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Debt Enforcement Company Cannot Rely on Public Contract Regulations

The Public Contracts Regulations 2015 introduced a regime that is designed to ensure transparency and fairness in commercial relations between the public and private sectors. However, in one guideline case, the High Court ruled that the Regulations did not apply to a local authority tendering exercise in respect of a debt enforcement services contract.

The exercise concerned the contracting out of the council’s responsibilities to collect overdue council tax, non-domestic rates and other debts. The company which had previously held the contract launched proceedings under the Regulations after its bid for a further engagement was unsuccessful and the new contract was awarded elsewhere.

The Court noted that the contract entitled the successful bidder to retain part of the debts recovered, in order to cover its costs and provide a profit. The contractor would thus itself have the right to exploit the services being provided. In those circumstances, the contract was one for a services concession and thus fell outside the terms of the Regulations. That ruling was fatal to the company’s pleaded claim.