Are VEATs really "Get out of jail free" cards? - DAC Beachcroft

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Are VEATs really "Get out of jail free" cards?

Published 30 April 2014

My name is Ruth Connorton and I have recently joined DACB as Head of Procurement Law with my team from Eversheds where we successfully operated a procurement practice rated band 1 in the UK by Chambers and Partners directory for many years. We have joined forces with the team here and our goal is to give you access to market leading advice and experience and to share with you helpful information to make your role easier.

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Are VEATs really "Get out of jail free" cards?

Voluntary ex-ante transparency (VEAT) notices can offer a big reduction in the timing of risk exposure in procurements, however a recent Advocate General's opinion on their use of to avoid the remedy of ineffectiveness has clarified the circumstances in which they will and will not have their intended effect.

The Italian Government published a VEAT for an e-communications project worth over €500m relying on the fact that there would be technical difficulties of switching to a new supplier. The preliminary question for the ECJ was whether a VEAT notice could have its intended effect of granting immunity from ineffectiveness claims if it was published when the authority was aware (or should have been aware) that the exemption from advertising did not genuinely apply.

The Attorney General's opinions states that if there is not a genuinely held belief that the direct award of the contract was permitted under procurement legislation then any VEAT notice has no immunity effect. It was relevant whether the authority had acted "in good faith" and with "requisite diligence", particularly where it had available legal advice at its disposal to assist in interpreting the exemptions available. It is also relevant whether the error in interpreting the exemption was excusable or whether it was in fact a "deliberate and international infringement of the public procurement rules".

What does this mean for you?

We have often described VEAT notices as "for the brave". Effectively if there is a genuine reason for relying on an exemption then a VEAT notice just publicises that fact and even without one, if challenged, an authority would be in a position to defend an ineffectiveness claim. If the reason for the VEAT notice is not a valid one, and following the AG's opinion that validity must be considered diligently and in good faith, any VEAT notice published will only serve to publicise the breach and alert would-be challengers to the direct award of the contract - very brave!

We have seen a rise in the popularity of VEAT notices, particularly from funders keen to de-risk ineffectiveness prior to contract award. However, authorities considering such publication should carefully consider the availability, risks and likely impact prior to agreeing to this course of action.

What is a VEAT?

A voluntary ex-ante transparency notice, a standard form notice by which an authority voluntarily notifies the potential award of a contract which has not been previously advertised.

What protection can a VEAT give?

Under procurement legislation, a court can declare a contract ineffective (i.e cancel the contract) where there has been no OJEU advertisement prior to the award and there is no exemption available under procurement legislation. However, the legislation provides complete immunity from this risk where:

  • The authority considered that there was no need for an OJEU advertisement; and
  • The authority published a VEAT notice in OJEU before signature of the contract; and
  • The authority waited ten days from publication of the VEAT notice before signing the contract.