Supreme Court dismisses appeal where County Council awarded contract based on uncertain future costs despite lower initial price.

THE SUPREME COURT

Record No. 329/97

High Court Record No. 305 JR

Keane C.J.

Denham J.

Murray J.

Hardiman J.

Fennelly J.

BETWEEN

SIAC CONSTRUCTION LIMITED

Applicant/Appellant

and

THE COUNTY COUNCIL OF THE COUNTY OF MAYO

Respondent/Respondent

JUDGMENT delivered the 9th day of May, 2002 by FENNELLY J.

This appeal concerns the public procurement rules of the European Union. The European Court of Justice has answered a

question referred to it by this Court, in 1999. The judgment of the European Court was given in 2001. The parties are not

agreed on the extent to which that judgment determines the issues on the appeal. The respondents complain, in particular, that

the appellant (for brevity hereafter described as “SIAC”) seeks to rely on parts of the judgment of the European Court to

pursue issues which had not previously figured in the appellant’s appeal from the judgment of the High Court.

In 1992, the respondent County Council, (for brevity described as “the County Council”), advertised for tender a major

sewerage works at Ballinrobe. The award was, as advertised, to go to the “most economically advantageous” tender and not to

be made on the basis of “lowest price only.” These are the two alternative bases for advertising public works contracts under

EU procurement rules.

The price submitted by SIAC was the lowest after mathematical adjustment. However, the consulting engineer engaged by the

County Council reported that the competing tender of Pat Mulcair might prove “at the end of the day to be the lowest.” SIAC

claimed in its High Court proceedings that the County Council, by relying on this conclusion, breached the EU public

procurement rules. In particular, it submitted that it was not permissible to take into account the likely ultimate out-turn of the

cost of the contract: SIAC’s tender, being the mathematically adjusted lowest, had to be accepted. This argument failed in the

High Court. On appeal to this Court, the question whether the ultimate cost to the County Council was an admissible criterion

for awarding the contract was referred to the European Court, which ruled in substance that, provided it formed part of the

tender criteria, it was.

At the resumption of the appeal, the appellant has argued that the possibility of awarding the contract on this basis was not

part of the award criteria notified in the tender documents. The County Council objects that this is a new argument: it was not

advanced in the High Court. Though it was advanced on the appeal at the earlier stage, the County Council had always

objected. Indeed, it was implicit in the form of the questions referred to the European Court that the criteria covered this

possibility. Furthermore, they did in fact do so.

In these circumstances, the European Court has left it to this Court to assess, in accordance with national law, the scope of

the award criteria, specifically whether they should be interpreted as notifying tenderers that the County Council would decide

on the basis of the ultimate out-turn cost. In doing so, I will consider in detail those parts of those documents which bear on

that issue. The objection taken by the County Council requires also consideration of the nature of the case made in the

pleadings, heretofore, by SIAC.

THE INVITATION TO TENDER

On 20th February 1992, the County Council advertised an open tender procedure in the Official Journal of the European

Communities for the construction of a sewerage and sewage disposal scheme for the town of Ballinrobe. It was to consist of

pipelines for sewers, storm water drains, rising mains, water supply pumping stations and waste treatment works together with

a detailed list of fittings such as manholes, storm overflows and drains, ventilating columns, and gullies. The notice named the

Consulting Civil Engineer as Patrick J. Tobin and Company. Mr Downes of that company (“the Engineer”) was the responsible

engineer, from whom documents were to be obtained. It also specified dates for completion of the works as well as for steps in

the tender procedure. The award criteria insofar as they were stated in the notice were:

“The contract shall be awarded to the competent contractor submitting a tender which is adjudged to be the most

advantageous to the council in respect of cost and technical merit, subject to the approval of the Minister for the

Environment.”

The relevant directive then in force was Council Directive 71/305/EC of 26 July 1971 concerning the co-ordination of procedures

for the award of public works contracts (OJ, English Special Edition 1971 (II), p. 682), as amended (hereinafter “directive

71/305”). Essentially, the present case is concerned only with Article 29(1) and (2):

1. The criteria on which the authorities awarding contracts shall base the award of contracts shall be:

- either the lowest price only;

- or, when the award is made to the most economically advantageous tender, various criteria according to the

contract: e.g. price, period for completion, running costs, profitability, technical merit.

2. In the latter instance, the authorities awarding contracts shall state in the contract documents or in the contract

notice all the criteria they intend to apply to the award, where possible in descending order of importance.”

It is clear that the County Council opted for the second indent of Article 29(1), i.e., that it would choose “the most

economically advantageous tender” and not award on the basis of the “lowest price only.” The set of tender documents was

complex, as one would expect where a local authority organises a large civil engineering project.

The “Instructions to Tenderers,” which were accompanied by other documents required that the instructions themselves be

read carefully and that the “whole of these documents should be read and their true intent and meaning ascertained....” The

contract was described as being “in the category of measure and value contracts.” The tender procedures ascribed a crucial

role to the Engineer. It was stated that the County Council did “not bind [it]self to accept the lowest or any tender,” though

SIAC maintain that this provision merely entitles the County Council not to accept any tender and not to accept any tender

other than the lowest. The Instructions provided at paragraph 37:

"Contractors are hereby put on notice that the lowest or any tender need not necessarily be accepted and the role of

the Consulting Engineer is to make an adjudication and a recommendation to the Mayo County Council. Furthermore the

award of the Contract will be made, subject to Mayo County Council being satisfied as to the ability of the Contractor to

carry out the work, to the Contractor who submits a tender in accordance with the Tender Documents which is

adjudged to be most economically advantageous to the Council in respect of price, and technical merit."

There was a voluminous Bill of Quantities, which had been prepared by the Engineer, in five substantial volumes of several

hundred pages detailing each and every item of work to be carried out. Tenderers were required to price all of the more than

four thousand items in the Bill of Quantities. The priced Bill of Quantities was one of the most important documents that had to

be returned as part of the tender. It was on the basis of these quantities together with the provisional and prime cost sums

that the tenderers submitted their tender prices. The totals thus reached produced the single total price that was entered as

the tender price in the Form of Tender.

One provision of the Description of the Works (paragraph 1.24) provided in relevant part:

"It is the policy of the Engineer to make a detailed examination of the Bill of Quantities and other documentation

furnished by the lowest, second lowest and third lowest Tenderers as these appear at the official opening of tenders by

Officials and Elected Representatives of the Mayo County Council ...... [Provision for correction of arithmetic mistakes]

... In examining the Bill of Quantities the Engineer is also entitled to make comparisons as between prices quoted in his

estimate of the cost so as to ensure that in his opinion the several items of the Bills have been adequately priced to

ensure compliance up to the highest standard of workmanship, and without resort to unwarranted additional expenditure

in the event that the tender appears to be underpriced. In making his recommendation the Engineer will also have (sic)

account of the stipulation in the public advertisement that the lowest or any tender need not necessarily be

accepted.........”

