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Cite as: [2007] EWHC 1848 (Admin)

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		Neutral Citation Number: [2007] EWHC 1848 (Admin)
		Case No: HQ07X01529, and CO/3268/2007

IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
ADMINISTRATIVE COURT

Royal Courts of Justice
Strand, London, WC2A 2LL

27th July 2007

B e f o r e :

THE HONOURABLE MR JUSTICE BEATSON
____________________

Between:

	R (on the application of the Law Society)	Claimant
	- and -
	Legal Services Commission The Lord Chancellor and the Secretary of State for Justice (formerly the Secretary of State for Constitutional Affairs) Dexter Montague & Partners (a firm) -and- Legal Services Commission	Defendant Interested Party Claimant Defendant

____________________

Mr John Howell QC, Mr Javan Herberg and Mr Mark Vinall (instructed by Bircham Dyson Bell) for the Claimants
Mr Robert Jay QC and Mr Rhodri Williams (instructed by the Legal Services Commission and the Treasury Solicitor) for the Defendant and Interested Party
Hearing dates: 26th and 27th June 2007
____________________

HTML VERSION OF JUDGMENT
____________________

Beatson J :

These proceedings concern the new Unified Contract for the provision of publicly funded civil legal work by solicitors and not for profit organisations. It was introduced on 1 April 2007, and replaced the General Civil Contracts. The Unified Contract forms part of a programme for the reform of the public funding of legal aid.

In July 2005 Lord Carter of Coles was commissioned by the government to review legal aid. In July 2006 his report, Legal Aid: a market based approach to reform, was published and the Department for Constitutional Affairs ("DCA") and the Legal Services Commission ("LSC") published a consultation paper, Legal aid: a sustainable future. The consultation period expired on 21 November 2006 and, on 28 November, DCA and the LSC published Legal aid reform: the way ahead Cm 6993 containing their proposals for reform. The main change is an alteration to the payment structure from a system based on hourly rates towards one based on fixed and graduated fees. The LSC has also indicated that there will be further changes. The Unified Contract will be extended to cover publicly funded criminal work from 1 April 2008. The LSC may wish to introduce a minimum contract size so that publicly funded work will be restricted to firms undertaking more than that minimum amount of work. The standard to be achieved by firms in peer review may be raised from "competence" to "competence plus".

The Claimant, the Law Society, which represents the interests of solicitors and also has certain statutory functions concerning the regulation of the solicitors' profession, applies for permission to bring a judicial review of the decision of the LSC to seek offers from firms of solicitors and not for profit organisations on the basis of the new Unified Contract. A letter before claim was sent to the LSC on 22 March and proceedings seeking declaratory relief only were launched on 20 April 2007. The Law Society argues that the contract, in particular clause 13, does not comply with the requirements of regulations 4 and 9 of the Public Contracts Regulations 2006 (SI 2006 No. 5) ("the 2006 Regulations") or with the principle of transparency in EC law because of the scope of the right it gives the LSC unilaterally to amend the contract.

On 8 May 2007 Walker J ordered that there be an expedited rolled up hearing of the application for permission and, if permission is granted, of the claim. On 9 May 2007 Dexter Montague & Partners, a firm which declined to enter the Unified Contract, issued proceedings in the Queen's Bench Division seeking damages for breach of the LSC's obligations under the 2006 Regulations. Its claim is also based on the right the contract gives to the LSC unilaterally to amend its provisions. It is pleaded and advanced on identical grounds to the Law Society's claim for judicial review. On 5 June 2007 by consent it was ordered by the Master of the Crown Office that there be a split trial of Dexter Montague's claim, and that the claim relating to liability only be referred to the Administrative Court to be determined at the same time as the judicial review proceedings by the Law Society.

The evidence consists of two statements respectively dated 18 April and 24 June 2007 made by Mr Desmond Hudson, the Chief Executive of Law Society, and a statement dated 29 May 2007 made by Ruth Wayte, the LSC's Legal Director.

The legislative and regulatory framework

(a)The Access to Justice Act 1999

The LSC is a statutory corporation established under Part 1 of the Access to Justice Act 1999 ("the 1999 Act"). Section 1(2) of the 1999 Act confers powers and imposes duties on the LSC in relation to the Community Legal Service (the "CLS") and the Criminal Defence Service (the "CDS").

The Community Legal Service was established by the 1999 Act to promote the availability to individuals of specified legal services and securing within available resources and priorities that individuals have access to services that effectively meet their needs: section 4(1) of the 1999 Act. By section 4(4) those exercising any function relating to the CLS are required to have regard to the desirability of doing so, so far as is reasonably practicable so as to (a) promote improvements in the range and quality of services provided, (b) secure services that are appropriate having regard to the nature and importance of the matter, and (c) secure the swift and fair resolution of disputes without unnecessary or unduly protracted proceedings in court.

Section 4(5) requires the LSC to fund the specified services and section 5(1) requires it to establish and maintain a fund known as the Community Legal Service Fund. By section 5(7), in funding services as part of the CLS, the LSC "shall aim to obtain the best possible value for money". Funding priorities are set by the LSC in accordance with directions given by the Lord Chancellor and taking into account the need for the specified services. Section 6(3)(a) of the 1999 Act empowers the LSC to fund services by "entering into contracts with persons or bodies for the provision of services by them".

By section 10 (1) of the 1999 Act a person for whom services are funded by the LSC as part of the Community Legal Service "shall not be required to make any payment in respect of the services except where regulations otherwise provide". The Community Legal Service (Financial) Regulations 2000 (SI 2000 No. 516) as amended by SI 2007 No. 906 make provision for the assessment of the financial resources of individuals in order to determine eligibility to receive funded services and to assess any contribution to be made. Contributions in respect of the costs of any services provided are to be paid to the LSC unless it has delegated that function under contract or the funding code. Section 22(2) of the 1999 Act provides that a person who provides services funded by the LSC as part of the CLS or the CDS "shall not take any payment in respect of the services apart from (a) that made by way of that funding, and (b) any authorised by the Commission to be taken".

In January 2000, acting under its powers pursuant to section 6(3)(a) of the 1999 Act, the LSC started to contract for the provision of legal services. From the outset the contracts contained provisions empowering the LSC unilaterally to amend the contracts. The former General Civil Contracts, which expired on 31 March 2007, contained such a power. The LSC does not purchase a specified amount of services by means of the contracts. The contracts permit the solicitors and not for profit organisations who have obtained the requisite quality standard, and agree to abide by the terms of the contract, to undertake legal aid work.

In relation to legal advice, known as controlled work, the permission to undertake legal aid work is subject to a maximum number of new cases (called "matter starts"). In relation to certificated representation before the courts there is no maximum. Initially there was a single legal aid quality standard, the "SQM". In a "bid round" in 2004 the LSC introduced additional criteria concerning quality and access for new civil contracts. In her statement Ms Wayte says that "when contracting commenced … the sole requirement was that the provider needed to demonstrate compliance with the SQM. There was no competition as such, although the fixed budget for controlled work meant that there was only a limited number of matter starts to be distributed".

