DfT's no-deal ferry contracts were lawful, insists Grayling

Written by Beckie Smith on 30 January 2019 in News
News

The Transport Select Committee was told there was “no lawful basis” to use emergency powers to award contracts worth millions without an open tender.

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Transport secretary Chris Grayling has said he “stands by” his department’s decision to use emergency powers to award more than £100m in post-Brexit ferry contracts, denying allegations that the process may have been unlawful.

Grayling was forced to once again defend the decision to award the three contracts – which included the now-infamous deal with Seaborne Freight, a company that owns no ferries – without an open tender after the Transport Select Committee pressed him to respond to allegations of wrongdoing.

The committee asked Grayling to consider claims that his department should have foreseen that the UK could leave the EU without a withdrawal agreement, and was therefore not justified in rushing through the procurement process without an open tender.


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Grayling told the committee in a letter published yesterday: “The department stands by the award of these contracts as a responsible measure to secure capacity in the public interest in conditions of extreme urgency."

Earlier this month Grayling said DfT had used an “accelerated competitive process” to award more than £100m in contracts to three freight companies to operate ferries in the event of a no-deal Brexit. This was done under Regulation 32 of the Public Contracts Regulations 2015, which allows public bodies to procure services without prior publication when an unforeseen event means there is no time to carry out a full procurement process.

But transport committee chair Lilian Greenwood pressed Grayling for a more detailed explanation after the committee received two letters alleging theuse of the procurement terms was not justified. Greenwood had already written to Grayling on 7 January with 22 questions about the department’s handling of the contracts.

One submission from Andrew Watt claimed there was “no lawful basis” for DfT to award the contracts without prior publication. He said it had been apparent since 29 March 2017 - the date on which prime minister Theresa May triggered Article 50, beginning the Brexit process - that the UK could leave the EU without a deal.

“The Department for Transport’s claim that a ‘no deal’ Brexit is unforeseeable appears to me to be entirely spurious and visibly dishonest,” he said.

Watt urged the transport committee to seek further evidence on whether or not the manner in which the contracts were awarded was justified. He also wrote to both Grayling and May to express “grave concern” that the awarding of the contracts may have been unlawful.

A second submission from Albert Sanchez-Graells, a reader in economic law at the University of Bristol Law School and a former member of the European Commission Stakeholder Expert Group on Public Procurement, said the awarding of the three ferry contracts raised “illegality concerns”.

He said the regulations did not apply in the case of the ferry contracts because there had been time for DfT “to comply with the 60 calendar days’ time limit required by alternative, transparent competitive procedures with negotiation”.

In his reply to Greenwood’s letter on 24 January, Grayling said he noted the “detailed points” raised in the two letters but insisted there had been “unexpected and unforeseeable limitations on the extent to which the market had to date been able to respond to the risk of no-deal by putting in place contingency plans to prepare for this scenario”.

Grayling also denied that the contract contravened State Aid rules – a concern raised both by Greenwood and by the two submissions to the transport committee.

Commenting on Grayling’s response to her letters, Greenwood said the transport secretary had failed to provide satisfactory responses to concerns about the contracts. “It seems extraordinary to me that the government’s response fails both to provide any additional insight into why the department used emergency powers in the award of the contracts, and to respond to the substance of our questions about the department’s process for securing them,” she said, adding that Grayling had not taken them opportunity to “put the record straight”.

“This cursory reply is no way to respond to the committee’s efforts to scrutinise the government’s decision to use emergency powers to award contracts worth hundreds of millions of pounds,” she said.

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Beckie Smith
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Beckie Smith is a reporter for CSW who tweets Beckie__Smith.

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