Nationwide Gritting Services (NGS), based in Southampton, is pursuing Scotland's transport agency through the courts over its failure to follow European procurement rules and advertise its requirement for large quantities of de-icing salt to supply to councils and other public authorities as thermometers plunged during the two winters.
NGS claims that as a result, it was the only major gritting company in the UK not to supply Scotland with salt in the years in question. It claims that this lost opportunity cost it £3.5m and meant that Scotland overpaid for the product by as much as £5m.
The increased claim is due to be the subject of a hearing in the Court of Session in Edinburgh on Wednesday, where TS is expected to argue that it should be dismissed on the grounds that NGS has fallen outside the three-month period permitted between the time of learning of the damage and bringing an action.
NGS's case for the increased claim turns on the fact that it was previously under the impression that TS had only bought 25,900 tonnes of salt from Ineos's Runcorn outlet during 2010 and 2011 for around £1.5m.
According to NGS commercial manager Mike Karia, the company had been aware that a further 141,000 tonnes of salt had been purchased by BEAR Scotland, the firm that is contracted by TS as the country's trunk road operator. BEAR's private status, however, meant it is not in principle subject to the same European procurement rules as TS.
But NGS has numerous pieces of evidence that purport to show that BEAR was not merely supplying the salt to TS but effectively procuring it on its behalf, including the fact that TS agreed to underwrite at least one of BEAR's salt purchases. NGS says its position was also confirmed at the Court of Session by Lord Woolman during a preliminary hearing last summer, who said that the salt had been acquired by BEAR "on behalf of the defenders [TS]".
According to NGS, TS should consequently have published a tender notice. It argues that once this much larger amount of salt is taken into account, its losses equate to around £3.5m and not the £980,000 that it was previously seeking. TS paid £570,000 to Ineos for salt that it bought in January 2010 before the agency and BEAR spent a further £9.7m on the product during the winter of 2010-11.
This does not include haulage or the storage of nearly 100,000 tonnes which were never used in facilities in Aberdeen, Ayr, Leith and Perth. TS has yet to say how much this cost, but NGS has obtained documentary evidence seen by the Sunday Herald that at least 10% of the salt was transported from Scottish ports to its final destination at a cost of £65 per tonne (or £130 per tonne factoring in the cost of the salt). NGS says this is £20 per tonne more than what it would cost if it was transported all the way from the company's base in Southampton.
Karia said: "You could never charge £65 to haul salt within Scotland. And paying £130 per tonne for salt delivered is a hell of a lot of money."
NGS has obtained evidence of indicative storage rates paid to one of the suppliers. Karia said that if these haulage and storage figures were true of all five salt suppliers, TS paid £5m more than it could have paid NGS.
He said: "If there's an emergency and there's a shortage of salt, the only relevant factor is getting the salt at the right price."
One of TS's arguments is that it was permitted to waive the standard procurement procedure due to the fact that it was acting in an emergency. NGS is preparing to argue that this is negated by the agency taking the same course of action two winters in a row; an email exchange between TS and one of the other suppliers discussing salt more than three months before the 2010-11 cold snap; and the decision by BEAR and TS to purchase from five different suppliers.
Legal firm Dundas & Wilson concluded in a paper last August: "This case is rather an unusual one in that it involves a damages claim brought by a claimant that had not participated in any formal procurement process. If a breach of the regulations is established it will raise interesting (and difficult) questions as to causation and loss, in terms of NGS's entitlement to damages."
TS declined to comment on the grounds that the case was live.