But what happens when a contract is awarded to company A, but only company B has the right to compete for the contract?
The Public Contracts (Scotland) Regulations 2012 govern the rules applicable to public procurement. Regulation 19(3) provides that where a contracting authority awards a specific contract based on a framework agreement it must do so to those parties to the framework agreement only. This was recently challenged in the case of Lightways (Contractors) Limited v Inverclyde Council  CSOH 169.
Inverclyde Council has a framework agreement listing eight contractors entitled to pitch for contracts through mini competition processes. One of the framework contractors is Amey OW Limited.
A procurement exercise for street lighting services was undertaken by the Council. The contract was awarded to Amey Public Services LLP. The LLP was not a party to the framework agreement although it is a part of the Amey group of companies.
Lightways sought an order from the court that the award of the contract to the LLP was unlawful and thereby ineffective on the basis of a breach of Regulation 19(3). The Council sought to argue that the error could be rectified by substituting OW (on the framework) for the LLP (not on the framework). The Council were unsuccessful.
The judge in this case took the view that there was no issue for a local authority in rectifying a minor clerical error at the time of contracting however that this particular situation was not administrative. The Council had no intention of awarding the contract to OW. There was no agreement between the parties that the contract would be between OW and the Council. He opined:
"If one were to drive at 45mph on a road with a 30 mph speed limit in the mistaken belief that the limit was 50mph, an intention (however genuine) to drive within the speed limit could not be equated with an intention to drive at less than 30mph."
So the fact that the Council did not intend to breach the regulations in that it intended to award the contract to a framework contractor cannot be equated with an intention to award the contract to the particular framework contractor within the same group of companies as the LLP. OW could not simply be substituted for the LLP.
The contract is ineffective. The Council failed to award the contract to a framework contractor, contrary to Regulation 49(5).
The Council have sought leave to appeal the decision.
Falling foul of procurement regulations can be an expensive mistake. It is important that, where a framework exists, those operating within the framework are clear on the companies (or LLPs) involved so as to avoid or mitigate exposure to litigation going forward.
Should you have any queries on the case, the regulations or require assistance with procurement procedures our public sector team will be happy to assist.