Secretive road contract for millions ruled illegal as court lashes civil servants for giving firm preferential treatment
Northern Ireland’s highest court has savaged civil servants for an illegal secretive process to award lucrative road contracts to a firm incapable of doing the work.
The Court of Appeal ruled that the Department for Infrastructure engaged in a “clandestine” preferential process with one bidder in a way which broke the law.
The senior judges found the department guilty of “an egregious breach of the principle of transparency” in how it gave six contracts to one company – even though that firm did not have the necessary resources.
In a verdict which raises fresh questions about the Northern Ireland Civil Service, half of the eight road resurfacing contracts were given to John McQuillan (Contracts) Ltd without written records of key decisions. In all, the eight contracts were worth up to £191.5 million over several years.
Lord Justice McCloskey, sitting with Lord Justice Maguire and Mr Justice Huddleston, said: “To design and operate this competition in such a way as to rank first six contract bids from an operator who had the resources to perform only four contracts at most defies common sense and commercial reality”.
In a devastating verdict, the court ruled: “The department engaged in a secret, bilateral and unrecorded process with one of multiple bidders.
“This is the very antithesis of what transparency requires. Furthermore both the substance of this engagement and its consequences for other bidders infringed the principle of equality of treatment.
“In short, McQuillans were accorded special treatment in a clandestine and purely bilateral process and, in consequence, the level playing field was distorted for other bidders.”
The department’s illegal activity only came to light because one of the bidders which had lost out – Northstone (NI) Ltd legally challenged what had happened.
Northstone had bid for seven of eight contracts while McQuillan had bid for all eight contracts. The department ranked six of McQuillan’s tenders first before entering private negotiations with the company which culminated in the firm withdrawing two of its bids and then being awarded four of the eight contracts.
In bidding for seven contracts, McQuillan had submitted details of identical staff who would do the work and the High Court found that at best there were enough staff to carry out four of the contracts.
Four civil servants held a key meeting on September 24, 2015 to discuss the contracts but no minutes of the meeting were provided to the court.
The failure to keep records of key meetings is further evidence that the behaviour revealed by the RHI scandal was not confined to the Department for the Economy, but was widespread across government.
The court said it had been told that the NI Civil Service did not have a policy for when meetings should be minuted – something which appears to conflict with evidence to the RHI Inquiry where officials accepted that their rules meant they should have been minuting any significant meeting.
Despite the elementary problems with the McQuillan documentation, civil servants ultimately made the firm preferred bidder for six of the eight competitions, something which the court said had never occurred before.
Setting out the highly unusual nature of what had gone on, the judges said: “Nor had a single operator held this many asphalt resurfacing contracts in so many territories simultaneously. “Success on this scale had never occurred in the past. The evidence in the lower court was that the previous highest for a single operator was three contracts out of nine regions.”
The judges said that the department’s secretive engagement with one firm “effectively unfolded in a ‘no rules’ world” and added: “Transparency furthers the ends of equal treatment. It is the handmaiden of equality of treatment of all competitors.”
Yesterday’s decision upholds a similarly scathing High Court verdict last year which the department had appealed.
The decision to contest the case in court – and then to appeal when the High Court ruled against it – will have substantially added to the bill for taxpayers.
Civil servants land taxpayers with huge bill
Taxpayers are now likely to foot a huge bill as a result of the behaviour of the civil servants responsible for the illegal activity which disadvantaged Northstone (NI) Limited.
It is now too late for the firm which unfairly lost out on the lucrative road resurfacing contracts to get that work.
However, it has sought damages to compensate for how it was treated, and is also likely to be awarded costs for all the hearings which have taken years to work through the court system, partly because the department chose to appeal the initial judgment.
Last night the department refused to say how much had been spend defending the case, nor whether it will now accept the verdict or attempt to appeal to the Supreme Court.
The News Letter asked the Department for Infrastructure whether it would accept the vetdict or seek to appeal to the Supreme Court, how much public money has been spent defending the case, and whether minister Nichola Mallon will instigate an internal investigation to establish accountability for how the law was broken, and support discipline against any civil servants found to be culpable.
In response, the department would only say: “The department notes the judgment from the Court of Appeal and we are considering it with our legal advisors.”
TUV leader Jim Allister said the judgement raised “major questions” about the department’s tendering process and the keeping of records within government departments generally.
“It beggars belief that meetings held to discuss the awarding of multimillion pound contracts could be held without any minutes being kept. This is an issue which I have sought to resolve through my Functioning of Government Act which places a legal obligation on departments to keep proper records.
“Failure to check if the company had sufficient staff to fulfil the contract was a very basic error and will raise in the minds of many basic questions as to how public money is being managed.
“It is hard to disagree with Lord Justice McCloskey’s assessment that the decision of the department to award more contracts to a company than it had resources to carry out ‘defies common sense and commercial reality.’”
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