Twenty four tenders were received. The Engineer produced an extremely detailed report. Following arithmetic correction, the

three lowest tenders were:

SIAC £5,378,527.69

Pat Mulcair £5,508,918.82

Pierse Contracting £5,623,966.15

The Engineer reported that all three were of equal technical merit and that SIAC had submitted the lowest mathematically

adjusted tender. However, for reasons which he explained in detail, having acknowledged that the competence of SIAC was

beyond question, he recommended with “the greatest reluctance” that the contract be awarded to Pat Mulcair.

He stated that he was disappointed with the make-up of the SIAC tender and that he was disturbed by the method of pricing.

He said: “in my view [the pricing method] gives a Tender Sum which is more apparent than real.” In addition, he went so far as

to doubt the validity of the tender. The principles of equality in tendering oblige awarding authorities which are not valid. In the

event, he did not reject it on that ground. He went on in what became a crucial passage:

“In addition, I feel that the pricing system used if not taking wholly from, certainly greatly reduces, the freedom of the

Consulting Engineer to properly and fully administer the contract in a way that the Consulting Engineer’s rights under the

contract have been greatly curtailed by the methods used to make up SIAC’s priced Bill of Quantities...”

The nub of the Engineer’s complaint was that SIAC had zero-rated a high proportion of items in the Bill of Quantities. This is

permissible and it had been done by Pat Mulcair but to a much lesser extent. Of 4,097 items in the Bill of Quantities, SIAC zero

rated 1,125 or 27.5%; Pat Mulcair zero rated 741 or 18%. Mulcair had priced all major items, leaving only lesser items among the

18% unpriced. The Engineer considered that the Mulcair tender was “the most balanced of the three lowest tenders containing

as it does very very few items with high rates or rates above the ordinary.”

His other complaint related to the treatment of a provisional sum of £90,000 under the Heading “Materials.” The Instruction to

the Tenderers stated: “Percentage addition for overheads, profit etc.” Instead of making an addition, SIAC, in effect, deleted

this provisional sum by simply writing in “-100%”. Pat Mulcair wrote “+0%.”

It should be recorded, of course, that both tenderers made, as they were entitled to under the terms of the tender, a

substantial general adjustment to his preliminary costed tender sum: SIAC deducted “£100,000 and Pat Mulcair £557,546.” In

the end, the SIAC tender, as adjusted, was some £131,000 lower than Pat Mulcair’s. The Engineer also noted in his report that

SIAC had not furnished a date for completion as they were required to do. However, this is no longer an issue, as it was

decided in the High Court that this did not affect the decision.

The Engineer recommended accepting the Mulcair tender. The County Manger made an order on 25th August 1992 approving

the acceptance and the Minister for the Environment approved. The County Council entered into a contract with Pat Mulcair

and the works were completed.

SIAC sought, pursuant to the procedure laid down, an explanation for the failure to award them the contract. The County

Council, in compliance with the directive, gave its response in a letter of 30th August 1993, as follows:

"(a) Their failure to submit a 'time for completion' at the date of the tender.

(b) Their withdrawal by means of 100% reduction of a £90,000.00 provisional sum against which they were only allowed

to add a percentage for overheads, profit, etc.

(c) Their failure to price major items of measured word throughout the various Bills of Quantities, e.g. rock, back-filling,

large manholes especially measured, connections to pipelines, steel reinforcement, excavations and filling treatment

works site and entrance road as well as other important items.

(d) This is a Measure and Value Contract where expenditure can and should be controlled and the Contract managed on

the basis of items priced in the Bill of Quantities. Where major items of work are un-priced the Bills of Quantities become

distorted and proper administration, management and control of the entire progress of works and costs thereof are

rendered extremely difficult if not well nigh impossible.

(e) At page 17 of the 'Instructions to Tenderers' the following statement appears:-

'Contractors are hereby put on notice that the lowest or any tender need not necessarily be accepted and the

role of the consulting engineer is to make an adjudication and a recommendation to Mayo County Council.

Furthermore, the award of the Contract will be made subject to Mayo County Council being satisfied as to the

ability of the contractor to carry out the work, to the contractor who submits a tender in accordance with the

tender documents which is adjudged to be most economically advantageous to the Council in respect of price and

technical merit.'"

HIGH COURT PROCEEDINGS

SIAC instituted proceedings in the High Court, firstly by way of judicial review, and, secondly by way of Special Summons. They

did not seek to prevent the contract with Pat Mulcair from proceeding which it, in fact, did. They sought declarations that the

County Council had acted in breach of the public procurement requirements, any issue of damages being left over until the

determination of that issue. Laffoy J gave judgment on 17th June 1997 dismissing the claim.

The Judicial Review Statement alleged that the SIAC tender was the “most economically advantageous” and that that of Pat

Mulcair was not. It referred to the reasons for the award furnished by the County Council in its letter of 30th August 1993. One

of the County Council’s reasons, cited in the Statement was:

“This is a measure and value contract where expenditure can and should be controlled and the contract managed on the

basis of items priced in the Bill of Quantities. Where major items of work are unpriced the Bills of Quantities become

distorted and proper administration, management and control of the entire progress of works and costs thereof

rendered extremely difficult if not well nigh impossible.”

Laffoy J heard expert evidence about the basis of the Engineer’s report. In particular evidence was given by Mr Staveley, a

consulting engineer, on behalf of SIAC, with regard to the opinion of the Engineer upon which the County Council based its

award of the contract. SIAC relied on the evidence of Mr Staveley to claim that the Engineer’s advice was incorrect even in the

sense, for the purpose of judicial review, of being “irrational” or “unreasonable.” Laffoy J expressed her conclusions on this issue

in a passage showing that “ultimate cost” was the issue in the hearing before her. She spoke of the discretion exercised by the

County Council, as the awarding authority “in a context in which a large measure of professional expertise as to the final out-

turn came into play.” She went on to say that “underlying the ..challenge on the ground of unreasonableness or irrationality is

the assertion that Mr Staveley is correct in his professional opinion that Mr Downes’ [the County Council engineer] professional

opinion that the applicant’s tender, although the lowest, would not turn out to be the most economically advantageous..... is

incorrect.” (page 30 of the unreported judgment).

There were three main issues involved in the attack on the County Council’s decision.

One is no longer in contention on the appeal and can be dealt with briefly. The Engineer criticised SIAC in his report for failure

to specify a completion date. Each tenderer was required to specify a completion date. However, this was not made one of the

award criteria. Nonetheless, Laffoy J concluded on the evidence that the Engineer had attributed no substantial relevance to

this issue and the tender was not rejected for this reason. Although one ground of appeal criticises the learned trial judge’s

failure to find that the County Council had taken into account an irrelevant consideration, that matter has not been pursued on

the hearing of the appeal.

