ON APPEAL FROM THE HIGH COURT OF JUSTICE
(MR JUSTICE BRIGGS)
Strand, London, WC2A 2LL
B e f o r e :
LORD JUSTICE RIMER
LORD JUSTICE SULLIVAN
| AZAM & CO SOLICITORS
|- and -
LEGAL SERVICES COMMISSION
WordWave International Limited
A Merrill Communications Company
165 Fleet Street, London EC4A 2DY
Tel No: 020 7404 1400 Fax No: 020 7831 8838
Official Shorthand Writers to the Court)
Mr Paul Nicholls (instructed by the Legal Services Commission) appeared on behalf of the Respondent.
Crown Copyright ©
Lord Justice Pill:
"1) The obligation on a) a contracting authority to comply with the provisions of these Regulations … and with any enforceable community obligation in respect of a public contract …
is a duty owed to an economic operator.
(6) A breach of the duty owed in accordance with paragraph (1) or (2) is actionable by any economic operator which, in consequence, suffers, risks or risks suffering, loss or damage and those proceedings shall be brought in the High Court."
By virtue of Regulation 2 the appellants are an economic operator. The respondents are a contracting authority.
"A contracting authority shall (in accordance with Article 2 of the Public Sector Directive) --
(a) treat economic operators equally and in a non-discriminatory way; and
(b) act in a transparent way."
The respondents also accept that the decision they took must have been proportionate if it is to survive.
"2. Azam & Co is a firm of which Mr Shafiul Azam is the sole principal. At the time when the 2009/10 tender process was instituted, the firm was an existing supplier of publicly funded immigration services to the LSC pursuant to a Unified (Civil) Contract which will expire on 13th October 2010, and which represents the bulk of the firm's work. Azam & Co missed the deadline for submitting a tender for immigration work, namely 12 noon on 28th January 2010, and its application on 4th February 2010 for permission to submit its tender out of time was refused by the LSC. If the firm obtains no relief in these proceedings, it will later this year cease to be able to carry out publicly funded immigration work (save possibly in a very restricted field), with financial and professional consequences both for Mr Azam himself, and for his employed staff, which include other solicitors qualified in the same field, which may fairly be described as disastrous.
3. The firm's case is, in a nutshell, in two parts. First it claims that its failure to submit a tender before the deadline was itself caused by a failure of the LSC expressly to identify that deadline by any direct communication to the firm, and that this constituted a breach of the LSC's duties of equal treatment and transparency (imposed by Regulation 4(3)), breach of its enforceable Community obligation to give effect to a legitimate expectation of the firm that it would be directly notified and, more generally, breach of the LSC's enforceable Community obligation to comply with the principles of good administration.
4. Secondly, the firm alleges that the LSC's refusal of an extension of time constituted a breach of the LSC's enforceable Community obligation to comply with the principle of proportionality, having regard to the serious commercial damage likely to be caused to the firm by a refusal, and the absence of any prejudice which would have been occasioned by the grant of an extension, in particular in the context that the firm's missing of the deadline was itself the result of the LSC's fault, rather than its own lack of reasonable care and diligence.
5. It is common ground that if the firm were to establish any of its allegations of breach of duty against the LSC (together with any necessary causal link between that breach and the firm's predicament), then the appropriate outcome would be that the firm would be given time to submit its tender late. These proceedings have been directed to be determined urgently so as to ensure that (subject to the outcome of any appeal) the result will be known in time for the LSC to make an appropriate award of publicly funded immigration work to the firm before the progress of the tender process has reached a stage where that would be impossible.
The urgency referred to by the judge continues, and the court gives judgment this morning following yesterday's hearing.
"We notified providers in July this year that we intended to extend the Unified Contract (Civil), which is due to expire on 31 March 2010, for a further six months. We have extended that period slightly, to six months and 2 weeks.
Please find enclosed formal notice of extension of your Unified Contract (Civil) under clause 2 of the Contract for Signature. This contract will now end at midnight on 13 October 2010. You do not need to take any action in relation to this extension and can carry on working as usual.
If you wish to undertake publicly funded civil work after 13 October 2010 in any category of law you must submit a tender(s), in response to our Invitations to Tender (ITT) by the applicable ITT deadline. The first ITTs, in relation to the Immigration category of law, were published on 30 November 2009 and 16 December 2009. ITTs for the remaining civil categories of law will be published from February 2010 onwards.
Full information on the tender processes and how to tender can be found on our website at www.legalservices.gov.uk following the path Community Legal Services > Tenders > Civil contracts for 2010.
