This document summarizes situations where the threat of a contract being declared ineffective should be considered in procurement decision making. Some key areas discussed include: 1) Decisions made in good faith around whether a contract requires an OJEU advert could potentially result in a contract being declared ineffective if the decision is later deemed incorrect. 2) Scope changes to a procurement may treat it as a direct award if it evolves outwith the original advert scope. 3) The classification of services and whether contracts meet value thresholds can be difficult judgements, with ineffectiveness risk increasing for decisions near the margins. 4) Significant changes to contractors or subcontractors after award may require a new competition to avoid

1. Procurement law remedies –ineffectiveness
For procurements commenced on or after 20 December
2009, a contract awarded without an advert, in breach of
the procurement regulations, may be declared ineffective.
This note summarises other situations where the threat of
ineffectiveness should form part of decision making.
Issue Comment
Introduction Sometime a judgement call is required as to whether the
procurement rules require an OJEU advert and competition.
In this situation an authority may in good faith and on balance
decide that an advert is not required. If that decision is
incorrect, there is the potential for ineffectiveness.
Scope of If the scope evolves, it may be outwith the scope of the
procurement original advert, and so treated as a direct award.
Land deals Pure land deals are outwith the scope of procurement law, but
there is a spectrum of application from a pure land deal to
what amounts to a works contract with a land element.
The "Teckal" in- An authority does not need to compete a contract awarded to
house exemption an "in-house" body, for example a company owned and
controlled by a local authority. The tests for this exemption
being met are by no means black and white.
Changes to Like contract variations, the courts may find that significant
contractors or sub- changes to consortium members require a new competition.
contractors This is a developing area of procurement law.
Use of the In some circumstances an authority is permitted to make a
negotiated direct award e.g. extreme urgency. As with the other
procedure without a examples, there are judgements to be made.
notice
Part B services Part B services do not require an OJEU advert. In some
circumstances the classification of a service can be difficult.
Thresholds With contract values on the margins of the thresholds, the
safest course was always to follow the OJEU route. The risk
of ineffectiveness as a consequence of getting valuation
wrong increases the importance of the decision.
Contract Variation If a contract is materially changed after award, a new
procurement may be required. In a challenge situation, the
courts may treat the amended contract as a new and directly
awarded contract.
This note is by its nature a summary only, and is not legal advice.