The first of the remaining substantial arguments concerned the provisional sum of £90,000. The Engineer’s concern was that

SIAC, by making a 100% deduction, had simply deleted this item from the contract. SIAC, however, at a pre-adjudication

meeting said that the item was overpriced and that they believed that, if required to perform this work, they would have to do

so free of charge. The Engineer considered that SIAC, by treating the matter in this way, rather than by an adjustment, had

distorted the tendering process. The Engineer treated SIAC as providing nil expenditure under this heading which gave them an

advantage in the tendering process. Laffoy J noted, however, that, “even if one adjusted the competing tenders to reflect this

possible, if unlikely, eventuality, by reducing Mulcair’s tender price by £99,000 ( the provisional sum of £90,000 plus £9,000 in

respect of VAT), the result was that the Applicant’s tender was still lower than Mulcair’s.” She continued: “However, the

likelihood of there being no expenditure on dayworks material was extremely remote and, if a sensitivity analysis had been

carried out by Mr Downes, as Mr. Staveley presumed in his report.........the appropriate reduction on Mulcair’s tender price to

eliminate the distortion would have been of a lesser order than £99,000 and the differential between the Applicant’s tender and

Mulcair’s tender on that adjusted basis would have been greater than £31,391.13.”

Laffoy J did not, however, reach any further conclusion on this item, although SIAC claims that the County Council’s reason for

refusal in this respect was invalid or mistaken.

The second substantive issue relates to the pricing of the Bill of Quantities and is more central to the reason for the making of

the award to Mulcair. The Engineer criticised the approach of SIAC to the pricing of the Bill of Quantities. As already indicated,

SIAC zero-rated a higher proportion of items than Mulcair. The Engineer’s concern was that this would affect his ability to

control work and expenditure under the contract. As stated by Laffoy J, his worry was that “the assessment at adjudication

stage of the effect of quantity fluctuations on the contract price was difficult, if not impossible, to evaluate.” And “control of

the price of ordered variations post-contract would be difficult, if not impossible, if the Applicant’s tender was accepted.” Mr

Staveley gave evidence that it was the duty of the Engineer to seek clarification at the pre-adjudication interview of the

quantities allowed for by the tenderers and the rates applicable thereto.” The Engineer, on the other hand, considered that

such procedures would open the door to post tendering. Laffoy J summarised the opposing contentions of the engineers at

considerable length. Again, contrary to the submission of SIAC, she did not find that the Engineer or the County Council had

adopted a mistaken or invalid approach. A passage cited by SIAC for this purpose, stating that “Mr Downes was entitled to and

should have required the Applicant’s representatives to produce a complete build-up of prices at the pre-adjudication

interview,” is taken from the learned trial judge’s summary of Mr Staveley’s evidence.

Central to the debate was the County Council’s view that SIAC’s treatment of the pricing of the Bill of Quantities posed a

serious risk that it would be difficult, if not impossible to control the cost of the contract and SIAC’s response that the County

Council failed to investigate and quantify this alleged danger, in particular by seeking clarification from SIAC in the post-tender

and pre-adjudication process. This, in turn, raised the question of whether a tenderer should be allowed the facility of explaining

such matters post-tender, i.e., outside the tendering procedure.

Laffoy J did not go further than to summarise the opposing contentions. She held that the County Council had “reserved to

itself the discretion to choose the criteria by which the most economically advantageous tender should be identified.” She

continued:

“In choosing the contractual criteria which were stipulated in the contract notice and amplified in the other contract

documentation, and in particular in clause 1.24 of the specification, [the County Council], as it was entitled to do under

the 1971 Directive, as amended, assumed a discretionary power of selection which was largely predicated on the

exercise of professional judgement based on professional expertise.”

Her approach was that the tendering was very competitive, with a difference of less than £131,000 between the two lowest

corrected tenders in a contract valued in excess of £5.5 million and which the Engineer estimated at in excess of £6.2 million. In

fact, as mentioned above, she had at another point considered the difference to be somewhat in excess of £31,000. The choice

between those figures depends, of course, on the treatment of the provisional sum of £90,000 plus VAT in respect of dayworks

materials. Having adopted that view of the figures, she noted that the discretion of the County Council was based on an

estimation of quantities by the Engineer “the accuracy of which could only be ascertained when the contract had been

awarded and the implementation of the works was in hand, in other words, in a context in which a large measure of

professional expertise as to the final out-turn came into play, both on the part of the tenderers and on the part of the

adjudicator.” She approached her task of judicially reviewing the decision on the principle that: “The Court’s function [was] to

determine whether the [the County Council’s] decision was unreasonable in the sense that it plainly and unambiguously flew in

the face of fundamental reason and common sense, or not.” Her final conclusion on the conflict of experts was: “It is not the

Court’s function to assess the two conflicting professional opinions to determine which is correct on the balance of

probabilities.” Since SIAC had not discharged the onus in the terms of the principle of judicial review which she had posited, she

dismissed the claim.

THE APPEAL AND THE REFERENCE

In their Notice of Appeal, SIAC took issue principally with the approach of the learned trial judge to the exercise of judicial

review, in particular her adoption of what might be called a pure Wednesbury test. A number of grounds of appeal criticise her

conclusions on this issue, arguing in general terms for a modified approach to judicial review for cases, such as the present,

involving the protection of rights derived from Community law. As already stated, SIAC also continued to maintain that it was

not legitimate for the County Council to make the award on the basis of the likely ultimate out-turn of the cost of the contract.

Since, SIAC’s tender, being the mathematically adjusted lowest, it simply had to be accepted.

Faced with this argument, this Court, employing the machinery of Article 234 EC, asked the European Court of Justice whether

“the awarding authority is obliged to award the contract to the contractor who shall have tendered the lowest price or

[whether] the awarding authority [is] entitle[d] to award the contract to the contractor with the second lowest price on the

basis of the professional report of its consulting engineer that the ultimate cost of the contract to the awarding authority is

likely to be less if the contract is awarded to the contractor who tendered the second lowest price than it would be if the

contract were awarded to the contractor who tendered the lowest price..”

The European Court gave judgment on 18th October 2001. It began by explaining that it could not resolve differences

concerning the interpretation of the tender documents. Such interpretation was a matter for the national court. It then

summarised concisely the general principles of the public procurement system:

"32. The Court has held in this regard that the purpose of coordinating at Community level the procedures for the award

of public contracts is to eliminate barriers to the freedom to provide services and goods and therefore to protect the

interests of traders established in a Member State who wish to offer goods or services to contracting authorities

established in another Member State (see, inter alia, Case C-380/98 University of Cambridge [2000] ECR 1-8035,

paragraph 16).

33. In accordance with that objective, the duty to observe the principle of equal treatment of tenderers lies at the very

heart of Directive 71/305, as amended (Case C-243/89 Commission v Denmark [1993] ECR I-3353, paragraph 33).

