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Government to pay Eurotunnel £33m over ‘secretive’ Brexit ferry contract

The UK Government is set to pay a £33m settlement to Eurotunnel, after they launched a procurement challenge over the contract to supply ferry services in the event of a no-deal Brexit.

The Government’s troubles began in December last year when they made the decision to award a £100m ferry service contract to three companies without following an open and transparent procurement procedure.

After the award was announced, the criticism heightened. One of the successful companies, Seaborne Freight, did not own any ships and had never operated this kind of service before. The contract was subsequently scrapped after its financial backer pulled out.

The Department for Transport (DfT) argued that due to the “unforeseeable” circumstances of “extreme urgency” they didn’t have time to tender for the contracts, which would have been the appropriate procurement process.

Eurotunnel claimed the contracts were awarded in a “secretive” way and they should have been considered as they have relevant recent experience, unlike one of the successful organisations. If the case had gone to court, Eurotunnel would have argued that the DfT had ample time to conduct a fully compliant tender process, considering the chance of a no-deal Brexit should have been foreseen from the date Article 50 was triggered nearly 2 years earlier.

The DfT has defended the £33m payout of taxpayers’ money on the grounds that it was “protecting the freight capacity that the government has purchased”. Since the fiasco, Transport Secretary Chris Grayling has received pressure from both the public and the opposition to resign.

These latest issues further highlight the importance of following the correct procurement procedures in order to avoid similar legal challenges and reputational damage. Contracting authorities should procure in an open and transparent manner and carefully consider any justification to invoke procedures for ‘extreme urgency’.

With core expertise in the Public Contracts Regulations, Cirrus has delivered over £5 billion of compliant tenders across a range of categories. For advice and support on how to deliver compliant public sector tenders, please contact Lucy Williams via lwilliams@cirruspurchasing.co.uk or 07904 674499.

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