Award of contracts

November 1st, 2017 by James Goudie KC

R (Hersi & Co) v Lord Chancellor (2017) EWHC 2667 (TCC) is concerned with the defendant’s conduct of a public procurement exercise for the award of contracts to provide publicly-funded legal services relating to immigration and asylum and mental health work.

As part of the tender, there were 7 particular questions, grouped under the heading ‘Selection Criteria’, which all applicants were required to answer. The claimant answered the first three, but then left blank the answers to Questions 4, 5, 6 and 7. In consequence, the defendant awarded the claimant no points for its answers to those questions and the claimant’s tender failed to gain the required points to justify the award of a contract. The claimant now argues, either that the defendant should have sought clarification of their non-answers, and/or that the answers to the questions were plain from other parts of the claimant’s tender and should have been scored accordingly. In addition, the claimant has a wider case in which it seeks to compare the defendant’s treatment of numerous other applicants on other aspects of their tenders, so as to allege inequality of treatment.

Coulson J stated (paragraph 7) that the best general guidance as to the scope of a contracting authority’s duties under the Public Contracts Regulations can be found in the judgment of Morgan J in Lion Apparel Systems Limited v Firebuy Limited [2007] EWHC 2179 (Ch). By reference to a number of other authorities, Morgan J summarised the relevant legal principles to be applied to any public procurement challenge:

“26.     The procurement process must comply with Council Directive 92/50/EEC, the 1993 Regulations and any relevant enforceable Community obligation.

  1. The principally relevant enforceable Community obligations are obligations on the part of the Authority to treat bidders equally and in a non-discriminatory way and to act in a transparent way.
  2. The purpose of the Directive and the Regulations is to ensure that the Authority is guided only by economic considerations.
  3. The criteria used by the Authority must be transparent, objective and related to the proposed contract.
  4. When the Authority publishes its criteria, which conform to the above requirements, it must then apply those criteria. The published criteria may contain express provision for their amendment. If those provisions are complied with, then the criteria may be amended and the Authority may, and must, then comply with the amended criteria.
  5. In relation to equality of treatment, speaking generally, this involves treating equal cases equally and different cases differently.

  1. When the court is asked to review a decision taken, or a step taken, in a procurement process, it will apply the above principles.
  2. The court must carry out its review with the appropriate degree of scrutiny to ensure that the above principles for public procurement have been complied with, that the facts relied upon by the Authority are correct and that there is no manifest error of assessment or misuse of power.
  3. If the Authority has not complied with its obligations as to equality, transparency or objectivity, then there is no scope for the Authority to have a “margin of appreciation” as to the extent to which it will, or will not, comply with its obligations.
  4. In relation to matters of judgment, or assessment, the Authority does have a margin of appreciation so that the court should only disturb the Authority’s decision where it has committed a “manifest error”.
  5. When referring to “manifest” error, the word “manifest” does not require any exaggerated description of obviousness. A case of “manifest error” is a case where an error has clearly been made.”

From paragraph 9, Coulson J addressed the scope of the duty to seek clarification. At paragraph 17, he stated the applicable principles to be derived from the cases as follows:-

(a)       A duty to seek clarification of a tender will arise only in “exceptional circumstances”, sometimes called “limited circumstances.

(b)       Such a duty may arise where a tender is “ambiguous”, but it will not do so in every case where a tender is ambiguous.

(c)       It will only arise “where the terms of a tender itself and the surrounding circumstances known to [the contracting authority] indicate that the ambiguity probably has a simple explanation and is capable of being easily resolved”.

(d)       Such a duty may also arise where there is a “simple clerical error” or “when it is clear that [the details of a tender] require mere clarification, or to correct obvious material errors”. This would appear to be the same as the “serious manifest error” referred to in Adia. It is not necessary for the error to be “clerical” (whatever that might mean) but it must be “simple”, “material”, “serious” and “manifest”.

(e)       The duty will not arise where any amendment or clarification provided post-tender would “in reality lead to the submission of a new tender”. The contracting authority “cannot permit a tenderer generally to supply declarations and documents which will require to be sent in accordance with the tender specification and which were not sent…”.

(f)       There is no authority to support a submission that ‘the change generated by a request for clarification would have to fundamentally alter the nature of the bid before it becomes unacceptable’. This proposition is contrary to the cases and is unworkable in practice.”

Coulson J found (paragraphs 169 and 170) both that the claimant’s claim for judicial review failed at every level and that the claimant’s wider claim on equality failed in principle and failed on an analysis of the specific comparisons drawn.

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