34. More precisely, tenderers must be in a position of equality both when they formulate their tenders and when those

tenders are being assessed by the adjudicating authority (see, to this effect, Case C-87/94 Commission v Belgium [1996]

ECR I-2043, paragraph 54)."

It then stated that the criteria for an award based on the most economically advantageous tender are not listed exhaustively in

the second indent of Article 29(1) of directive 71/305. It emphasised, nonetheless, that it would be incompatible with directive

71/305 if the award criteria were interpreted so as to confer “on the adjudicating authority an unrestricted freedom of

choice....” (paragraph 37). However:

“38. The mere fact that an award criterion relates to a factual element which will be known precisely only after the

contract has been awarded cannot be regarded as conferring any such restricted freedom on the adjudicating

authority.”

Then, in a passage which forms the basis of much of SIAC’s case on the resumed hearing, it reiterated that “in order for the

use of such a criterion to be compatible with the requirement that tenderers be treated equally, it is first of all

necessary..........that that criterion be mentioned in the contract documents or contract notice.” (paragraph 40).

Furthermore, since the “principle of equal treatment implies an obligation of transparency in order to enable compliance to be

verified...” (paragraph 41):

"42. More specifically, this means that the award criteria must be formulated, in the contract documents or the

contract notice, in such a way as will allow all reasonably well-informed and normally diligent tenderers to interpret them

in the same way.

43. This obligation of transparency also means that the adjudicating authority must interpret the award criteria in the

same way throughout the entire procedure...

44. Finally, when tenders are being assessed, the award criteria must be applied objectively and uniformly to all

tenderers. Recourse by an adjudicating authority to the opinion of an expert for the evaluation of a factual matter that

will be known precisely only in the future is in principle capable of guaranteeing compliance with that condition."

The Court of Justice finally proceeded to give the following answer to the question referred by this Court:

"Article 29(1) and (2) of Council Directive 71/305/EEC of 26 July 1971 concerning the coordination of procedures for the

award of public works contracts, as amended by Council Directive 89/440/EEC of 18th July 1989, must be interpreted as

permitting an adjudicating authority which has chosen to award a contract to the most economically advantageous

tender to award that contract to the tenderer who has submitted the tender the ultimate cost of which, in the

professional opinion of an expert, is likely to be the lowest, provided that the equal treatment of tenderers has been

ensured, which presupposes that the transparency and objectivity of the procedure have been guaranteed and in

particular that:

- this award criterion was clearly stated in the contract notice or contract documents; and

- the professional opinion based in all essential points on objective factors regarded in good professional practice

as relevant and appropriate to the assessment made."

THE SCOPE OF THE APPEAL

At this point it is necessary to consider the grounds of appeal. SIAC, at the resumed hearing of the appeal relied on those parts

of the judgment of the European Court which emphasised the need for award criteria to be stated in the tender documents and

notice. SIAC has stated in its written submissions that this issue is of fundamental importance. Counsel for SIAC, Mr Bill Shipsey

S.C. stated at the opening of the appeal that paragraphs 40 to 44 of the judgment, which I have summarised rather fully, are

at the heart of the appeal. In substance, he objected that the criterion of ultimate cost was not mentioned in any of the

contract documents. Miss Finlay S.C., on behalf of the County Council objected that no previous claim had been made to the

effect that the award criteria did not include an assessment of the tenders on the basis of which was the most economically

advantageous in the sense of the question referred to the European Court, namely the “ultimate cost of the contract.” The

County Council had objected when the matter had been raised prior to the reference. She claimed that the decision of this

Court to make the reference regarding “ultimate “ or “out-turn” cost implied that the Court did not accept SIAC’s contention.

In order to rule on this objection, it is necessary to identify the substance of the claim made by SIAC in the High Court. It

seems clear that the ambit of the entire debate in the High Court was whether the Engineer was correct in his conclusion that

SIAC’s tender, though the lowest arithmetically, might ultimately prove to be less advantageous. All parties were aware that

the Engineer had reported that SIAC’s lowest tender was “more apparent than real.” SIAC vigorously contested the

correctness of this view, contending that it was “unreasonable” or “irrational.” It does not appear to have been contended, on

the other hand, that the County Council was not entitled to take “ultimate cost” into account.

The reason for rejection furnished by the County Council, quoted above and cited in the Judicial Review Statement, put SIAC on

express notice that the County Council had interpreted “most economically advantageous” as encompassing control of costs

during the performance of a measure and value type of contract. In the grounding affidavit the deponent on behalf of SIAC said

that SIAC had submitted the lowest tender and that the grounds advanced by the County Council were “utterly capricious,

unreasonable and improper...” He said that “no reasonable person could legitimately or properly reject the applicant’s tender,

as not being the most economically advantageous tender on the grounds outlined.....in [the] letter of 30th August 1993.”

Nonetheless, SIAC did not complain at that stage that such an approach was not permitted by the award criteria or include

that point in the grounds upon which it sought judicial review.

Laffoy J clearly stated that the County Council had chosen “contractual criteria which were stated in the contract notice.” She

did not, however, decide as a distinct issue whether the advertised award criteria permitted reference to “ultimate cost.” That

was simply not an issue in the proceedings before her.

Next, it is material to consider the grounds of appeal. Grounds 14 and 15 state as follows:

"14. Further that the learned Trial Judge misdirected herself in law and in fact in finding, against the weight of the

evidence, that the second lowest tender was the most economically advantageous tender on the basis of evidence as to

what might be the costs incurred during the course of the construction of the scheme the subject matter of the

contract.

15. That the learned Trial Judge misdirected herself in law and in fact by finding that the Respondent was entitled to

reserve to itself a discretion to award a Public Works Contract on the basis of an assessment of what might be the "out-

turn" costs of the works."

Nowhere in those grounds is it suggested that the criterion of “ultimate cost” was not among the notified award criteria. In this

respect, grounds 14 and 15 contrast with ground 17, which reads:

"17. That the learned Trial Judge misdirected herself in law and in fact in failing to find that in breach of the provisions of

the EU Public Procurement Code, the Respondent had taken into account in the award of the contract (the subject

matter of these proceedings) an award criterion which was not advertised, as required, by the provisions of the EU

Public Procurement Code, namely the criterion of period for completion."

As I have already mentioned the question of the “period for completion” mentioned in ground number 17 is no longer an issue in

the case. However, that ground mentions the award criteria, whereas grounds 14 and 15 do not.

In this light, I am satisfied that the objection taken by the County Council is well founded. The High Court did not decide the

issue; it did not form part of the grounds of appeal. Furthermore, it would appear to have been a rather futile exercise for this

Court to refer to the European Court the admissibility of the criterion of “ultimate cost,” if that was not accepted as one of the

award criteria.

It is contrary to the function and practice of the Court, as an appellate court, to entertain appeals on matters which have not

been argued or decided in the High Court. I would, therefore, uphold the objection taken by the County Council to the

admissibility of argument relating to the award criteria.

