Computer Weekly has learned that, after nearly three years of contention between the Treasury and the European Commission over the use of umbrella "framework" contracts, the UK Government has now been referred to the European Court of Justice (ECJ).
If the UK Government loses a test case over the legality of vaguely-worded "framework" contracts, it could raise doubts over the lawfulness of deals such as the contracting out of 1,500 DSS computer specialists to US services giant EDS. The £2bn deal was signed last month by social security secretary Alistair Darling.
The outcome of the test case could also call into doubt the legality of a £200m contract last month for new IT systems that will support reforms at the Child Support Agency. Both the DSS outsourcing and the Child Support Agency contracts were awarded to Affinity, a consortium led by EDS.
Computer Weekly has learned that the DSS did not, in either of the cases, advertise or publish a specific tender setting out the terms and details of the key elements of the contracts that were later awarded. Although the DSS denies it, some lawyers have said that the contracts could infringe EC rules on open and competitive tenders.
Computer Weekly has also discovered that, in the case of the DSS outsourcing deal, a specific invitation to tender was issued in June this year, but in secret and only to Affinity.
The invitation to tender was issued nearly eight months after a decision had already been taken to sign a contract with Affinity, subject to agreement on price and other issues.
Dave Wilkinson, a Public and Commercial Services union official, said, "It struck us as very odd that an invitation to tender was being issued for the contract when we were already finalising the arrangements to transfer staff to EDS."
In statements to Computer Weekly cleared by its lawyers, the DSS insisted that the two contracts awarded to Affinity followed EC tendering rules.
The DSS says the two deals came under a "very broad" umbrella advertisement in the European Journal in 1996 that mentioned the possibility of outsourcing and other IT work. But the EC told Computer Weekly that "vague" framework contracts that are not followed by specific, open and competitive tenders may infringe EC rules.
Some IT managers in government welcome framework deals as bypassing EC tendering rules. They say that such deals avoid the delays and expense of an open competitive tender for every large contract.
But in its referral to the ECJ, the EC said that, where the key terms and conditions of individual contracts under the framework are "vague or simply not specified at all, they must be advertised in the Official Journal and follow the detailed procedural requirements of the public procurement directives".
Under this definition, the DSS's decision to award the Child Support Agency contract and outsourcing deal, without advertising specific and detailed tenders, could be deemed unlawful.
Stephen Tupper, a specialist lawyer on EC procurement at Hammond Suddards, said that if the test case goes against the UK Government, contractors which believe they have lost money as a result of being excluded from framework contracts could sue.
Tupper said he was "startled" that the only published DSS tender advertisements for the outsourcing and the Child Support Agency contracts were so "vague".