We look forward to receiving your tender(s) in due course and continuing to work with you in the future."
"Dear Mr Hatrick, I am totally stressed today; due to the fact that I missed the deadline to submit the Tender for the 2010 Standard Civil Contract -- Immigration.
I have spoken to bravo solutions about the closing date for two other Tenders – ITT_15 and ITT_16 and have also checked in the website.
I have submitted my two Tenders by completing ITT_15 and ITT_16 tonight at 9.30 pm.
I have briefly explained that I missed the submission date of 28th January 2010. I need your urgent help and guidance to submit the tender of which I missed the deadline.
Kindly advise me on how I should rectify this situation."
"Dear Mr Azam
I write to you as the relationship manager for Hackney & City firms.
Unfortunately there exists no provision for accepting bids once the tender had closed. The reason for this is to ensure that all tenders are accessed within the context of standardised criteria."
"In view of the fact that we acted promptly and the process has just closed, we do not feel the integrity of the process would be disaffected were you to allow us that opportunity."
Mr Azam supplied further information on the following day by letter.
"The Commission's refusal to consider an out of time application by the Claimant concerning the Commission's Invitation to Tender to deliver Publicly Funded Immigration Services in respect of the 2010 Standard Civil Contract."
The respondent's responded:
"We are afraid that the Commission cannot accept an out of time application from you and does not consider that that decision is susceptible to judicial review as you suggest, for the reasons set out below."
There is then a long explanation. Reference is made to the 2006 Regulations:
"The Commission is satisfied that it has conducted the tender in question in accordance with the relevant law, and in particular the Public Contract Regulations 2006, insofar as they concern Part B services contracts. In this context the Commission's obligations are broadly that it treats economic operators equally and that it acts in a transparent way, its obligations to advertise being limited (where, in any event, the Commission had advertised the tender in the Law Society Gazette on 19 November 2009 and on its website)."
The writer dealt with the claim that the appellants had a legitimate expectation of receiving further information. The letter continues:
"The tendering process was governed by the terms and conditions in the information for applicants (IFA) which was publicised by a range of methods. The Commission was obliged to treat all tenderers equally and to conduct the process in a transparent way. To do otherwise for your firm would be unfair towards other applicants and reduce the transparency in the process.
The appropriate comparator for the purposes of procurement law is the communication to the whole class of other potential tenderers, not just existing suppliers. Judged on this basis your firm has not been treated any differently from other applicants."
European authority was cited. The letter continued:
"Thus, all entities which are in a comparable position in terms of their ability to participate in the procurement exercise must be treated equally. If some already have contracts to work for a public authority, this is not, in itself, a reason for different treatment, all [emphasis in the letter] tenderers must face the same conditions"
Reference was then made to Commission v France  ECHR 1-8315 and to the decision of the European Court of Justice in Commission v CAS Succhi di Frutta SpA  ECR 1-381/01. I will refer later to that case. The letter continued:
"When viewed in the context of the procurement exercise as a whole, the Commission has treated your firm no worse than it treated the class of potential tenderers for the delivery of Publicly Funded Immigration Services in respect of the 2010 Standard Civil Contract.
It is not for the Commission, after the tender has closed, to evaluate the overall pros and cons of awarding your firm a Contract out of time. Indeed, it would be inappropriate, in the context of a nationwide procurement exercise, governed by the Terms and Conditions of Tender, set out in the IFA, for the Commission to embark upon such an exercise now.
In conclusion, the Commission does not consider, for the purposes of judicial review, that its approach could properly be said to disclose any error of reasoning on its part, let alone an error that would make its decision one which no reasonable decision-maker could have reached having regard to all the circumstances."
"But that analysis ignores the weighty reasons to be considered in the balance against the grant of a week's extension. First, the immigration tender process had been published expressly on the basis that deadlines were there to be complied with, and that no extensions would be given. Secondly, the grant of an extension to the firm, occasioned by a failure to submit a tender on time which was by no means beyond its control, would run the grave risk of constituting unequal treatment of other tenderers. In particular, it would be likely to be regarded as unfair by tenderers who would have wished for longer time in which to perfect their tenders, but who nonetheless completed them on time and, in reliance on the warning that extensions would not be granted, sought no further time for themselves. Thirdly, it seems to me that the principles of transparency and good administration weigh very heavily in the balance against an applicant for an extension of time who is unable to point to reasons beyond his control by way of justification."
The judge concluded at paragraph 71:
"…it was not a breach of the LSC's obligation to respect the principle of proportionality for it to refuse the requested extension."