At this point, it is necessary to take up the other threads of the proceedings. I will first state the position in its essence. SIAC,

as already stated, claimed that the decision of the County Council on the award was invalid as being contrary to the terms of

the directive. In substance it was unreasonable and irrational, because it awarded the contract to Pat Mulcair, whereas SIAC’s

tender was the lowest. Laffoy J rejected this argument applying the Wednesbury test. It was not her function, she considered,

to determine which of the two competing professional opinions was correct on the balance of probabilities. Throughout the High

Court, at the original appeal hearing and in the European Court SIAC maintained specifically that the County Council was not

entitled to take into account the ultimate out-turn, but must award on the basis of the lowest mathematically adjusted tender.

This point was decided against SIAC. The European Court held that ultimate out-turn was a permissible element but added the

important proviso that this must have been included in the award criteria as notified.

On the resumed hearing of the appeal, SIAC have relied on this proviso, claiming that the original tender criteria did not give

notice of the intention of the County Council to approach the granting of the award on that basis. For the reasons explained

above, I do not think this Court can entertain that ground. That, however, is not the end of the case. SIAC maintains that the

decision of the County Council was, nonetheless, not a valid exercise of its function as awarding authority. The opinion of the

Engineer was subjective and demonstrably incorrect. Moreover, the test applied by the learned trial judge to the judicial review

of the decision was not the correct one.

At this point, I propose to consider the admissible grounds now advanced by SIAC to challenge the decision and then to

consider the test.

SIAC continued to maintain throughout the hearing that cost must be treated as synonymous with price, emphasising that

Laffoy J had said in her judgment that the terms “were used interchangeably in the contract documentation” and that she was

satisfied they “were intended to have the same meaning.” Although the County Council had relied on the notion of ultimate or

out-turn coat, this was nowhere expressly mentioned in the report of the Engineer. Since cost and price were the same, the

price had to be the same as the tender price. The County Council had not acted consistently, since it applied the criterion of

out-turn cost only to the two lowest tenders.

Insofar as the trial judge held the County Council to be entitled to rely on clause 1.24 of the Specification to “make

comparisons between the prices quoted and their estimate of costs, ” for the purpose of adjudicating between tenders, this

was unlawful and a misconstruction of that clause. Zero-rating was a legitimate procedure and had been used by Mulcair. In

response to the Engineer’s concern about being able to control the cost of the contract, SIAC draws attention to the

conditions of contract as giving the Engineer adequate power to manage the contract. In particular, the contract permits the

Engineer to vary rates of prices, though accepting that any such procedure could be made the subject of an arbitration under

the contract, which might lead to an increase in cost for the County Council.

Turning to the substance of the evaluation by the Engineer, SIAC says that he did not conclude that the SIAC tender would, in

fact, turn out to be more expensive than Mulcair’s but only that it might be. The Engineer did not act objectively. He assumed

that the quantities which he had himself estimated were wrong and underestimated certain aspects of the work. He did not

make any calculation of the likely out-turn cost. SIAC relies on one passage from page 27 the judgment of Laffoy J as a

determination that the Engineer had failed properly to assess the respective treatments of the Bill of Quantities. It reads:

“In the case of the Applicant, Mr Downes was entitled to and he should have required the Applicant’s representatives to

produce a complete build-up of the prices at the pre-adjudication interview.”

This is based on a misreading of the judgment. Laffoy J was, at that part of her judgment summarising the evidence of the

respective Engineers, and, in the passage in question that of Mr Staveley. This becomes clear when one reads page 28, where

she says that she has not intended an exhaustive “resumé of Mr Staveley’s analysis and criticism of Mr Downes’s evaluation

and comparison of the three lowest tenders.” Moreover, SIAC’s view would be inconsistent with the learned trial judge’s

statement that she did not consider it her function to assess the conflicting professional opinions. I will, however, treat this

passage as a submission made on the appeal.

In addition to all the foregoing, SIAC submitted that Laffoy J had been incorrect to assess the validity of the decision of the

County Council to award the contract a test of “unreasonableness” or “irrationality.” The so-called Wednesbury test (from

Associated Provincial Picture Houses Limited v Wednesbury Corporation [1948] 1 K.B. 223), as also applied in this jurisdiction in

The State (Keegan) v The Stardust Compensation Tribunal [1986] I.R. 642 and O’Keeffe v An Bord Pleanála [1993] I.R. 39 was

not appropriate. Council Directive 89/665/EEC of 21 December 1989 on the co-ordination of the laws, regulations and

administrative provisions relating to the application of review procedures to the award of public supply and public works

contracts (OJ No 1 395/33 of 30 December 1989) requires a fresh and different form of summary procedure more suited to the

Community law nature of the remedy especially the principle of effectiveness. Advocate General Jacobs, in his opinion in the

reference in this case, it was noted, thought that the “test for objectivity should be ... rather less extreme.” (paragraph 53)

than that applied by Laffoy J.

The County Council’s principal argument throughout the proceedings has been that, having specified the most economically

advantageous tender and not the lowest price for the purpose of Article 29(1) of directive 71/305, it was entitled, as a matter

of Community law, to exercise a discretion and to award the contract on the basis of a recommendation from its consulting

engineer as to which tender was likely to yield the lowest cost in the long run. The decision of the European Court determined

the matter entirely in favour of the County Council, which has always accepted and applied the principles of transparency and

equal treatment and the need for the professional opinion to be based on objective factors.

Miss Finlay repeated that the award concerned a measure and value contract. It is of the nature of such contracts that the

quantities in the performed contract will be remeasured and invariably turn out to be different from those in the Bill of

Quantities. Hence, cost should mean the cost to the County Council. She drew particular attention to a paragraphs 45 and 48

of the opinion of Advocate General Jacobs, where he explained the uncertainties of such contracts, the potential effects of

zero-rating and the value of the professional judgment of an experienced consultant.

With regard to the appropriate standard of judicial review, Miss Finlay, for the County Council, submitted that the decision of an

awarding authority falls to be reviewed according to principles of Irish law subject to the Community law principles of

effectiveness and equivalence. The test of reasonableness, applied by the learned trial judge, specifically in respect of the

professional opinion of the consulting Engineer, was, she argued, appropriate. She relied on the decision of the Court of First

Instance in Case T-19/95 Adia Interim S.A. v Commission [1996] ECR II-321, in which it was held that the review by that court

of a decision of the Commission in an open tender for agency staff “should be limited to checking there has been no serious and

manifest error.”

