Sultan Properties, one of the defeated firms in the recent contest to redevelop Rochdale town centre, has started legal proceedings against the council to reopen the final round of bidding.
In a move apparently designed to protect Sultan's interests in the Wheatsheaf shopping centre it owns in the town centre, the developer is seeking an injunction to prevent the council signing contracts for the redevelopment with winning developer Wilson Bowden.
Sultan, in a joint venture with Ask Developments, was a runner up along with Valad Properties in the race to secure the £250m project.
A spokesman for Ask said the legal challenge was being made solely by Sultan in relation to existing interests, and not by the joint venture. Sultan is advised by law firm Addleshaw Goddard.
Eamonn McCann, chief executive of Sultan Properties, said: "Rochdale council has failed to comply with important EU rules requiring a fair, open and transparent competition between those bidding for this important project. These errors became clear after the de-brief meeting that our team had with the council last week.
"They excluded a key aspect of our proposals – the refurbished and extended Marks & Spencer store when their representatives had advised us that this was being considered. For this reason alone I believe that the council should undertake a full re-submission of the final proposals. But there are other problems with the process which in my view make the outcome unreliable."
Sultan says it commissioned a report which found relocating the M&S store, as proposed by Wilson Bowden, would harm the town centre economy.
As a result of Sultan's action, Rochdale council has agreed to a 'standstill period' until 30 April, a period of time during which the council is unable to enter into any contract for the town centre's redevelopment under the tender scheme.
McCann added: "I believe that the Council has made the wrong decision and that the process lacked the transparency which is such an important part of complying with the law, but more importantly ensuring that the best scheme is secured for the people of Rochdale. I accordingly believe that the competing developers should be invited to re-submit their proposals."
The council responded with a statement of its own that said: "Rochdale Development Agency [essentially part of the council] and their professional advisors have, on behalf of Rochdale council, provided the Ask/Sultan team with a de-brief on their own submission and a clear explanation of the rigorous evaluation process leading to the final selection of Wilson Bowden Developments as the preferred developer for the Rochdale town centre scheme.
"EU procurement rules have been followed in a fair, open and transparent manner. Both the national regeneration agency, English Partnerships and DTZ, one of the world's leading property and regeneration consultancies, stated that this has been one of the most thorough and robust developer selection competitions they have been involved in."
Andy Zuntz, executive director at Rochdale council, added: "Ask/Sultan made a sufficiently good submission to be short-listed as one of the three prospective developers for the town centre redevelopment scheme. However, Wilson Bowden Developments were the unanimous choice of both the council and English Partnerships. We are very disappointed that Sultan Properties are seemingly taking this action and suggesting that our selection processes did not comply with EU procurement rules. We strongly contest any such suggestion."
Diane Goodwin, senior regeneration manager at English Partnerships, said: "English Partnerships has been involved and supported the Council throughout this rigorous and detailed process to select a preferred developer and we are very surprised that Sultan Properties has decided to pursue legal action after the Ask/Sultan joint submission was not selected by Rochdale council."