Small businesses sue State over changes to tendering process

A challenge by 10 small businesses to proposed changes to the conditions of public works contract applications has opened before the High Court. Their concerns include a condition requiring tenderers to have a minimum annual turnover of €2 million.

The action, regarded as a test case, is by 10 small or “micro” businesses that have for years supplied State bodies, including schools, local authorities and the HSE, with printers and associated devices such as ink cartridges.

Their case is against the Commissioners of Public Works, who operate the National Procurement Service, which provision goods and services for State bodies.

The action arises from criteria included in a March 2013 Framework Agreement for the supply of printers and associated devices to State entities via contracts worth an estimated €25 million over two years.

Disqualifying

The businesses argue that the proposed introduction of new minimum qualification criteria will disqualify them from tendering.

Under these new criteria, tenderers must display certain “economic and financial standing”. Any company applying for a contract under the Framework Agreement must have a minimum annual turnover of €2 million. Tenders are also required to fulfil certain technical and professional abilities.

The companies say that, because they are small businesses, many will be unable to meet these requirement – though they have been supplying products to the State for some time.

They contend that the new regulations are disproportionate, discriminatory and prevent and distort competition in the Irish market.

They are seeking various orders and declarations, including one setting aside the qualification criteria specified in the request for tenders.

Deny claims

The commissioners deny the claims and argue the qualification criteria are necessary to ensure contracts will be properly tendered and fulfilled.

The changes to the tendering regulations were brought in line with a European Union directive providing for better competition within the EU, and have been introduced to save the State money, it is claimed.

Opening the case, Gary McCarthy SC, for the companies, said the adoption of the minimum qualification criteria meant that many small businesses, some employing 10 people or less, would be unable to apply for the contract.

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