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Affordable housing giant Circle is facing a High Court claim from contractor Apollo that it unfairly awarded 拢500m worth of repair and maintenance contracts to rival firm Kier on the basis of an 鈥渁bnormally low鈥� fee bid.

The legal row comes against the backdrop of growing industry fears about underbidding and tightening margins.

The court case concerns a 鈥渟ix-lot鈥� framework worth at least 拢1.2bn issued by Circle last summer, covering planned and responsive works in three regions over 10 years.

Four contractors were selected by Circle in May and although Apollo - which is now part of the Keepmoat Group - won the 鈥渓ot three鈥� contract worth up to 拢220m, it lost out on lots one, four and five with Kier winning the latter two.

The claim seeks to overturn Circle鈥檚 decision to awards lots four and five to Kier, contracts which are worth up to 拢490m in total and cover planned repairs in the eastern and central and West Midlands regions.

It alleges Circle鈥檚 tender process breached regulations and the obligations of European law including in terms of Circle鈥檚 assessment of whether or not Kier鈥檚 tenders on the two lots were 鈥渁bnormally low鈥�.

According to its own defence, Circle had included mechanisms in the tender process to guard against low fee bidding including the ability to reject tender bids seen as abnormally low.

Apollo鈥檚 claim seeks either for lots four and five to be awarded to Apollo or for the tender process to be 鈥渞ewound to an appropriate stage鈥� plus, or alternatively, damages.

However, Circle鈥檚 defence denies that its evaluation of the bids was flawed or that Kier鈥檚 prices were unsustainable.

According to the defence, Apollo itself submitted an outline pricing submission for lots four and five in December last year which Circle viewed as 鈥渨orrying鈥� because it was 鈥渟ignificantly lower than the other bidders鈥�.

However, Apollo agreed to revise the submissions at that point by removing what it called 鈥渆xtra over鈥� items, the defence said.

Later in the process, Kier鈥檚 price submission for lot five had sparked concern but Circle had concluded, after meeting the contractor, that its bid should not be rejected, the defence added.

鈥淐ircle [鈥�] sought verification of various constituents of Kier鈥檚 prices and, following such verification, decided not to reject Kier鈥檚 bids as being abnormally low,鈥� the defence stated.
Although lawyers working on behalf of Apollo have submitted a short claim form to court and Circle has filed a defence, no detailed 鈥減articulars of claim鈥� had been received by the court as 好色先生TV went to press.

A spokesperson for Circle said: 鈥淲e have followed a rigorous process in line with the European regulations, and will be defending the claim [鈥�] We hope to resolve this as quickly as possible.鈥�

Kier and Keepmoat declined to comment.

The case continues.