(b) Directive 2004/18/EC of 31 March 2004 and the 2006 Regulations

It is common ground that in its exercise of its contracting power under section 6(3)(a) the LSC is subject to the European and national rules governing the co-ordination of procedures for making public works, public supply and public services contracts. The relevant EC Directive is Directive 2004/18/EC of 31 March 2004. The 2006 Regulations implement it in England, Wales and Northern Ireland.

It is also common ground that the provisions of the 2006 Regulations considered in this case faithfully implement the corresponding provisions of the Directive. "Legal services" are services within the Directive and the Regulations: see Article 1(2)(d), regulation 2(1) and item 21 in Annex IIB to the Directive and schedule 3 to the Regulations. The 2006 Regulations do not, save in one respect, apply to public service concessions, and there is disagreement as to whether the Unified Contract is a public service concession.

The 2006 Regulations specify the procedures to be followed in relation to the award of public service contracts by public bodies, the value of which exceed the relevant thresholds. In the case of the LSC's Unified Contract the relevant threshold is €211,000 because it is a Part B services contract: see regulations 2(2)(b), 8(3) and Schedule 3. It is also common ground that the value of the services provided by many firms of solicitors exceeds the threshold. For instance, it is claimed (but not admitted) that the relevant figure for the services provided in the past by Dexter Montague & Partners is £620,000 net of VAT and disbursements. By regulation 5(2), the 2006 Regulations apply "whenever a contracting authority seeks offers in relation to a proposed Part B services contract other than one excluded by virtue of Regulation 6 or 8". Regulation 8 sets out the relevant financial thresholds.

The provisions of central importance in this case are regulations 4(3) and 9. Regulation 4(3) provides that, where the 2006 regulations apply, a contracting authority is obliged to treat "economic operators" equally and in a non-discriminatory way, and to act in a transparent way. This refers to and mirrors Article 2 of the Directive. It is common ground that firms of solicitors and not-for-profit organisations, who are or who may be offered the Unified Contract, are service providers and thus "economic operators" within regulation 4. Regulation 9 implements Article 23 of the Directive. It governs "technical specifications" which must be met by the services to be provided under a public services contract. These include any specification defining the required characteristics of services such as quality levels, performance levels, and conformity assessment procedures. Where a contracting authority wishes to lay down technical specifications which must be met, regulation 9(2) states "it shall specify those technical specifications in the contract documents". Regulation 2(1) defines the contract documents as the invitation to tender for or to negotiate a contract, the descriptive document, the proposed conditions of contract, the specifications or descriptions of the services, work or works required by the contracting party and of the materials or goods to be used, and all supplementary documents.

Regulations 9(6) to (9) concern the ways technical specifications must be specified in the contract documents and the degree of precision required. Regulation 9(5) enables the contracting authority to choose which of the alternative methods to use. The first, in regulation 9(6), enables the definition to be by reference to British, European or international standards, technical approvals or technical specifications. The second, in regulation 9(7), is relevant in the present case. It permits technical specifications to be defined in terms of performance or functional requirements "…provided that the requirements are sufficiently precise to allow an economic operator to determine the subject of the contract and a contracting authority to award the contract".

Where a contracting authority defines the technical specifications in terms of performance or functional requirements, regulation 9(11) provides that it must not reject an offer which complies with a British, European or international standard, technical approval or specification if the person tendering proves that it meets the contracting authority's performance or functional requirements. This reflects the provisions of Article 23(3)(b) of the Directive which provides that a reference to such standards must be accompanied by the words "or equivalent". See also Article 23(8) in relation to specifications referring to a particular make, source or process.

In some contracts the contracting authority is not able objectively to define the technical means capable of satisfying its needs or set specifications in accordance with regulation 9(7), (8) and (9). In respect of these contracts, described by Article 29 of the Directive and regulation 18 as "particularly complex contracts", provision is made for a process of "competitive dialogue" between a contracting authority and tenderers. The aim of this dialogue is to identify the means best suited to satisfying the needs of the contracting authority. During the dialogue authorities are required to secure equality of information among all tenderers: Article 29(3) and regulation 18(21)(b).

The purpose of any technical specifications laid down by a contracting authority can be discerned from regulation 9(4). This provides that "[a] contracting authority shall ensure that technical specifications "afford equal access to economic operators and do not have the effect of creating unjustified obstacles to the opening up of public procurement to competition."

By Regulation 6(2)(m), with one important qualification, the 2006 Regulations do not apply to a proposed public contract which is "a services concession contract awarded by a contracting authority". By regulation 2(1) "services concession contract" means "a public services contract under which the consideration given by the contracting authority consists of or includes the right to exploit the service or services to be provided under the contract". The qualification is that by regulation 46, where a contracting authority grants to a person special or exclusive rights to carry on a service for the benefit of the public, it shall impose an express duty on that person not to discriminate in seeking offers or in awarding contracts for the purchase or hire of goods on the grounds of nationality or the fact that the goods to be supplied under the contract originate in another state. The LSC submits that the Unified Contract is a services concession contract.

Regulation 47 identifies to whom the obligations under the 2006 Regulations are owed and makes provision for the enforcement of those obligations. Its material parts provide:

"(1) the obligation on –

(a) A contracting authority to comply with the provisions of these

regulations

… and

(b) A concessionaire to comply with the provisions of Regulation 37(3);

is a duty owed to an economic operator."…..

(6) A breach of a duty owed in accordance with paragraph (1)….. is

actionable by any economic operator which, in consequence, suffers, or

risks suffering, loss or damage and those proceedings shall be brought in the

High Court.

(7) Proceedings under this regulation must not be brought unless –

(a) the economic operator bringing proceedings has informed the contracting authority or concessionaire, as the case may be, of the breach or apprehended breach of the duty owed to it in accordance with paragraph (1) …. by that contracting authority or concessionaire and of its intention to bring proceedings under this regulation in respect of it; and

(b) those proceedings are brought promptly and in any event within 3 months from the date when grounds for the bringing of the proceedings first arose unless the court considers there is good reason for extending the period within which proceedings may be brought.

(8) Subject to paragraph (9) but otherwise without prejudice to any other powers of the court, in proceedings brought under this regulation the court may-

(a) by interim order suspend the procedures leading to the award of the contract … in relation to the award of which the breach of the duty owed in accordance with paragraph (1) …. is alleged, or suspend the implementation of any decision or action taken by the contracting authority or concessionaire, as the case may be, in the course of following such a procedure; and

(b) if satisfied that a decision or action taken by a contracting party was in breach of the duty owed in accordance with paragraph (1) … –

(i) order that the setting aside of that decision or action or order the contracting authority to amend any document;

(ii) award damages to an economic operator which has suffered loss or

damage as a consequence of the breach; or

(iii) do both of those things.

