Donegal County Council powerless to initiate procurement ban

It is highly doubtful Donegal County Council could exclude a particular economic operator from a future public procurement competition, on the basis it was said to be known the operator had previously supplied defective products, ten or more years ago, according to additional legal advice obtained by the Council.

Donegal County Council obtained the legal advice in July, following the submission of a revised motion on the procurement issue after its May 21, 2021, Mica Redress Committee meeting.

The motion said: “That this Council discuss the MICA Redress Scheme and explore the possibilities of improving efficiency in processing applications and that we direct the management to put protocols in place to ensure that this Council does not purchase any products from quarries that are known to have had defective materials.”

Donegal Live has seen a copy of the detailed legal advice which Donegal County Council obtained on the motion from Barrister Nathy Dunleavy, on behalf of VP McMullin Solicitors.

Mr Dunleavy's legal advice concluded: “On the assumption that the formal public procurement rules applied to a particular contract, it is highly doubtful that the Council could exclude a particular economic operator from a future public procurement competition, on the basis that it was said to be known that the operator had previously supplied defective products, ten or more years ago.”

Donegal County Council had sought legal advice specifically in relation to the second part of the proposed motion and the lawfulness of what was proposed, in particular, the compatibility of the proposed motion, and the action which might be taken on foot of it, with the Council’s obligations under public procurement law.

Mr Dunleavy said: “The question arises in the context of the ongoing mica issue and possible concerns about the supply of concrete blocks which turned out to be defective owing to the presence of muscovite mica in abundant quantities in the aggregate constituent of the concrete blocks.

“I have been provided with the 2017 Report of the Expert Panel on Concrete Blocks which discusses the issue in some detail. I note that in table 2.2 of that report, it is stated that the earliest year when affected dwellings were constructed in County Donegal is believed to be 1984 and the latest year of construction is believed to be 2011.

“The panel notes in section 2.9 of the report its own opinion that the concrete blocks at issue were not fit for purpose. The report also notes, for example at page 65, that a significant proportion of the affected dwellings were social housing units in County Donegal.

“It appears that the only means of establishing the Mica issue in respect of particular products is by way of sampling. I am instructed that it is understood that there has been no finding of any Court or any public body to date that a particular economic contractor or quarry supplied concrete blocks, or materials for such blocks, which had the Mica problem and bears responsibility for such problem.”

The public procurement rules which could apply to the proposed motion were contained in a number of EU directives, as transposed into Irish law.

The main directive is Directive 2014/24/EU on public procurement, which was transposed into Irish law by SI No 284 of 2016, European Union (Award of Public Authority Contracts) Regulations, 2016 (the “2016 Regulations”).

In terms of the application of the provisions on discretionary Exclusion Grounds to the mica issue, the legal advice held: [There] “appears to be a significant difficulty in applying any of the discretionary exclusion grounds in respect of events that occurred three or more years ago.

“The power of exclusion in Regulation 57(8) is not exercisable “where the contracting authority establishes that 3 or more years have elapsed since the date that the economic operator concerned was in the relevant situation referred to in that paragraph” (Regulation 57(20)).

“According to the expert report, the latest year in which dwellings were constructed, which have the mica issue, was 2011. If that is correct, it is difficult to see how reliance could be placed on actions of any economic operator which would have taken place 10 or more years ago.

“If there is evidence pointing to the supply of defective products within the last three years, then the position may be different.

“Second, there would appear to be a real difficulty in the Council establishing that grounds actually exist for the invocation of any of the discretionary exclusion grounds set out in Regulation 57(8).

“As can be seen from the terms of Regulation 57, there is some flexibility in the way in which the contracting authority can establish the grounds for exclusion. But the contracting authority must be able to establish such grounds. I doubt that a suspicion, even a reasonable one, of grave professional misconduct, would suffice.

“Were the motion adopted, it appears to at least have the potential to go beyond the discretionary exclusion grounds which are set out in Regulation 57 of the 2016 Regulations.

“It essentially appears to envisage the Council deciding to exclude from public tenders, economic operators whose quarries are known to have had defective materials.” This begs the question, by whom is this known? To what standard? And when was a particular quarry said to have had or supplied defective materials?

“The adoption of such a wide-ranging and loose basis for excluding tenderers runs a significant risk that any such tenderer would seek to challenge its exclusion as being incompatible with the 2016 Regulations and with the general principles of EU law.

“The public procurement rules indicate, rather, that the ability of a contracting authority to exclude a particular tenderer from a particular contract, is more circumscribed.

“It may be the case that the Council could ensure that defective products are not supplied to it in future tenders, by way of application of selection and/or award criteria, possibly together with minimum requirements,” concluded the legal advice.