The Government's attempts to save face in the wake of its humiliating £33m payout to Eurotunnel over the Brexit Ferries procurement fiasco fell on deaf ears in Parliament.
In its original statement on the matter, the Government said that as a result of the settlement Eurotunnel had withdrawn its legal claim against the Government, 'protecting the vital freight capacity that the Government has purchased from DFDS and Brittany Ferries'.
This suggests that the contracts would have had to be abandoned and re-tendered if Eurotunnel won the case and or an even larger payout would have been made.
DFDS and Brittany Ferries won contracts totalling close to £100m while Seaborne Freight won the remaining £13.8m of the total £108m procurement.
Standing in for Chris Grayling on 4 March, the health minister Matt Hancock told the Commons: 'The reason we settled this case...was to ensure that the freight capacity purchased from DFDS and Brittany Ferries continues, in order to have the unhindered supply of medicines [provided by the ferries in the case of a no deal Brexit]. That is what the settlement was a about.
'Without this settlement, the ferry capacity needed to be confident of supply was at risk.'
However the Seaborne Freight contract - the ferry service with no ships - has been cancelled, ending that potentially necessary supply of medicines.
This follows a National Audit Office (NAO) report, which found that even with Seaborne Freight, the agreed routes provided only around 11% of normal flows across the short straits of the English channel.
A Department for Transport (DfT) spokesperson confirmed to Transport Network that the arrangement with Eurotunnel would provide no extra freight capacity, despite earlier reports it would.
Ministers attempted to put a positive spin on the settlement stating that 'Eurotunnel has to spend the money on improving resilience, security and traffic flow at the border, benefiting both passengers and business'.
The Government has since released details of the settlement with Eurotunnel specifying how the £33m must be spent, suggesting these only cover investments in the national interest.
However in another emergency debate on the issue in the Commons on 5 March, this time attended by the transport secretary Chris Grayling, Joanna Cherry MP, made the point it was 'highly unusual' for the settling party to stipulate how the part receiving the funds should spend it.
'In my long experience, 20 odd years at the Bar and a number as a solicitor, I have never heard of this type of settlement in this type of case.'
The agreement could cover investments Eurotunnel was likely or wanted to make anyway as a result of planned upgrades or Brexit preparations, while it also means extra monies that had been earmarked can now be spent elsewhere, including boosting profits.
Mr Grayling all but conceded the monies would not be paid back in the event of a no deal - while the other ferry contracts were only put in place to cover potential outcomes of no deal - telling the House 'we are paying for facilties at the border'.
Neither Mr Grayling nor Mr Hancock specified which department would be paying the £33m just that it was a 'cross-government' decision made by a cabinet committee.
Labour shadow transport secretary, Andy McDonald, said 'a former DfT procurement adviser had suggested 'it is likely this Eurotunnel deal will be challenged' resulting in potential 'satellite litigation because of the settlement'.
The case against the Government:
Transport select committee chair, Lillian Greenwood, cited evidence provided by EU procurement expert Dr Albert Sanchez-Graells, which reads:
- The award of three contracts for ‘additional shipping freight capacity’ in the context of the Government’s ‘No-Deal’ preparations raises important illegality concerns.
- The Department for Transport justified the award of the three contracts without a prior call for competition on the basis of the ‘extreme urgency’ created by the prospect of a ‘No-Deal’ Brexit.
- Under reg.32(2)(c) of the Public Contracts Regulations 2015, ‘extreme urgency’ only exists where an unforeseeable event renders impossible the observance of the time-limits laid down for calls for tenders.
- The award of the three contracts for additional capacity seems likely to be in breach of reg.32(2)(c) of the Public Contracts Regulations 2015, as there was time to comply with the 60 calendar days’ time limit required by alternative, transparent competitive procedures with negotiation.
- Even if it was accepted that there was no time for alternative competitive procedures due to the specific characteristics of the shipping market, the award to Seaborne Freight (UK) Ltd still raises issues of potential illegality. The Secretary of State for Transport has justified the award as an act of support for a new British start-up business. This fact, coupled with eg the lack of readiness of the port infrastructure from which Seaborne plans to operate, undercuts the rationale of the extreme urgency of the procurement and heightens the likely illegality of the award.
- All contracts, and Seaborne’s in particular, raise potential risks of illegal State aid that require further investigation.
- This event indicates that the Government seems intent on pursuing a transport policy—and, possibly, a broader procurement policy—that runs against the core rules of EU law and policy. This is an unwelcome indication of potential roadblocks in the path towards reaching an agreement on a future UK-EU trade deal.
Register now for full access
Register just once to get unrestricted, real-time coverage of the issues and challenges facing UK transport and highways engineers.
Full website content includes the latest news, exclusive commentary from leading industry figures and detailed topical analysis of the highways, transportation, environment and place-shaping sectors.
Use the link below to register your details for full, free access.
Already a registered? Login
