paragraph (10)(a), the Court must have regard to the extent to which the contract or framework agreement will remain in effect in respect of the period leading up to the date of the ineffectiveness order.

(17) Regulation 48(5) and (6) applies to an order made under paragraph (15)(b) as it applies to an order made under regulation 48(3)(b).

(18) In proceedings under this Part to which regulation 47(7)(b) applies, the Court does not have power to make an ineffectiveness order if the proceedings would be incompetent if regulation 47(7)(a) applied to the proceedings.

(19) In paragraph (8)(c), “estimated value”, “relevant time” and “relevant threshold” have the same meanings they have in regulation 8.

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