Camden Academy
Appeal Dismissed
The Court of Appeal has dismissed an appeal against the Secretary of State in connection
with an academy which is to be set up in Camden.
The appeal was brought
by a Camden parent who contended that the Secretary of State had failed to comply
with the public procurement regime when approving University College London’s (UCL’s)
expression of interest for the Camden academy.
The decision to dismiss the appeal will be a relief
to the Government, academy sponsors and the many
local authorities involved in the
academy and building schools for the future programmes.
Background
The appeal stems from UCL’s expression of interest to act as the sponsor for an
academy in the London Borough of Camden. On 21 November 2007 the Authority approved
a proposal for a new academy to be built in the Borough. The Authority also approved
UCL as the preferred academy sponsor. On 29 February 2008 the Secretary of State
approved UCL’s formal Expression of Interest for the academy proposal.
Two judicial reviews applications were brought by a Camden parent, Gillian Chandler
to challenge the promotion of the academy. Judicial Review One brought against the
Authority maintained that an open competition should have been held to decide the
type of Secondary School to be built in the area. Judicial Review Two was brought
against the Secretary of State challenging the decision to approve UCL’s Expression
of Interest. Both applications were dismissed by the High Court.
This appeal concerns the challenge against the Secretary of State under Judicial
Review Two (Judicial Review One was not appealed by the claimant). The claimant
argued that the Secretary of State had failed to comply with the public procurement
regime and that a competition should have been held to determine who should act
as sponsor to the academy.
The Court of Appeal noted that there were two issues which were to be contested
at the appeal:
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Does the public procurement regime apply to the expression of interest by UCL? |
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Does the claimant have the required standing to contend that the public procurement
regime is applicable? |
Does the public procurement regime apply to UCL’s expression of interest?
The Court noted that UCL, as an academy sponsor is precluded from gaining a profit
from their sponsorship of the Camden academy. To determine whether an organisation
which is unable to make a profit could still be subject to the public procurement
procedures, the Court considered Directive 2004/18 (the Directive) and the Public
Contract Regulations 2006 (The Regulations). The Directive governs the procedures
and principles for the award of public contracts by contracting authorities. The
Regulations implement the Directive into UK law and must be interpreted so as to
be compatible with the Directive.
The Court noted that the Directive defines a public contract as “contracts for pecuniary
interest” and defines a “contractor, supplier or service provider” as bodies which
offer “on the market” works, products or services. The Regulations contain similar
definitions with “an economic operator” defined as a “service provider” and the
definition of “service provider” requiring that services are provided “on the market”.
The Regulations also state that a “public services contract” require that the contract
is “for consideration (whatever the consideration)” – the Court noting that this
is to be read as compatible with the Directive ie meaning that the contract must
be for pecuniary interest. In consideration of these definitions the Court emphasised
that the crucial points to determine were: “Did UCL make an offer on the market
to act as a sponsor of the Camden Academy?” and “Will the funding arrangements be
for pecuniary interest?”.
“Pecuniary Interest”
When considering “pecuniary interest” the Court considered the case of Commission
v Italy. In this case the Court of Justice concluded that even if a service
provider is a not-for-profit organisation it can still be caught within the public
procurement regime, as such organisations can still distort the market if they provide
services more cheaply than other service providers. However, in the Commission v
Italy case the Court of Justice also found that a contract merely for the
reimbursement of costs and no remuneration or other benefit is not “for pecuniary
interest”. In applying the Commission v Italy case the Court considered
whether the sponsor was only receiving a reimbursement of costs rather than a pecuniary
interest. The Court found that under the pro forma for the academy’s funding agreement
it was clear that the academy trust would only receive a reimbursement (providing
that proper accounting methods were followed). The Court’s conclusion therefore
was that philanthropic arrangements which are made on the basis that no remuneration
or benefit is given by the contracting authority to the service provider will not
be within the Directive or the Regulations.
Under the “pecuniary interest” point, the claimant also argued that UCL may obtain
a reputational benefit from their involvement with the academy programme, however,
the Court dismissed that this could be classed as a “pecuniary benefit”. It was
also suggested that UCL’s involvement may allow UCL to show a “public benefit” and
thus contribute to the retention of its charitable status, however, the Court dismissed
this argument as too indirect and remote.
“On the Market”
The Court then moved to determine whether UCL’s offer was “on the market”. The Court’s
view was that “on the market” requires “participants in the market to be intending
to make a profit from contracting services offered by them”. It was held that in
the Camden case, the “on the market” definition could not be met as there was not
an intention to make a profit. The Court also noted that if an organisation’s offer
to sponsor an academy is an adjunct to its commercial activities in another field,
such commercial activities are irrelevant for determining whether the public procurement
regime applies to the sponsorship of an academy.
Cross Border Interest
An alternative argument expressed by the claimant, was that a contract for the provision
of educational services can potentially be of interest to suppliers established
in other member states, and as such must comply with the requirements of transparency
and non-discrimination. The Court noted that a contracting authority is not bound
to comply with the obligations of the Treaty simply because there is an outside
possibility that an economic operator from another member state might be interested.
The Court found that there was no interest from suggested potential sponsors from
outside the UK in this case and so dismissed this argument.
Does the claimant have the required standing to contend
that the public procurement regime is applicable?
The Court noted that it could be possible for an individual who is affected
in an identifiable way by a body’s non-compliance with the public procurement regime
to have sufficient standing to bring a judicial review, even if they are not an
“economic operator”. The Court stated that this may be the case if an individual
could show that performance of the competitive tendering procedure under the Directive
“might have led to a different outcome that would have a direct impact on him”.
The Court stated that in the Camden case the claimant’s challenge was not because
of an interest under the public procurement procedure, but because of an opposition
of academies, and thus was not using the public procurement regime for its intended
purpose. The Court therefore found that the claimant did not have sufficient standing
to pursue a judicial review claim.
Closing Remarks
The Court, in its final observation stated that it would be unlikely that arrangements
for the provision of services for nil consideration or on reimbursement terms would
be of cross border interest and so subject to competitive tendering. The Court considered
that philanthropists may be deterred from acting if a competitive tendering or advertising
process was to apply, which could be contrary to the public interest.
As a final comment, the Court stated that the issue of whether the provision of
expertise in running schools could ever be subject to the public procurement regime
had been left open. It was stated that the Education Act 1996, S.482 does not expressly
prevent a sponsor being remunerated for their contribution to an academy, and if
such a payment was to occur, the reasoning of the judgment may alter.
Conclusion
The dismissal of the appeal will be a relief to the Government, especially as more
sponsors are being encouraged to get involved with the academy programme. However,
academy opponents will be disappointed that academy sponsors can continue to become
involved in the provision of education, without a public consultation over the identity
of the sponsor.
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For More Information Contact:
Graham Burns
TPP Law Limited
53 Great Suffolk Street
London SE1 ODB
t 020 7620 0888
f 020 7620 0778
e info@tpplaw.co.uk
Email: Graham
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