(9) In proceedings under this regulation the court does not have power to order any remedy other than an award of damages in respect of a breach of the duty owed in accordance with paragraph (1) … if the contract in relation to which the breach occurred has been entered into."

The process leading to the adoption of the Unified Contract

The LSC and the DCA's consultation paper, Legal Aid: a sustainable future, published in July 2006, stated (a) the General Civil Contracts then in force were to expire on 31 March 2007, and (b) the LSC wished to introduce a Unified Contract to cover the provision of legal aid work by firms of solicitors and not for profit organisations on 1 April 2007. The period for formal consultation on the proposals was to end on 21 November 2006. On 9 October the LSC circulated a draft of its proposed new Unified Contract.

In her statement Ruth Wayte, the LSC's Legal Director, says that the LSC's policy proposals in relation to the Unified Contract were the subject of a full public consultation between 13 July and 12 October 2006 during which time there was detailed discussion of the draft standard terms and the specification with representative groups including the Law Society. Ms Wayte's statement also says that the consultation paper made it clear that the LSC proposed to replace the power in the General Civil Contract simply to amend the contract specification "at our discretion" by a provision allowing amendments to all the contractual documents. The Law Society submitted its formal response to the LSC on 21 November, the end of the consultation period. There is no reference to the procurement regulations in the Law Society's response.

The decisions of government and the LSC are contained in the White Paper, Legal Aid Reform: the way ahead, published on 28 November 2006. This inter alia stated that the new regime was to be introduced in stages. The award per organisation (rather than per office) and the new standard terms would be introduced in April 2007, the new Specification and fee schemes in October 2007, and the extension of the Unified Contract to criminal work in April 2008. Ms Wayte states that the LSC had previously decided that, in the light of the reform programme, there would be no "bid round" for April 2007 so that all current organisations with General Civil Contracts would be offered a Unified Contract. She also states that new providers would also have the opportunity of obtaining a contract, depending upon the coverage in any particular area, in accordance with the LSC's bid rules.

After the formal consultation period ended on 21 November, the Law Society and others sought to continue to persuade the LSC to take a different course. Ms Wayte states that, after that time, from the LSC's point of view the purpose of further consultation about the Unified Contract was to deal with drafting and detail. On 22 December 2006 the LSC sent an amended version of the Unified Contract to the representative bodies, including the Law Society. Ms Wayte states that the Law Society's President asked that the implementation of the contract be postponed until at least October 2007 in order to have further discussions about the standard terms. The LSC rejected this proposal. It was, however, reiterated in subsequent meetings and correspondence.

Ms Wayte states that on 18 January the Law Society was given a last opportunity to make representations about the Unified Contract. She states that the first time an objection of principle was raised to the unilateral right to amend in the Unified Contract was in these representations, which the LSC received on 26 January. The Law Society proposed additional criteria to the way in which the amendment clause operated. Ms Wayte considered these amendments would have made the process cumbersome and possibly impracticable. This was because they incorporated an individual right for each provider to feed in to the consultation process on amendments and to refer the matter to mediation in the event of dissatisfaction with the outcome.

Further amendments were made to the standard terms, and these were sent to the Law Society and others on 16 February and published on the LSC's website on 19 February. Ms Wayte states that clause 13 was amended so that the same trigger, a reform of the Legal Aid Scheme, applied for amendment and for termination. The LSC considered this simplified the contract. A provision allowing a provider to terminate in the event of not being able to accept an amendment was also introduced.

The last meeting between the LSC and the Law Society was on 21 February 2007. Following this the LSC made further amendments to the standard terms. The LSC sent copies of the final version of the standard terms to the Law Society and other representative bodies on Friday 23 February. The LSC published the final version of the Unified Contract on its website on 26 February. The documents comprising the Unified Contracts were sent by the LSC to solicitors' firms under cover of a letter dated 27 February 2007. The firms were required to complete and return the forms by 31 March 2007. The Law Society's solicitors thereafter published a detailed guide to the Unified Contract which included a section on clause 13 objecting to it on the grounds of lack of certainty.

The Unified Contract

The Unified Contract comprises three documents. The first is the contract for signature by the individual contracting organisation together with schedules authorising particular offices within the organisation to provide services and specifying the maximum and minimum "starts" for a given period. The second document contains the standard terms that apply to all contracting organisations. The third is the contract specification and payment annex. This contains detailed provisions about the different categories of work, how the work must and must not be performed, reporting requirements, and the rates and methods of remuneration. Clause 2.2 of the Standard Terms requires the LSC to "act in good faith and … as a responsible public authority required to discharge functions under the [1999] Act". The Standard Terms give the LSC wide powers including the unilateral power to amend the terms of the contract in clause 13, which has given rise to the present proceedings. The material provisions of clause 13 are set out or summarised below. Clause 13.1 provides:

"Subject to the provisions of this clause 13 [the LSC] have the right to amend the Contract Documents from time to time if, (i) we consider it necessary or desirable to do so in order to facilitate a Reform of the Legal Aid Scheme, or (ii) our proposed amendments have been approved by consultative bodies, or (iii) our proposed amendments are permitted under clause 13.2 or any other provision of this contract authorising us to make amendments".

The reform of the legal aid scheme referred to in clause 13.1(i) is defined widely in clause 1 of the standard terms to mean:

"such reforms as [the LSC] may wish to implement in order better to comply with our statutory duties or fulfil our statutory functions" including (a) such changes as we wish to make, or as are related to, the CLS, CDS, or both, consequent on or related to, the paper "Legal Aid Reform: The Way Ahead" Cm 6993; or (b) new approaches to procurement and contracting for the provision of publicly funded legal services".

Clause 13.2 empowers the LSC to amend the contract as it considers necessary to comply with or take account of UK legislation, directly effective EU legislation, or the decisions of UK courts, the ECHR or the ECJ, or the requirements of any regulatory body or tax or similar authority. Such amendments may include without limitation:

"(a) amendments to any of the terms of a Schedule;

(b) changes to payment provisions;

(d) excluding from this Contract any description of Contract

work; and

(e) amending procedures in the Specification."

Clause 13.12 provides that when the LSC is entitled to amend the Contract Documents, it may make amendments that affect all, or fewer, suppliers. The only limitation is the obligation, pursuant to clauses 13.13 and 13.4, to consult. Clause 13.13 provides:

"Except for amendments made under any other provision of this contract authorising us to make amendments, we may not amend either the Contract for Signature, the Contract Standard Terms or the Specification without prior consultation in accordance with this clause."

Clause 13.4 states that where a proposed amendment affects only one supplier,

the LSC will consult that supplier. Otherwise it will consult with representative

bodies.