CONCLUSION

I approach the appeal at this stage on the following assumptions. Firstly, the nominal difference between the tender prices was

of the order of £131,000. In this respect, Laffoy J has found in favour of SIAC, even without determining an adjusted difference

between the two prices, and there is no cross-appeal or notice to vary. Furthermore, it seems correct that SIAC’s decision to

reduce that amount by 100% meant that SIAC would, if called upon by the Engineer have had to perform that work as part of

the tender price, and thus, in effect, free. The Engineer’s criticism that SIAC should have done this by way of addition to the

general deduction does not appear convincing, since that would have had the same effect. Secondly, SIAC may not complain,

for reasons already given that the award criteria did not include ultimate or out-turn cost. My reason for this is exclusively that

SIAC had not made any such complaint either in the High Court or, assuming that could be relevant, in the notice of appeal. It

is, no doubt, understandable that SIAC should seek to criticise the award criteria. The European Court in its judgment and the

Advocate General in his Opinion laid emphasis on the need for the criteria to be clearly stated in the contract documents. This

is, of course, fundamental. The cases show that an individual tenderer may get an unfair advantage by negotiating on a

criterion different from those advertised and upon which others have based their tenders. Although I recognise this remark as

being obiter, I think it would have been, to say the least, more transparent and, therefore, desirable that the contract

documents specify more exactly, firstly, the possibility that excessive zero-rating could be deemed by the Engineer to have a

distorting effect on a tender price, secondly that it might affect the capacity of the Engineer to manage the contract and to

control its cost and, thirdly, that the award would be made with due regard to the probable ultimate or out-turn cost to the

awarding authority. In Case 31/87 Beentjes v Netherlands [1988] ECR 4635 (“Beentjes”), the Court of Justice was speaking of a

contract criterion of “the most acceptable offer” in a Dutch tendering procedure and said:

“..it should be noted that even if such a criterion were compatible with the directive.....it is clear from the wording of

Articles 29(1) and (2) of the directive that where the authorities awarding the contract do not take the lowest price as

the sole criterion for awarding the contract but have regard to various criteria with a view to awarding the contract to

the most economically advantageous tender, they are required to state these criteria in the contract notice or the

contract documents.” (paragraph 35)

This passage is, in substance, a restatement of the requirement contained in Article 29(2) of directive 71/305 that, even where

the criterion is the most economically advantageous “the authorities awarding contracts shall state in the contract documents

or in the contract notice all the criteria they intend to apply to the award.” For the reasons already given, SIAC is not,

nonetheless, in a position to raise this issue at this late stage. By my above obiter remarks, I wish merely to emphasise the

need to notify award criteria as clearly as possible so as to avoid future litigation and uncertainty.

With those assumptions in mind, I turn to consider the submissions of the parties.

I am pleased to adopt the succinct statement by Advocate General Jacobs (paragraph 33 of the Opinion) that the “main

purpose of regulating the award of public contracts in general is to ensure that public funds are spent honestly and efficiently,

on the basis of a serious assessment and without any kind of favouritism or quid pro quo whether financial or political.”

While the Advocate General went on to say that the “main purpose of Community harmonisation is to ensure in addition

abolition of barriers and a level playing field.”, the public procurement directives can be invoked by tenderers from all Member

States, including that of the awarding authority (see Case C-87/94 Commission v Belgium [1996] ECR I-2043 ("Walloon Buses")

paragraph 33 and Advocate General Lenz paragraph 24). The directives were adopted on the Community legal basis of Treaty

provisions conferring legislative competence to harmonise or approximate laws of the several Member States which may hinder

trade in goods or services. Once adopted, the Community public procurement directives enure for the benefit of all Community

undertakings. Thus, in the present case, the Court referred a question to the Court of Justice, though the applicant is an Irish

Company challenging the decision of an Irish authority.

The principle of equal treatment of tenderers lies, as the European Court has said, at the heart of the directive. Thus the

awarding authority may not enter into negotiations with an undertaking whose tender does not comply with the award

conditions. (see Case C-243/89 Commission v Denmark [1993] ECR I-3353, the “Storabaelt Bridge”). That would not respect

the rights of other tenderers. The principles most relevant to the present case were laid down in Beentjes, cited above. The

European Court held that a rule for the award of public works contracts would be incompatible with Community law if it was

interpreted in such a way as to confer “unrestricted freedom of choice” on the awarding authority. (paragraph 16 of the

judgment). “On the other hand, such a provision is not incompatible with the directive [directive 71/305] if is to be interpreted

as giving the authorities awarding contracts discretion to compare the different tenders and to accept the most

advantageous on the basis of objective criteria....” (paragraph 17).

These principles have been supplemented by the judgment of the European Court in the present case. Subject to the reiteration

of the fundamental obligation of awarding authorities to respect the principles of equality, transparency and objectivity, the

Court ruled, firstly, that, where the award is on the basis of the most economically advantageous tender, the awarding

authority may award on the basis of ultimate cost and, secondly, that it may rely on the professional opinion of an expert for

that purpose. The Court, having referred to Beentjes, put the first of these points as follows at paragraph 38:

“The mere fact that an award criterion relates to a factual element which be known precisely only after the contract

has been awarded cannot be regarded as conferring...... unrestricted freedom on the adjudicating authority.”

As to the second, it stated at paragraph 44:

“Finally, when tenders are being assessed, the award criteria must be applied objectively and uniformly to all tenderers.

Recourse by an adjudicating authority to the opinion of an expert for the evaluation of a factual matter that will be

known precisely only in the future is in principle capable of guaranteeing compliance with that condiition.”

A simple comparison, then, of the tenders of SIAC and Pat Mulcair reveals that, on the basis assumed by me, that of the former

was some £131,000 lower. It is common ground that, in the case of a measure and value contract, it is assumed that the final

quantities will not be the same as that estimated by the Engineer for the purpose of the tender documents. They are intended

to be an estimate, but they can only that. It is common and even accepted practice for tenderers to adopt different strategies

in the pricing of the Bill of Quantities. This process is complex. The tenderers try to foresee what the actual quantities will be

and to price in a manner which gives the best chance of being awarded the contract as well as protecting the long-term

profitability of the work. Sometimes they may judge that the Engineer has overestimated the quantities; sometimes that he has

understated them. By the practice of zero-rating, the tenderer omits a price for an item by explicitly or implicitly including it

under another heading. This may affect the long-term cost of the contract in both cases. By zero-rating an item, the contract

takes the risk that he will have to perform more work or supply more materials, if the Engineer has underestimated. On the other

hand, where the Engineer has overestimated the employer will get a smaller allowance or reduction on the remeasurement.

The County Council included in their written submissions the following helpful explanation by a well-known writer (Max

Abrahamson, Engineering Law and the I.C.E. Contracts, p 14):

“Unbalanced bids: the comparison by the engineer of the detailed pricing of tenders is a safeguard against unbalanced

bids where the contractor prices some items high and other work low in the belief that the variations or increases in

quantities will mean more of the high priced quantities and less of the low-priced work which has been estimated in the

bill. Obviously such a bid should not be accepted.....Under the I.C.E. (London) 5th Edition this comparison is the only way

of evaluating tenders since there is no initial Contract Price and it is quite misleading to an Employer to compare tenders

under a remeasurement contract by reference (only) to the tender total”

This passage was quoted by the Engineer, Mr Downes, in a letter addressed to the County Council which was exhibited in an

affidavit sworn in the proceedings. It is backed up by several quotations tending to show that the concept of an unbalanced bid

is well known and something against which the consulting Engineer must guard so as to protect his clients.

