Small firms challenge changes to public works

A challenge brought by several small businesses to proposed changes to the conditions of public works contract applications has opened before the High Court.

The action, which is seen as an important test case, has been brought by 10 small or “micro” businesses, who for many years have been supplying State bodies, including schools, local authorities the HSE and the Garda Síochána with printers and associated devices such as ink cartridges.

Their case has been brought against the Commissioners of Public Works, which operates the National Procurement Service.

The action arises out of criteria included in a March 2013 Framework Agreement for the supply of printers and associated devices to State entities, which the court heard is worth an estimated €25m over two years.

The businesses argue the proposed introduction of new minimum qualification criteria included in the agreements request for tenders will disqualify them from applying for the contracts.

Under these new qualification criteria tenderers must display certain ‘Economic and Financial Standing’ which state that any company applying for a contract under the Framework Agreement must have a minimum annual turnover of €2m. Tenders are also required to fulfill certain technical and professional abilities.

The companies say because they are small businesses many will not be able to meet these requirements, even though they have been supplying the products to the State for some time.

In their High Court proceedings the 10 companies say the new regulations are disproportionate, and prevent and distort competition in the Irish market.

They seek various orders and declarations, including one setting aside the qualification criteria specified in the request for tenders. They also seek declarations from the court that the qualification criteria are discriminatory and are contrary to provisions of the 2002 Competition Act.

The action is opposed by the Commissioners, who reject the claims, and argue that the qualification criteria are a necessary part of the tendering process to ensure that contracts will be fulfilled. They argue the changes to the tendering regulations were brought in under European Union Directive to allow for better competition within the union. The changes have been introduced in order to save the state money.

Yesterday in opening the case Gary McCarthy, counsel for the companies, said the adoption of the minimum qualification criteria meant that many small businesses, many of which employ ten people of less, would not be able to apply for the contract.

The case before Mr Justice Paul McDermott continues and is expected to last for several weeks.