There is no minimum period for consultation. By clause 13.5 the maximum period is 42 days or, where the LSC considers there is an urgent need to make the amendment, 21 days. Clause 13.7 provides that an amendment made by the LSC after consultation may be as proposed or in a modified form, and shall bind the supplier. By clause 13.8 amendments take effect from the date specified by the LSC. Such date shall be not less than 42 days after notice of the amendment and, in urgent cases, not less than 28 days after notice.

The power to amend pursuant to clause 13 is a far-ranging one. It enables the amendment of the definition of the standards to which contract work must be performed and what counts as a breach and a fundamental breach of the contract: see clauses 1 and 10.4 –10.7. Failure to achieve the specified rating is either a breach of contract or a fundamental breach of contract: see clauses 10.4-10.6.

Clause 13 also enables the amendment of the key performance indicators in the contract and the introduction of additional ones. At present failure to achieve the key performance indicators is not of itself a breach of contract ( clause 10.10 and Annex G) but it may be made so be an amendment pursuant to clause 13: see clause 10.11. In its evidence the LSC states (paragraph 26 of Ms Wayte's statement) that any amendments to the system of peer review will be confined to procedure and will not relate to quality levels. The LSC can amend the maximum and minimum number of "matter starts" in the Contract for Signature for individual firms.

A number of provisions specifically authorise the LSC to make amendments for which consultation is not required. For example, clause 11B enables the contract to be amended by extending it to cover criminal work as part of the CDS, and the contract specification permits it to be amended. Paragraph 8 of the contract specification envisages a wide power of amendment, describing it as a "living document" which can be amended to ensure that it continues to achieve "the objectives of contracting". It is, however, to be noted that the current specification in the Unified Contract is identical to the specification that applied to the former General Civil Contract, this power of amendment was also a feature of the previous regime.

Where the LSC amends the contract under clause 13, suppliers may serve notice and terminate the contract on the day before an amendment comes into effect: clauses 13.13 and 30.2. In his statement Mr Hudson says (paragraph 26) this is not realistic given the degree of dependence that some firms have on public funding, their commitments in terms of staff, premises and financial obligations, and the fact that an amendment may come into effect a very short time after notice has been given: see the minimum periods of 42 days and, in cases of urgency, 28 days specified in clause 13.8.

Termination of the contract does not only remove the ability to do new publicly funded work but affects existing work. Clause 31.2 requires the supplier to immediately stop all work. Although there is provision in clause 31.10 for the LSC to authorise the supplier to perform what the contract describes as "remainder work", the sub-clause states the LSC will not normally authorise this.

Ms Wayte says (paragraph 21) that there is no need to terminate the whole contract and that a firm could simply stop delivering a category of service, for example family work, or discuss amending the contract with its account manager. She does not, however, state that there is an entitlement in a firm unilaterally to withdraw from part of the work specified in the contract or that it is practical for a firm with a significant proportion of legally aided cases to disengage from publicly funded work in the timescale provided in the contract.

In paragraph 9 of his statement Mr Hudson, the Chief Executive of the Law Society says that the LSC required firms to contract on a "take it or leave it " basis and expressly told firms which wished to negotiate that this was not possible. He says that firms who are financially dependant on funding from the LSC were unable to decline to enter into the Unified Contract or to seek to suspend the implementation of the LSC's decision to make contracts in that form because it had been made clear to them that the existing General Civil Contract would expire on 31 March 2007.

Ninety-five percent of solicitors' firms have signed the Unified Contract. Dexter Montague & Partners has not. On 21 March the firm asked the LSC about the position if it entered the contract but subsequently served notice of termination in respect of all or some of the categories, the notice to expire before 30 September 2007. The firm wanted to know whether it would be permitted to complete "run-off" work taken on prior to the termination of the contract. On 30 March it wrote stating that the unfair and unreasonable terms of the Unified Contract imposed in advance of revised fee structures left it in an untenable position, that it would not be signing the Unified Contract, and would cease providing legally aided work.

Dexter Montague & Partners' letter states that the key issue which forced the firm's hand was the interplay of the new arrangements for contract variation, termination and remainder work. The combination of the width of the LSC's power to amend its terms and the provisions on remainder work meant that the firm would be exposed to an unacceptable risk if it entered into the contract. It said this was because it would be prevented from completing cases for clients and making a controlled exit from one or more areas of work should they become unviable under the planned reforms.

Ms Wayte states that throughout the process the LSC has tried to set out the proposed reform programme as clearly as possible. The position taken by Dexter Montague & Partners is, she states, very much an isolated case at present. She states that Dexter Montague's decision was driven by the proposals which are in the public domain rather than any lack of transparency in the process.

I have referred to the LSC's intention to bring criminal work within the scope of the Unified Contract in April 2008. Mr Hudson states (paragraph 12) that the LSC intends to do this by amending the Unified Contracts of those solicitors who are providing civil legal services under the Unified Contract and issuing a new Unified Contract to firms who do not already have one but are to provide services. He refers (paragraphs 18ff) to the LSC's intention to use the power of amendment to introduce further substantial reforms to the legal aid scheme. He states it is currently proposed that the first amendments will be made on 1 October 2007 when a new specification is introduced making substantial alterations to the payment structure for certain kinds of work.

The LSC is currently consulting on draft proposals in all areas of business save mental health. Mr Hudson states (paragraph 20) that a solicitor cannot know to what extent the new specification that it is said will be introduced in October or any specification introduced at any other time will differ from the current proposals. The draft proposals, however, make fundamental changes to the way certain categories of work will be paid for by introducing new fixed and graduated fee schemes.

Mr Hudson states that the LSC's indication that it may wish to amend the Unified Contract to provide a minimum contract size means that firms which only do a limited volume of publicly funded work cannot know whether they will be able to maintain that level of work over the life of the contract, or whether the LSC will require them to choose between doing more publicly funded work and ceasing doing any publicly funded work. They might cease doing publicly funded work either because of an inability to meet the minimum contract size specified or because they do not wish to meet it. Mr Hudson also refers to the fact that the standards set for the performance of work are subject to unilateral change by the LSC. At present the contract requires a supplier to achieve specified ratings by a process of independent peer review.

With regard to the LSC's proposals for the future, Ms Wayte states that all providers will have the opportunity to make appropriate comments on the reform programme as it develops and will have ample forward notice of how the contract might be amended in order to implement the programme. She states that the LSC's intention that contract sanctions would in due course follow where a provider failed to meet key performance indicators is stated in Annex G of the Unified Contract. She observes that this is in accordance with the LSC's general policy of providing as much information to service providers as possible. She states that there are no current plans to amend the quality standards, SQM, to any significant extent but the LSC does intend to consider other recognised quality marks although it is unlikely this will happen before March 2010. She states that any changes to quality levels will not be implemented before March 2010 save in relation to preferred suppliers and that any changes to peer review procedures would not be brought in without consultation.

