Lessons from the Court of Appeal decision in Killaree Lighting Services Limited v Mayo County Council
Avoiding legal challenges is a central concern for any contracting authority conducting a procurement competition. Ensuring that such processes are robust and fully compliant with the relevant legislation is essential, write Beauchamps’ Pat McInerney, and Cian Clifford.
While legal challenges can pose difficulties, they also offer valuable insights that can improve future procurement practices. The recent Court of Appeal decision in Killaree Lighting Services Limited v Mayo County Council provides useful guidance on key issues such as abnormally low tenders, standstill periods, and the application of the European Communities (Public Authorities’ Contracts) (Review Procedures) Regulations 2010 (S.I. No. 130 of 2010) (as amended) (the ‘Remedies Regulations’).
Background
The case concerned a procurement process led by Mayo County Council (MCC) on behalf of a number of other local authorities for the repair, maintenance, and upgrade of public lighting. The contract notice was published on 3 July 2020, with Killaree Lighting Services The law firm for Ireland’s future Limited (Killaree) submitting a tender on 31 July. On 14 August, MCC raised concerns about potentially abnormally low prices in Killaree’s tender. Killaree responded on 20 August, followed by further correspondence on 27 August, 4 September, and 15 September. Ultimately, MCC deemed the tender abnormally low and excluded Killaree from the competition, notifying them on 9 October. MCC awarded the contract to another bidder on 27 October. Killaree initiated judicial review proceedings on 6 November 2020.
High Court decision
Killaree sought various remedies, including the setting aside of its exclusion and a declaration of ineffectiveness regarding the awarded contract.
The High Court addressed five key challenges:
- the obligation to issue a standstill letter;
- MCC’s duty to investigate abnormally low tenders;
- interpretation of the tender documents;
- evaluation of Killaree’s explanations for low pricing; and
- adequacy of MCC’s reasons for exclusion.
While the Court found MCC’s 9 October letter failed to meet the standstill notice requirements under Regulation 5(1) of the Remedies Regulations, it declined to issue a mandatory declaration of ineffectiveness under Regulation
11(2)(b). The Court held that Killaree had not demonstrated that it was deprived of the chance to seek pre-contractual remedies and had not adequately explained why it failed to take steps to preserve its position in light of MCC’s letter of 9 October 2020, which made it plain that the contract would be awarded without further reference to Killaree.
Although the Court acknowledged it had discretion to issue a declaration of ineffectiveness under Regulation 11(7), it refused to do so, finding that Killaree had not properly pleaded this issue.
The High Court upheld MCC’s decision to exclude Killaree, citing Regulation 69 of the European Union (Award of Public Authority Contracts) Regulations 2016 (S.I. No. 284 of 2016) (the “Procurement Regulations”), which requires authorities to investigate abnormally low tenders. The Court emphasised that this obligation overrides any discretion offered in the tender documents, and that MCC were entitled to reject the explanations put forward by Killaree.
On the issue of reasons, the Court ruled MCC had provided sufficient justification for Killaree’s exclusion, noting importantly that reasons can be discerned from the full body of correspondence – not solely from the final decision letter.
Court of Appeal decision
In January 2025, the Court of Appeal upheld the High Court’s core findings. It confirmed MCC was right to assess whether Killaree’s bid was reliable and whether it might impair contract performance. MCC was entitled to conclude that Killaree’s explanations were inadequate.
The Court also agreed that MCC had given sufficient reasons for exclusion. However, it disagreed with the High Court’s conclusion that Killaree was not deprived of the opportunity to pursue pre-contractual remedies. Still, since no substantive breach of procurement law was found, the criteria for a mandatory declaration of ineffectiveness under Regulation 11(2) were not met.
The Court further disagreed with the High Court’s finding that Killaree had failed to properly plead entitlement to a discretionary declaration under Regulation 11(7). Despite this, it upheld the refusal to grant the declaration, citing public interest factors, the involvement of multiple authorities, and the importance of legal certainty.
Finally, as the Court found an infringement under Regulation 11(7) but declined to declare the contract ineffective, it held that an alternative penalty under Regulation 13 was mandatory. The Court remitted the matter to the High Court for further consideration on what that penalty should be.
Key learnings
The issue of abnormally low tenders rarely comes before the courts, making this decision a valuable source of guidance for contracting authorities on the application of Regulation 69 of the Procurement Regulations. The case reaffirms that contracting authorities are legally required under Regulation 69 to request explanations from tenderers whose bids appear abnormally low. Contracting authorities must therefore:
- seek an explanation from the tenderer whose bid appears to be abnormally low;
- assess the information provided by the tenderer; and
- Decide whether to admit or reject the suspected tender.
The judgment also underscores the importance of issuing standstill letters in procurement processes. Although the Court ultimately declined to grant a declaration of ineffectiveness, MCC will nonetheless be required to pay a civil financial penalty of up to 10 per cent of the contract value to the Central Fund under Regulation 13 of the Remedies Regulations due to its failure to issue a compliant standstill letter. The Court of Appeal emphasised that Regulation 13 is mandatory and applies whenever a court finds an infringement under Regulation 11(7) but chooses not to declare the contract ineffective. For high-value contracts, such penalties could have significant budgetary consequences.