The judge found that the claim wholly failed "but not without considerable sympathy for Mr Azam and his staff", sympathy which, I add, I share. The appellants had failed "to take a proper care in the furtherance and protection of its own interests". There was no breach of duty by the respondents.
"We now have to balance two priorities: ensuring that current legal aid services are not disrupted through the civil contracts bid round at a time when demand for civil legal services is high; whilst encouraging new entrants into the market."
It was stated at 5.1 of the document:
"In accordance with EU procurement legislation, we are required to run a process that enables new entrants to bid for contracts as well as existing providers. We therefore cannot guarantee contracts to those already delivering services. In developing a procurement process we have considered how we can best ensure that providers are in a position to deliver a full service from the start date of the contract. This requires recognition of those already delivering LSC services but also those with a track record in delivering comparable services to allow new entrants access to the market. We are still developing the details of the process and the precise criteria will be set out in the tender documentation."
A press release of 31 July 2009 stated that the respondents would keep providers and stakeholders informed of developments.
"The function of the courts is to guarantee legality, though that notion itself has a number of elements, some procedural and some substantive."
"The principle of transparency which is its corollary [having considered the principle of equal treatment] is essentially intended to preclude any risk of favouritism or arbitrariness on the part of the contracting authority. It implies that all the conditions and detailed rules of the awards procedure must be drawn up in a clear, precise and unequivocal manner in the notice or contract documents so that, first, all reasonably informed tenderers exercising ordinary care can understand their exact significance and interpret them in the same way and, secondly, the contracting authority is able to ascertain whether the tender submitted satisfy the criteria applying to the relevant contract."
"The Directive and the Regulations are concerned with the award of contracts by public authorities. Their objective is to open up public procurement to competition. To this end the award of contracts must comply with the principles of equal treatment, non-discrimination and transparency. Technical specifications must clearly set out the requirements of the authority so that the tenderers will be aware of what they will be required to do under the contract for which they are tendering. This is an application of the principle of transparency."
"Secondly, a waiver of terms which are stated as applying without exception is a departure from the terms of the procurement process and is therefore an exceptional course. A waiver of such terms carries the very risks of unequal treatment, discrimination and a lack of transparency which the contracting authority is required to avoid. It is to be noted that the Commission's action under review in Tideland Signal involved a failure to exercise an express power under the invitation to tender, not a failure to waive express terms."
"Fundamentally, Devon CC relies on the simple proposition that a procurement process requires a deadline for the submission of tenders and that a deadline is a deadline. The ITT could not have been clearer on the requirement for a single upload and submission before the deadline, and the claimant's witnesses readily accepted that they knew this was the requirement. In addition, there are clear statements of policy and practice in Devon CC's code of business conduct that both tenders are not considered. True it is that the deadline was extended for three hours to accommodate a particular tenderer, but the extension of the deadline was agreed before the expiry of the existing deadline, it was caused by an event outside the control of the tenderer in question, it applied to all tenderers and was communicated to them all, and complete submissions had to be made by the new deadline."
"There may be circumstances where proportionality will, exceptionally, require the acceptance of the late submission of the whole or significant portions of a tenders, most obviously where, as noted by Professor Arrowsmith, it results from fault on the part of the procuring authority. But in general, even if there is discretion to accept late submissions, there is no requirement to do so, particularly where, as here, it results from a fault on the part of the tenderer. In addition to the considerations already mentioned, the particular facts on which the claimant relies to characterise its case of exceptional would require investigation and determination by Devon CC and I do not see that it was required to undertake those tasks. In my judgment, the decision of Devon CC to reject the claimant's tender was well within the margin of discretion given to contracting authorities."
The reference to Professor Arrowsmith is to his publication, The Law of Public and Utilities Procurement, 2005, paragraphs 7 .94 to 7.96.
"It appears that the LSC told Mr Azam at the time that it was unable to grant an extension, rather than that, having considered the matter as one of discretion, it had decided that it ought not to do so. For the reasons which I have given, related to the essentially objective nature of any question as to breach of duty under Regulation 47 (by comparison with the different considerations which might have affected a challenge based upon the principles of domestic administrative law) that way of communicating the LSC's refusal to the firm is of no legal consequence in these proceedings."
"to evaluate the overall pros and cons of awarding your firm a contract at the time."
He submits that the wording indicates that the respondents did not give the application the attention it required. He submits that it demonstrates a refusal to consider whether exceptionally an extension should be granted.
Lord Justice Rimer:
"[looked] forward to receiving your tender(s) in due course and continuing to work with you in the future."
Lord Justice Sullivan:
Order: Appeal dismissed