Discussion and Conclusions

If the Unified Contract had been entered into between two private bodies, broadly speaking and subject to legislative control such as that in the Unfair Contract Terms Act 1977, the breadth of the LSC's power of amendment would not be open to objection. The contract might be seen as one-sided and possibly even harsh but the power of amendment in clause 13 does not denude the agreement of contractual force. Moreover, the LSC is entitled , and indeed obliged, to aim to obtain the best possible value for money from firms and organisations.

The Claimants' complaints stem from the fact that the LSC is a contracting authority and thus subject to the 2006 Regulations and to the EC general principle of equality and the obligation of transparency implied from it. They submit that the powers enabling the LSC unilaterally to amend the whole contract, including the technical specifications it contains, at short notice with results that cannot now be determined from the contract documents, violate the requirement in regulation 4(3) for the LSC to act in a transparent way or the free-standing obligation of transparency implied from EC law's general principle of equality.

The LSC's response is that there is no violation of the requirement of transparency either under the Regulations or as an obligation under EC law implied from the principle of equality. It no longer argues that the regulations only applied to the award of the contract and not its implementation. That has not been pursued, perhaps in the light of the statements made by the ECJ in Case C-496/99 European Commission v CAS Succhi di Frutta [2004] ECR I-3801 that, where the procurement directives apply, a contracting authority must strictly comply with award criteria "not only in the tendering procedure concerned with assessing tenders and selecting the successful one, but up to the end of the stage during which the relevant contract is performed": see paragraph 115 and see also paragraph 105.

The LSC now submits that there is no violation of the requirement of transparency because the terms of the contract, including the power of amendment, are known to all potential contractors in advance. The rules apply to all potential contractors in the same way and they all have equal opportunity to offer to contract in accordance with the rules. The power unilaterally to amend contracts, is not new. It has existed since the introduction of contracts for the provision of publicly funded legal services in January 2000. The purpose of the power to amend the new Unified Contract was known to practitioners. A decision was made to implement the process of reforming legal aid in stages. The power of amendment is in part to enable the LSC to do this while affording solicitors and other providers the security of a three-year contract, rather than a series of six month ones.

It was clear from the consultation paper and Legal Aid Reform: the Way Ahead that there were to be amendments to the Unified Contract. This was also stated on the LSC's website. Legal Aid Reform: the Way Ahead, moreover, contained a provisional timetable for amendments and gave an indication of what, subject to consultation, they would be: see Cm. 6993, paragraphs 60-63, 65, 68. Paragraph 3 of the written submissions made on behalf of the LSC states that

"the central flaw in the Law Society's case is that it seeks to apply rules which were developed for the purpose of ensuring a transparent public contract award procedure in order to achieve altogether different aims: dictating the substantive content of a contract entered into after the carrying out of a transparent level of consultation which fully meets the requirements of the [2006 Regulations], and freezing the evolution in policy regarding legal aid".

The implications of the Claimants' submissions are far-reaching because, as observed in Arrowsmith's Law of Public and Utilities Procurement (2005), 6.17, contracts with governmental bodies often contain clauses allowing unilateral changes by the contracting authority. They do so for a variety of reasons, including the need to deal with unforeseen events and to balance the need for certainty with the statutory powers and duties of the contracting authority. Here the LSC is under a statutory duty to aim to obtain the best possible value for money: section 5(7) of the 1999 Act. A power unilaterally to amend undoubtedly creates some uncertainty. The question is whether that uncertainty inhibits competition and violates the 2006 Regulations or the obligation of transparency.

The principle or obligation of transparency arises in a number of different EC contexts apart from public procurement, for instance access to documents: see Craig, EU Administrative Law (2006) 350-360; Lenaerts, (2004) CMLRev. 317, 318-322. In that context Judge Lenaerts has stated that it can "hardly be denied that the principle of transparency has evolved into a general principle of Community law". Craig is more cautious. Citing a number of decisions of the ECJ and the Court of First Instance, he observes (at 353) that the Community courts, while generally supportive of transparency, have "refrained from far-reaching statements of principle that would enshrine a general right of transparency or access to information". Its status is perhaps that of an emerging general principle and, as Craig also observes (at 359), its impact will depend on the meaning accorded to transparency in specific cases.

In the present context transparency has two sources. It is required by Article 2 of the Directive and regulation 4(3) of the 2006 Regulations. Recital 1 to the Directive states that the Directive is based on the jurisprudence of the ECJ. That jurisprudence establishes that, in this context, an obligation of transparency is implied from the EC general principles of equal treatment and is (see e.g. Case C-458/03 Parking Brixen GmbH v Geimeinde Brixen [2005] ECR I-8612 at paragraph 49) intended to preclude any risk of favouritism or arbitrariness. The purpose of the obligation appears to be the same whether it is implied from the principle of equal treatment or required by the provisions of the procurement Directives. In Case C-324/98 Telaustria Verlags GmbH & Telfonadress GmbH v Telekom Austria AG [2000] ECR I-10745, however, Advocate-General Fennelly (paragraph 43) regarded the obligation of transparency implied from the principle of equal treatment to be more limited than the obligation contained in the procurement Directives and refused to apply the provisions of the Directive by analogy.

In Case C-496/99 European Commission v CAS Succhi di Frutta [2004] ECR I-3801 at paragraph111 the ECJ stated that the principle of transparency

"implies that all the conditions and detailed rules of the award procedure must be drawn up in a clear precise and unequivocal manner in the notice or contract documents so that, first, all reasonably informed tenderers exercising ordinary care can understand their exact significance and interpret them in the same way, and secondly, the contracting authority is able to ascertain whether the tenders submitted satisfy the criteria applying to the relevant contract."

The Claimants submit that the uncertainty resulting from the LSC's power unilaterally to amend the contract inhibits competition and violates the 2006 Regulations because a solicitors' firm which is considering whether to enter into the Unified Contract cannot determine for itself with reasonable certainty at the beginning what its rights and obligations will be during the life of the contract.

The purpose of the procurement directives and regulations implementing them, including Directive 2004/18/EC and the 2006 Regulations, is to open up procurement to competition, to ensure equal treatment, and to prevent hidden discrimination, in particular against non-nationals. In Case C-380/98 R v HM Treasury, ex p. University of Cambridge [2000] ECR I-8035 it was stated (at paragraph 17) that the aim of the procurement directives "is to avoid both the risk of preference being given to national tenderers or applicants whenever a contract is awarded by the contracting authorities and the possibility that a body financed or controlled by the State, regional or local authorities or other bodies governed by public law may choose to be guided by considerations other than economic ones".

The Claimants submit that the lack of transparency that results from the wide power of unilateral amendment means there is a risk of non-compliance with the principles of equal treatment and non-discrimination and prevents a firm ascertaining whether the contracting authority has acted arbitrarily or in a discriminatory manner.