The significance of the specific issue of zero-rating was also appreciated by the Advocate General at paragraph 47 of his

Opinion:

"47. If tenderer A submits an inclusive figure per linear unit of drain (zero-rating all the others) and tenderer B submits

full itemised figures, their tenders may be compared satisfactorily on the basis of the estimated quantities. However,

where the final length of drain laid is different, that comparison will not hold true unless the quantities of ancillary items

and types of excavation remain proportionately the same. Among other things, it may be easier for the awarding

authority (or its consulting technical engineer) to control expenditure in respect of variations by exercising technical

choices in the case of tenderer B than in the case of Tenderer A. Where tenders are very close in value, as was the

case here, it does not seem unreasonable to suppose that tender B may prove the lower in ultimate cost."

It is difficult for SIAC, in the face of these statements, to maintain that, where the award is to be made on the basis of the

most economically advantageous contract, and the contract is one of measure and value, the lowest tender price must

automatically prevail. Nonetheless, the effective mathematically adjusted difference between the lowest two tenders was the

not insignificant sum of some £131.000 or some two to three per cent of the approximate likely contract price. Furthermore, it is

claimed that the Engineer merely said that the Pat Mulcair tender “might” turn out to be the lowest, not that it would.

Therefore, this matter cannot be finally decided without addressing the important question of the proper standard of judicial

review.

Directive 71/305 did not originally provide for any remedial or enforcement machinery, though the European Court in Beentjes

held it to have direct effect in national law so as to be capable of being relied upon by affected individuals before national

courts (paragraphs 38 to 45 of the judgment).

Directive 89/665/EEC of 21 December 1989 on the co-ordination of the laws, regulations and administrative provisions relating

to the application of review procedures to the award of public supply and public works contracts ( OJ No L 395 of 30th

December 1989 p 33) (“the Remedies Directive”) recited the lack of “any specific provisions ensuring [the effective

application..” of , inter alia, directive 71/305.

The European Communities (Review Procedures for the Award of Public Supply and Public Works Contracts) Regulations, 1992

(S.I. No. 38 of 1992) give effect in the State to the Remedies Directive. Article 3 of that Statutory Instrument provides that

decisions taken by contracting authorities as regards contract award procedures falling within the scope of directive 71/305 are

to be reviewed according to the conditions set out in the Remedies Directive. Article 4 provides that these powers are to be

exercised by the High Court. Article 8 provides that proceedings may be brought in a summary manner. However, there were no

applicable Rules of Court in force at the relevant time. Hence, SIAC instituted its proceedings both by way of judicial review and

special summons. Nothing appears to turn on this distinction , save possibly that it may be relevant to the test for judicial

review pronounced by the learned trial judge.

Since it is clear that the judicial function has to be exercised by reference to the Remedies Directive, its terms are highly

relevant.

Article 1 provides, in relevant part:

"1. The Member States shall take the measures necessary to ensure that, as regards contract award procedures falling

within the scope of Directives 71/305/EEC and 77/62/EEC, decisions taken by the contracting authorities may be

reviewed effectively and, in particular, as rapidly as possible in accordance with the conditions set out in the following

Article, and, in particular, Article 2(7) on the grounds that such decisions have infringed Community law in the field of

public procurement or national rules implementing that law."

"3. The Member States shall ensure that the review procedures are available, under detailed rules which the Member

States may establish, at least to any person having or having had an interest in obtaining a particular public supply or

public works contract and who has been or risks being harmed by an alleged infringement."

Article 2 provides in relevant part:

"1. The Member States shall ensure that the measures taken concerning the review procedures specified in Article 1

include provision for the powers to:

(a) take, at the earliest opportunity and by way of interlocutory procedures, interim measures with the aim of

correcting the alleged infringement or preventing further damage to the interests concerned, including measures

to suspend or to ensure the suspension of the procedure for the award of a public contract or the implementation

of any decision taken by the contracting authority;

(b) either set aside or ensure the setting aside of decisions taken unlawfully, including the removal of

discriminatory technical, economic or financial specifications in the invitation to tender, the contract documents

or in any other document relating to the contract award procedure;

(c) award damages to persons harmed by an infringement.

5. The Member States may provide that where damages are claimed on the grounds that a decision was taken

unlawfully, the contested decision must first be set aside by a body having the necessary powers.

6. The effects of the exercise of the powers referred to in paragraph 1 on a contract concluded subsequent to its

award shall be determined by national law.

Furthermore, except where a decision must be set aside prior to the award of damages, a Member State may provide

that, after the conclusion of a contract following its award, the powers of the body responsible for the review

procedures shall be limited to awarding damages to any person harmed by an infringement."

This State is required to provide a judicial remedy for the purposes of directive 71/305. The courts of the State must render

those provisions effective in favour of those in a position to invoke them. The two classic principles applicable to that situation

are those of: equivalence, i.e., the remedy must be at least as favourable as that available in national law for a similar

complaint; effectiveness, i.e., as the Remedies Directive itself makes clear, a remedy which will offer appropriate and sufficient

protection for the Community law rights in question.

Miss Finlay, in supporting the standard of judicial review enunciated by the learned trial judge, cited the decision of the Court of

First Instance in Case T-19/95 Adia Interim SA v Commission [1996] ECR II -325 (Adia). This is one of a series of cases in

which the Court of First Instance has ruled on the standard of review that it will itself apply in the performance of its function

under Article 230 EC (formerly Article 173) to review the legality of decisions of the Community Institutions, when they act as

awarding authorities. The same general principles apply to those institutions as are applied to the Member States by the public

procurement directives, transparency, equality and objectivity. That Court, in Case T-139/99 Alsace International Car Services

v European Parliament, (judgment 6th July 2000. ECR reference not yet available) ruled on a complaint regarding the manner in

which the European Parliament awarded a public service contract for the supply of passenger transport at the Parliament’s

premises at Strasbourg. The procedure was governed by the services directive (Council Directive 92/50/EEC of 18th June 1992).

The following principle is laid down in the judgment (paragraph 39):

“Like the other institutions, the Parliament has a wide discretion in assessing the factors to be taken into account for the

purpose of deciding to award a contract following an invitation to tender and the Court's review should be limited to

checking that there has been no serious and manifest error (see Case 56/77 Agence Européenne d'Intérims v

Commission [1978] ECR 2215, paragraph 20, Case T-19/95 Adia Intérim v Commission [1996] ECR II-321, paragraph 49,

and Case T-203/96 Embassy Limousines & Services v Parliament [1998] ECR II-4239, paragraph 56).”

