News / Pressure increases on Grayling and 'illegal' Seaborne Freight contract

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Further allegations have rocked the UK’s Department for Transport, with besieged secretary of state Chris Grayling facing heightened calls to justify awarding Seaborne Freight a contract.

A Whitehall source told The Loadstar the decision to award the start-up a contract “stinks” of high-level ministerial intervention and was a “knowing breach” of legislation.

Suggesting a lack of transparency around the contract, as well as the timing of the announcement (24 December), the source suggested it appeared that DfT had hoped no one would notice.

On 28 December, the DfT made a full announcement, stating it had contracted Brittany Ferries, DFDS and Seaborne Freight to provide ro-ro services if the UK left the EU without a deal.

In awarding £103m-worth of contracts, the DfT relied on an emergency exemption provided for by the Public Contract Regulations Act (PCR), which states public tender can be avoided: “For reasons of extreme urgency brought about by events unforeseeable by the contracting authority,  the time limits for the open or restricted procedures or competitive procedures with negotiation cannot be complied with.”

The PCR also states that the “circumstances invoked to justify extreme urgency must not in any event be attributable to the contracting authority”.

Our source has joined several noted EU law experts to accuse both the DfT and Mr Grayling of “knowingly” breaking the law through use of the emergency exemption.

Of particular concern to them is the contradiction surrounding the “emergency” which prevented the DfT putting the bid out for public tender and “its willingness to sacrifice quality in favour of price”.

According to an EU notice, DfT criteria for awarding the contract to Seaborne Freight carried an 80% weighting on price, with just 20% premised on quality.

This, said, the source fell “well below” expected standards for a procurement of this kind, suggesting contracts only see weighting of this kind for mass-produced products, such as rubber gloves.

He then asked how the DfT could claim the “cost of disruption” of a no-deal Brexit was so high as to justify using an emergency exemption, while simultaneously relegating service quality.

Surely, he continued, if the cost of disruption was so high as to award the contract in the first place, the disruption would be exacerbated if Seaborne Freight failed in its duties.

Following submissions from two specialists in EU Law, the Transport Select Committee has launched an investigation into the use of exemption and the Seaborne Freight contract.

One submission came from Dr Albert Sanchez-Graells, who noted: “It is in the nature of emergency awards that the object of the contract needs to be achieved in an immediate or almost immediate manner.

“Indeed, not only does [Seaborne] not currently operate a ferry line, but the infrastructure of the UK port from which it plans to provide the emergency services requires adaptation.

“Even if the company is reported to have provided reassurances that the dredging of the port will allow it to be ready by the end of March, the DfT is unavoidably accepting a risk of unavailability of the emergency services if that is not the case.”

The source also ridiculed “the minister’s attempt to hide” behind claims of “commercial sensitivity” to avoid properly answering the committee’s questions.

He then went on to claim the DfT’s position, that Seaborne Freight is responsible for securing vessels, is “increasingly becoming a lie”, with the department “actively” assisting in the hunt.

To add to Mr Grayling’s woes, Dr Sanchez-Graells has pointed to “inconsistencies” in the minister’s publicly declared rationale, which he describes as also  illegal.

“In a Radio 4 Today interview, he [Mr Grayling] expressed he would ‘make no apologies for supporting a new British business’,” continued Dr Sanchez-Graells.

“He further indicated that ‘[Seaborne is] a new start-up business, government is supporting new British business and there is nothing wrong with that’.

“This is a clear indication that the DfT may have illegally decided the Seaborne award as part of a post-Brexit industrial policy.

“This would breach the requirement for the contracting authority seeking to rely on the ‘extreme urgency’ exemption to act diligently and be in the position to legitimately hold that the conditions for recourse to this procedure were in fact satisfied.”

In response to questions surrounding the possibility that the contract conferred illegal state aid on Seaborne Freight, Mr Grayling said neither he or the DfT believed this to be the case.