For the reasons given below I have concluded that; the Unified Contract is not a public service concession and that the 2006 Regulations apply to it, and that, in the circumstances of this case, the LSC's powers of amendment comply with the requirement of transparency in regulation 4(3), but do not satisfy the requirements of regulation 9.

(a) Is the Unified Contract a Public Service Concession?

Logically, this is the first issue because, save as stated in paragraph 21 above, the Directive, and the 2006 Regulations (including regulation 9) do not apply to public service concessions. Mr Jay QC, on behalf of the LSC, did not abandon the LSC's contention that the Unified Contract is a public service concession, but did not advance it with any enthusiasm. He stated that it is not necessary for a decision to be made on this issue.

Although not subject to the 2006 Regulations, public service concessions are, as seen from the Telaustria case, subject to the general principles of EC law, including the principle of equality and the obligation of transparency implied from that principle. I have referred to possible differences between what transparency involves when it is so implied, and when its source is the Directive, for instance regulation 4(3). It has not been suggested that there are any such differences in this case. Accordingly, whether the Unified Contract is a public service concession is primarily relevant in the determination of whether regulation 9 with its more specific requirements applies to it.

The submission that the Unified Contract is a services concession contract primarily relies on the fact that the contract does not guarantee any amount of work or minimum income to solicitors' firms and organisations. The LSC submits that, since the firms and organisations take the risk that they will be instructed by clients to perform publicly funded legal work, by entering into the Unified Contract they are given the right to exploit the provision of publicly funded services to the public. This, it is submitted, brings the contract within the definition of a "services concession contract" in regulation 2(1) because the "consideration given by the contracting authority consists of or includes the right to exploit the service or services to be provided under the contract".

Particular reliance is placed by Mr Jay on the statement the ECJ's decision in C324/98 Telaustria Verlags GmbH & Telfonadress GmbH v Telekom Austria AG [2000] ECR I-10745, paragraph 58, that the contract it was considering was a public services concession "by reason of the fact, in particular that the consideration provided by the [contracting authority] to the [service provider] consists in the [service provider] obtaining the right to exploit for payment its own service". He also relied on the reference in paragraph 30 of the opinion of Advocate-General Fennelly to the fact that the concessionaire must bear the principal or at least the substantive economic risk attaching to the performance of the service involved".

The fact that the service provider runs an economic risk that the public may not want the goods or services is not, however, conclusive, as Mr Jay recognised. This is seen in Case C-272/91 European Commission v Italian Republic ("Lottomatica") [1994] ECR I-1409 at paragraph 25. It was held that, in determining whether a contract is for pecuniary interest or a public service concession, the fact that the supply takes the form of an annual payment in proportion to the revenue which thus varies according to the public's use of the service or system is "irrelevant". The important question is whether full or significant consideration passes from the contracting authority to the service provider. If it does not the contract is a concession. If such consideration does pass, and the service provider is to be paid by the contracting authority for what he does or supplies, the contract is not a concession. The latter type of contract is referred to as a contract for pecuniary interest: see regulation 8(7).

The passage from paragraph 30 of the Advocate-General's opinion in the Telaustria case relied on by Mr Jay must, moreover, be seen in context. It is preceded by the statement that " the Community Legislature has viewed the absence of, at least full, consideration passing from the granting entity to the concessionaire as constituting the essence of a concession". Moreover, in paragraph 33 of his opinion the Advocate-General stated that the requirement that "the concessionaire effectively obtain at least a significant proportion of its remuneration not from the contracting authority but from the exploitation of the service". In the present case the essential consideration provided by the LSC to firms and organisations for entering into the Unified Contract is the guaranteed payment of the specified charges for services which the firms and organisation render to their clients. The Unified Contract does not therefore meet either of Advocate-General Fennelly's formulations of the requirement for a concession.

There is a further obstacle to the Unified Contract being a public service concession. This is because it does not give solicitors and organisations the right to exploit their services for payment by their clients. The LSC also generally determines what services should be provided and there are restrictions on the way firms and organisations are able to perform the contract. I have referred to the fact that sections 10 and 22 of the 1999 Act prevent such clients from being required to make any payment in respect of the services or the firms and organisations from taking such payment except in restricted circumstances, and only where authorised by the LSC.

Where the LSC does authorise payments to firms and organisations, it might be suggested that the "consideration given by the contracting authority … includes the right to exploit the service or services to be provided under the contract" for the purpose of the definition of public service concession in regulation 2(1). It is, however, clear that the fact that limited amounts may be payable to firms and organisations by clients does not prevent the contract from being one for pecuniary interest: see Case C-220/05 Jean Auroux v Commune de Roanne ECJ 17 January 2007. The fundamental point is that, under the Unified Contract, firms and organisations do not get a "significant proportion of their remuneration in respect of the services from third parties" as opposed to the LSC. They do not thus satisfy the requirement for a concession stated in paragraph 33 of Advocate-General Fennelly's opinion in the Telaustria case quoted above.

The fact that the beneficiaries of the services provided by firms and organisations are the members of the public who are the clients of such firms and organisations does not mean that the Unified Contract is a public service concession. As is stated in paragraph 65 of the Law Society's skeleton argument, "very many public service contracts involve the provision of services to members of the public, paid for by the contracting authority (for example doorstep refuse collection), but these are not public service concessions". For these reasons I have concluded that the Unified Contract is not a services concession contract, and the Directive and the 2006 Regulations apply to it.

(b) Does the Unified Contract satisfy the requirement of transparency in regulation

4(3)?

The Claimants rely on several cases of competitive tendering where the criteria for awarding the contract or its technical specifications were changed after the invitation to tender or the contract was awarded. For a number of reasons it is not altogether easy to apply what is said in those cases to the present context. First, those cases involved a number of bidders competing for a single contract. Here, however, there has, been no competition between bidders in a "bid round". All organisations with General Civil Contracts were offered the Unified Contract and the LSC has stated that new providers would have an opportunity of obtaining a contract in accordance with its bid rules. Secondly, in two of the cases, Succhi di Frutta referred to above, and Case C-87/94 European Commission v Belgium [1996] ECR I-2043, there was in fact no indication in the invitation to tender that the award criteria could or would be changed. It appears from the opinion of Advocate-General in a third case, Case C-174/03 Impressa Portuale di Cagliari Srl v Tirrenia di Navagazione SpA, 21 April 2005 that the technical specifications required were not announced prior to the selection of the contractor. Thirdly, whereas those cases were concerned with amendments already made, the present case concerns amendments anticipated or contemplated for the future.