Thus, it seems to be well established by a significant line of case-law of the Court of First Instance that a Community

institution, when in a comparable situation to the awarding authority of a Member State, enjoys “a wide discretion” as to the

criteria by which it will judge tenders and, moreover, its decisions will be annulled only if a “manifest error” can be

demonstrated.

It is not conceivable that the courts of the Member States are required to apply a different standard of judicial review to their

own awarding authorities. This emerges clearly from a reading of the other decision upon which Miss Finlay placed reliance, even

if that case, Case C-120/97 Upjohn Ltd v Licensing Authority established by the Medicines Act 1968 [1999] ECR I-223, did not

concern public procurement. The Court of Appeal of England and Wales had referred a question to the Court of Justice about

judicial review of a decision by a licensing authority to revoke, pursuant to applicable Community law rules, the marketing

authorisation of a medicine. It asked whether the national court should “decide whether the said decision was the correct

decision as opposed to one which the licensing authority could reasonably have reached on the material before it..” The Court

essentially answered the question in the negative. The national court was not bound to “substitute [its] own assessment of the

facts and, in particular of the scientific evidence relied on in support of the revocation decision for the assessment made by

the national authorities....” (paragraph of the judgment).

The Court explained the parallel functions, when reviewing the legality of decisions, of the Community and national judicatures

as follows:

"34. According to the Court's case-law, where a Community authority is called upon, in the performance of its duties, to

make complex assessments, it enjoys a wide measure of discretion, the exercise of which is subject to a limited judicial

review in the course of which the Community judicature may not substitute its assessment of the facts for the

assessment made by the authority concerned. Thus, in such cases, the Community judicature must restrict itself to

examining the accuracy of the findings of fact and law made by the authority concerned and to verifying, in particular,

that the action taken by that authority is not vitiated by a manifest error or a misuse of powers and that it did not

clearly exceed the bounds of its discretion (see, in particular, Joined Cases 56/64 and 58/64 Consten and Grundig v

Commission [1996] ECR 299, Case 55/75 Balkan-Import Export v Haputzollamt Berlin-Packhof [1976] ECR 19, paragraph

8, Case 9/82 Ohrgaard and Delvaux v Commission [1983] ECR 2379, paragraph 14, Case C-225/91 Marta v Commission

[1993] ECR I-3203, paragraphs 24 and 25, and Case C-157/96 National Farmers' Union and Others [1998] ECR I-2211,

paragraph 39).

35. Consequently, Community law does not require the Member States to establish a procedure for judicial review of

national decisions revoking marketing authorisations, taken pursuant to Directive 65/65 and in the exercise of complex

assessments, which involves a more extensive review than that carried out by the Court in similar cases.

36. Nevertheless, any national procedure for judicial review of decision of national authorities revoking marketing

authorisations must enable the court or tribunal seised of an application for annulment of such a decision effectively to

apply the relevant principles and rules of Community law when reviewing its legality."

There are obvious common threads which run through any system of review of administrative decisions, where especially the

primary decision-making function is administrative or governmental. The function of the courts is to guarantee legality, though

that notion itself has a number of elements, some procedural and some substantive. The passages which I have cited speak of

“manifest” error as the test for judicial review adopted by the Community courts. This is the standard which applies to the

appreciation of facts by the decision-maker. They do not say that this test must be adopted by the national courts. I would

observe, however, that the word, manifest, should not be equated with any exaggerated description of obviousness. A study of

the case-law will show that the Community Courts are prepared to annul decisions, at least in certain contexts, when they

think an error has clearly been made.

The decisive additional consideration in the area of the public procurement is the explicit concession of a wide margin of

discretion to awarding authorities.

I do not think, however, that the test of manifest error is to be equated with the test adopted by the learned trial judge,

namely that, in order to qualify for quashing, a decision must “plainly and unambiguously fly in the face of fundamental reason

and common sense.” It cannot be ignored that the Advocate General thought the test should be “rather less extreme.” Such a

formulation of the test would run the risk of not offering what the Remedies Directive clearly mandates, namely a judicial remedy

which will be effective in the protection of the interests of disappointed tenderers. It is significant, I think, that Member States

are required to make available, where appropriate and necessary, measures of interim relief ( i.e., potentially halting the public

procurement procedure) and damages.

The courts must be ready, in general, to render effective the general principles of the public procurement, already discussed.

Where a failure to respect the principles of equality, transparency or objectivity is clearly made out, there is, of course, no

question of permitting a margin of discretion. Equally, where the tender is on the basis of the lowest price (first indent of Article

29(1)), the courts must be ready to restrain any breach. Even in cases of the most economically advantageous contract, it is

clear that unlimited discretion can not be permitted. The margin of discretion enjoyed by the awarding authority does not

absolve it from explaining a choice, such as was made in the present case, of a tender other than the lowest. Indeed, Laffoy J

did not hesitate to express her view that the County Council had been incorrect in its treatment of the 100% reduction applied

by SIAC to the £90,000 provisional sum for dayworks materials.

Therefore, I am satisfied that the courts, while recognising that awarding authorities have a wide margin of discretion, must

recognise that this cannot be unlimited. The courts must exercise their function of judicial review so as to make the principles

of the public procurement directives effective. In the case of clearly established error, they must exercise their powers. The

application of these principles may not, in practice, lead to any real difference in result between the judicial review of purely

national decisions and of those which require the application of Community law principles.

It is now necessary to return to the instant case. The essential judgment to be made is whether the County Council has

adequately explained its decision to award the contract to Pat Mulcair, when the corrected SIAC tender was lower by the sum

of approximately £131,000, or of the order of two to three per cent of the value of the contract. The determining elements are

that the County Council will ultimately have to bear the cost, that this can not be predicted with accuracy at the time of the

award, that the expert independent advice of the consulting Engineer was to the effect that the SIAC approach to pricing

would render management and control of the contract and particularly its price significantly more difficult. In these

circumstances, it was not necessary that the County Council or its engineer produce calculations or estimates of the manner in

which the out-turn of quantities would impact on cost. It is the fact that the out-turn is uncertain that is decisive. I think that

the County Council acted within its margin of discretion. I do not think it exercised that discretion in an unfettered way. It

followed objective and objectively verified criteria.

I would reject, in particular, the contention that the County Council should have used the pre-adjudication phase to seek

clarification from the tenderers, particularly SIAC, of the pricing method used and the quantities upon which they had based

their prices. The Engineer was correctly cautious about this approach. The pre-adjudication discussions and clarifications must

not offer the opportunity to one tenderer to adopt a method of pricing which has not been available to competitors. The case

of Walloon Buses shows that this procedure cannot be used to permit one tenderer to propose a method of performing the

contract which was not among the award criteria. I also reject the criticism that the County Council rejected other tenderers

on the basis of price alone and did not act consistently. SIAC cannot complain that other tenderers were eliminated on a basis

different from itself. Its complaint must be restricted to the comparison with the treatment of Pat Mulcair.

For all these reasons, I would dismiss the appeal and affirm the order of the High Court.