Under most construction contracts, the contractor takes on the ground conditions risk. However, a recent case has demonstrated that the risk can fall on the employer.
Section 17 of the Local Government Act 1988 has made that clear for many years. It prohibits the taking into account of non-commercial considerations in procurement decisions, including considerations relating to country of origin. The Public Contracts Regulations 2015 also do not allow for a contracting authority (off its own back) to boycott certain countries or organisations.
Councils do, from time to time, pass resolutions seeking to boycott. However, as The Queen (on the application of Jewish Rights Watch, t/a Jewish Human Rights Watch) v Leicester City Council demonstrates, these commissioning resolutions are either made by full Council (when the Executive rather than full Council has the power to make procurement decisions) or usually caveated by words to the effect of “so far as the law allows” (we sense the hand of a lawyer there). As the law does not allow it, any such resolution has no legal effect and is purely symbolic.
The issue of boycotts greatly concerns the Government; it was only last year that they issued a Procurement Policy Note on the subject. Now the Government proposes to amend the Revised Best Value Statutory Guidance to “Add a new paragraph stating that authorities should not implement or pursue boycotts other than where formal legal sanctions, embargoes and restrictions have been put in place by the Government”.
In our view, given the clear understanding of what Section 17 means and that procurement law does not allow local authorities to boycott, there is no need for any change to the best value guidance.
Does this mean that the Government has some other motive? The consultation refers to “pursue boycotts”. Does this mean that the Government is also going after purely symbolic resolutions and restricting local authority members from even commenting on issues?
We wait to see the outcome of the consultation and the exact wording that goes into the guidance. For reference, the consultation can be found here.
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