Subject to those caveats, I turn to the cases. Case C-87/94 European Commission v Belgium [1996] ECR I-2043 concerned an invitation to tender for the supply of buses. It was held that a unilateral departure from requirements in tender documents which were to be understood as unalterable which favoured one tenderer without giving all other tenderers an opportunity to revise their figures was a breach of the principle of equal treatment: see Advocate-General Lenz at paragraph 63 and the ECJ at paragraphs 54-56. Case C-324/98 Telaustria Verlags GmbH & Telfonadress GmbH v Telekom Austria AG [2000] ECR I-10745 was concerned with a public service concession and thus with the obligation of transparency implied from the principle of equality and non-discrimination rather than the requirements of the procurement directives. The ECJ stated that "the obligation of transparency … consists in ensuring … a degree of advertising sufficient to enable the services market to be opened up to competition and the impartiality of procurement procedures to be reviewed": paragraph 62, and see also paragraph 44 of the opinion of Advocate-General Fennelly. These authorities primarily suggest that what is required is publication and publicity, but the reference in the Telaustria case to the need to enable the impartiality of procurement procedures to be reviewed suggests that this will not be sufficient.

That merely stating in the published tender documents that there may be changes is not sufficient is also suggested by C-340/02 European Commission v France [2004] ECR I-9845. The case concerned an invitation to tender for a feasibility study for a scheme for improving a network of sewage treatment works, which was the first of three phases of the scheme. The invitation stated that the winning bidder "may be asked" to become involved in the second phase. The successful candidate was subsequently awarded the contract relating to the second phase without a public notice and competition. The ECJ accepted the Commission's argument that the publication of the option to award the contract relating to the second phase to the successful candidate in the first phase did not release the contracting authority from the obligation to publish another notice.

The Commission argued (paragraph 20) that not only did the successful candidate have no certainty or right regarding the second phase contract, but no award criterion had been identified for that contract. The ECJ stated (in paragraph 34) that the principle of equal treatment required the subject matter of each contract and the criteria governing its award to be "clearly defined", and (in paragraph 36) that awarding the second contract according to criteria laid down for the first contract did not amount to awarding the contract in accordance with one of the procedures laid down in the Directive. The case suggests that an announcement of an open-ended discretion will not suffice, but in view of the contracting authority's announcement that the scheme of works would consist of three phases and fact that no criteria had been announced for the second phase, it is of limited assistance.

Case C-496/99 European Commission v CAS Succhi di Frutta [2004] ECR I-3801, is of more significance, and indeed lies at the heart of the Claimants' case. It concerned an invitation to tender for the supply of fruit juice as aid to the Caucasus whereby the supplier was to be paid in apples held in the Commission's intervention stocks. The possibility of withdrawing other fruit was not mentioned in the invitation to tender. There was, however, a shortage of apples and the award stated that the successful tenderer would receive a given quantity of apples or alternatively other fruit. Subsequently, the Commission fixed coefficients of equivalence between the different fruit. The award was annulled on the application of one of the unsuccessful tenderers. This was because inter alia (see paragraph 116) a contracting authority cannot amend one of the essential conditions of the award, in particular if it is a condition which, if it had been included in the invitation to tender, would have made it possible for tenderers to submit a substantially different tender. The ECJ stated at paragraph 118 that:

"Should the contracting authority wish, for specific reasons, to be able to amend some conditions of the invitation to tender, after the successful tenderer has been selected, it is required expressly to provide for that possibility, as well as for the relevant detailed rules, in the notice of invitation to tender which has been drawn up by the authority itself and defines the framework within which the procedure must be carried out, so that all the undertakings interested in taking part in the procurement procedure are aware of that possibility from the outset and are therefore on an equal footing when formulating their respective tenders."

The ECJ thus required that the notice of invitation to tender, which defines the framework within which the procedure must be carried out, must satisfy two requirements. It must (a) make express provision for the possibility of amendment and, (b) make provision for the "relevant detailed rules". Applying these requirements to the present case, the first is clearly satisfied. The power to amend and the purposes for which amendments may be made are stated in clause 13.1. The procedure for amendment is set out in clause 13.3-13.6. All the undertakings interested in providing publicly funded legal services under the Unified Contract were aware of the possibility of amendment of the contract from the outset, and indeed throughout the consultation process. Subject to what I say about the second requirement, all interested undertakings appear to be on an equal footing when formulating their respective tenders. The question is whether the breadth of the purposes for which amendments may be made, including that in clause 13.1(ii) "to facilitate a reform of the Legal Aid Scheme" mean that the second requirement is not satisfied.

It is suggested in the LSC's skeleton argument (paragraph 30) that the passage I have quoted from the Succhi di Frutta case makes it clear that a unilateral amendment provision which had been advertised during the procurement process does not infringe the principle of transparency "provided that the procedural mechanisms for effecting such amendments were also advertised". Other parts of the ECJ's judgment, however, suggest that more than a procedural mechanism is required. See, for example, the statement in paragraph 111 that the principle of transparency implies that all the conditions and detailed rules of the award procedure must be drawn up "in a clear precise and unequivocal manner in the notice or contract documents", and the reference in paragraph 126 to provision in the invitation to tender for the possibility of amending the conditions "by laying down in particular the precise arrangements for any substitution of other fruit".

In Case C-19/00 SIAC Construction Ltd. v County Mayo CC [2001] ECR I-7725 the ECJ stated that the list of criteria in the procurement directive for determining "the most economically advantageous tender" is not exhaustive. An award criterion which has the effect of conferring on the contracting authority "an unrestricted freedom of choice" in awarding the contract in question would, however, not suffice: [2001] ECR I-7725 paragraph 37. But "the mere fact that an award criterion relates to a factual element which will be known precisely only after the contract has been awarded cannot be regarded as conferring any such unrestricted freedom on the adjudicating authority": ibid paragraph 38. The ECJ stated (paragraph 42) that award criteria "must be formulated, in the contract documents or the contract notice, in such a way as to allow all reasonably well-informed and normally diligent tenderers to interpret them in the same way" and (paragraph 44) that "the award criteria must be applied objectively and uniformly to all tenderers".

In the SIAC Construction case the criterion was the professional opinion of the consulting engineer appointed by the contracting authority. The ECJ suggests (paragraph 38) that a measure of discretion and some uncertainty is not fatal provided (see paragraph 45) all reasonably well-informed and normally diligent tenderers are able to interpret the criterion in the same way and the professional opinion is based "in all essential points on objective factors regarded in good professional practice as relevant and appropriate. In paragraph 33 of his opinion in that case, Advocate-General Jacobs stated that "the main purpose of regulating the award of public contracts in general is to ensure that public funds are spent honestly and efficiently, on the basis of a serious assessment and without any kind of favouritism or quid pro quo whether financial or political. The main purpose of Community harmonization is to ensure in addition abolition of barriers and a level playing field by, inter alia, requirements of transparency and objectivity".

Drawing the authorities together: the possibility of an amendment must be in the contract notice or the contract documents, it must be formulated in such a way as to allow all reasonably well-informed and normally diligent tenderers to interpret it in the same way, and it must be formulated so as to enable the impartiality of procurement procedures to be reviewed. Here the possibility of amendment is clearly stated in the contract documents. Clause 13 identifies the purposes of the LSC's power of amendment. In particular (clause 13.1(i)) provides the LSC may amend if it considers amendment necessary or desirable to facilitate a reform of the Legal Aid Scheme. Clause 13.1(ii) empowers amendments where they have been approved by consultative bodies. These, in particular the first, are very wide indeed, wider than the criterion of professional opinion which the ECJ indicated in SIAC Construction Ltd. v County Mayo CC might satisfy the requirements. Even the first does not, however, confer a totally unrestricted freedom of choice upon the LSC. The exercise of the power pursuant to clause 13.1(i) would have to be in accordance with the well-known principles governing the exercise of discretionary powers by public authorities, including propriety of purposes and the consideration only of relevant factors.

In assessing transparency for the purposes of regulation 4(3) or the obligation of transparency implied from the general principle of equal treatment, regard should also be had to what is known about the intentions of the LSC. The parameters of the programme of reform and thus of the possible amendments have, as I have observed, been identified throughout the consultation process, published in the White Paper, and set out on the LSC's website. Although not in the contract documents, this information is available to all potential service providers. I note that in Telaustria [2000] ECR I-10745 (at paragraph 62) and in Advocate-General Jacobs' opinion in Impresa Portuale 21 April 2005 (at paragraphs 75-79) what is emphasised is publicity and knowledge. It is significant that, unlike the requirement in regulation 9 in respect of technical specification, regulation 4(3) does not require that the relevant information be in the contract documents.

The Claimants submit that the width of the contractual discretion to amend its terms affects competition, because some firms and organisations, such as Dexter Montague & Partners will not enter the contract. In the case of Dexter Montague & Partners this was stated to be because of the combination of the uncertainty and the inability under the terms of the contract of making a controlled exit from an area or areas of work once an amendment to the contract has been made. Mr Howell QC submitted that firms and organisations which accept the contract and gear themselves up to offering legally aided work in one or more areas of work will de facto be locked in to it because it is not possible or is impractical for a firm which is reliant or is substantially reliant on legally aided work to disengage within the specified time limits.

In assessing whether the obligation of transparency has been satisfied in the present context, it is also relevant that the present case is not one in which there has been a competitive bidding process where a choice has been made between bidders. The Unified Contract was offered to all organisations that had General Civil Contracts with the LSC. The evidence is that new providers were also given an opportunity of obtaining a contract, depending upon the coverage in any particular area, in accordance with the LSC's bid rules. What is required to prevent the favouritism to which Advocate-General Jacobs referred in SIAC Construction Ltd. v County Mayo CC in a competitive context is not the same as what is required in a context such as this.

In the light of the purpose of the Directive and regulations, in a case such as this where there has been no competitive bidding, the mere existence of a wide power to amend does not disadvantage a particular tenderer because the power applies to all. Any problems caused by the provisions concerning the position of a firm which wants to disengage from legally aided work after an amendment are also not the consequence of a lack of transparency because the provisions about that are in the contractual documents and their scope is reasonably clear.

It is also of relevance that the present case concerns anticipated or contemplated future amendments rather than amendments already made. If, in future, the LSC makes amendments outside the scope of the amendments contemplated and identified by the LSC during the process I have described, it may not be able to do so without undertaking a new contracting procedure. This may also be the position if, as the Claimants fear, the LSC seeks to make amendments which alter the economic balance of the contract to the disadvantage of those who have entered into the Unified Contract or to the disadvantage of some of them.

Bearing in mind the recognition in the SIAC Construction Ltd case that some uncertainty is not fatal, I have concluded that in the circumstances of the present case the identification and publication of the information about the parameters of the programme of reform and thus of the amendments contemplated enables reasonably well-informed tenderers to interpret the scope of the amendments that are contemplated in the same way. When an amendment is made, this will also enable compliance with what the LSC contemplated to be verified. Accordingly, there is no breach of the requirement of transparency in regulation 4(3).

(c) Does the Unified Contract satisfy the requirements of regulation 9?

It was originally submitted by the LSC that regulation 9 concerned the principle of mutual recognition and that, as the terms of the Unified Contract could not indirectly discriminate on the grounds of nationality, there was no breach. In the light of recital 29 to the Directive and the provisions of Articles 23.3(a), 23.4 and 23.5 the LSC now accepts that regulation 9 is also about transparency.

It is clear that the Unified Contract contains a number of technical specifications which must comply with regulation 9. These include the standard of care in clause 10.2, the requirement to achieve a rating of 3 or more in the peer review contained in clause 10.4, the provisions governing key performance indicators in clause 10.9 and annex G, and the QA standard. Other terms, for example those about the fee structure and levels, are not technical specifications.

The LSC submitted that the technical specifications are set out clearly in the Unified Contract notwithstanding the power of amendment in clause 13. Mr Jay stated there is no proposal to amend the quality levels of peer review and, as he did in the context of regulation 4(3), submitted that the key in assessing transparency is to consider what happens when the power to amend technical specifications is exercised. He argued that, if the Claimants' submissions are correct, the consequence would be bizarre. The technical specifications in a supply or services contract of lengthy duration with complicated specifications could not be amended even if the circumstances for doing so are defined and the criteria for amendment are set out. It did not follow from the obligation in regulation 9 to specify the technical specifications in the contract documents that they cannot be changed during the life of the contract. The proper approach is that when an amendment is proposed an assessment should be made as to whether a fresh obligation of transparency and equal opportunity arises at that time.

The Claimants submit that it is not possible to amend the technical specifications during the life of the contract. They rely particularly on the opinion of Advocate-General Jacobs in Case C-174/03 Impressa Portuale di Cagliari Srl v Tirrenia di Navigazione SpA , 21 April 2005, to which I have referred. It concerned Directive 93/98, the provisions of which differ from those in Directive 2004/18. Directive 93/98 required entities to include the technical specifications in the general documents or the contract documents relating to each contract. The provision governing technical specifications imposed no other publicity requirement prior to the award. Directive 2004/18 requires technical specifications to be "specified" in the contract documents and contains other requirements. The national court referred two questions to the ECJ. The first was whether the contract was subject to Directive 93/8. The second was whether, if it was subject to that Directive, technical specifications must be established prior to the procedure for selecting a contractor and, whether they are subject to publicity requirements.

Advocate-General Jacobs considered that the contract was not subject to the Directive but was nevertheless subject to the principles of equal treatment and non-discrimination which implied an obligation of transparency. He responded to the second question asked by the national court on the basis as the question was framed, that is on the assumption that the Directive applied. At paragraph 72 of his opinion he said:

"Technical specifications define the object of the contract in precise terms, they enable interested undertakings to assess whether to present a bid and they provide contracting authorities with the technical parameters to assess in relation to their needs the various offers presented. It clearly follows from their very nature that they must be established prior to the selection of a contractor."