QUEEN'S BENCH DIVISION
Strand, London, WC2A 2LL
B e f o r e :
| THE QUEEN (ON THE APPLICATION OF ALL ABOUT RIGHTS LAW PRACTICE)
|- and -
|THE LORD CHANCELLOR (as successor to THE LEGAL SERVICES COMMISSION)
for the Claimant
Fiona Scolding (instructed by the Treasury Solicitor) for the Defendant
Hearing dates: 29th and 30th October 2013
Crown Copyright ©
Mrs Justice Carr :
"An abuse of process is of concern not merely to the parties but to the courts. It is no longer the role of the court simply to provide a level playing field and to referee whatever game the parties choose to play upon it. The court is concerned to ensure that judicial and court resources are appropriately and proportionately used in accordance with the requirements of justice."
B. Background to the Tender
C. The Tender process
a) To confirm the number of NMS bid for and in which procurement area;
b) To tender for at least the minimum NMS in the procurement area;
c) Not to tender for more than the maximum NMS available.
"Section 9 : how to submit a tender (responding to the PQQ and ITT s)
9.1 This section covers how Applicant Organisations must submit a compliant tender and how to use the eTendering system to do so.
9.3 A completed tender will consist of a response to both a PQQ and an ITT:
- Response to the questions
- Response to the Applicant Information Form (non-mandatory);
and, if applying for the SQM:
- -the Applicant Organisation must as part of the PQQ response
submit a completed QM1 Form its Office Manual
- Response to the questions
- Response to the Tender Information Form (Mandatory Form);
- A completed Supervisor Declaration Form for each Supervisor (non-mandatory).
Mandatory and non-mandatory forms
9.4. The Tender Information Form is the only Mandatory Form, which must be submitted with the applicable ITT in order for a tender to be completed. The SQM documents are dealt with in Section 6…….
Bidding for Matter Starts
9.7 To tender for Matter Starts:
• Depending on the ITTs you respond to, you must confirm on the Tender Information Form the number of Matter Starts that you are tendering to deliver from each Procurement Area and if applicable for each High Security Hospital……..
• You cannot tender for more than the maximum capacity, set at 150 Matter Starts per full time equivalent staff member delivering Mental Health Services (full time equivalent equates to at least 35 hours per week).
• You do not need to have employed all caseworkers and Supervisors by the date you submit your response to the ITT but you must be able to provide evidence that you have recruited all staff when we contact you 8 weeks before the contract start date……
Steps to submitting a tender
9.14 Below we provide an overview of the steps that an Applicant
Organisation must follow in order to tender to deliver Mental Health Services.
9.15 A tender will consist of your responses to the:
(2) ITT (which includes the Mandatory Form (Tender Information Form) Essential Criteria and where applicable Selection Criteria).
- Tender Information Form
You must complete a Tender Information Form, providing details for each Strategic Health Authority or High Security Hospital you are tendering to deliver work at, giving details about the volume of work you are tendering for, and information about how the work tendered for will be delivered, including staff details…..
- PQQ and ITT Declarations
You must confirm that the PQQ is up to date and certify on behalf of the Applicant Organisation that your response to the ITT is accurate…..
Pre Qualification Questionnaire
9.22 The PQQ's purpose is to enable us to assess whether an applicant Organisation meets our minimum standards of suitability for a publicly funded legal aid contract and to gather certain other information about Applicant Organisations…..
9.27 It is the Applicant Organisation's responsibility to ensure that it makes full use of this opportunity in order to provide comprehensive details of any exceptional circumstances. We are under no obligation to seek further information or clarify a response – and will not do so where in our opinion this would give an Applicant Organisation an unfair opportunity to improve their response……
9.29 If an Applicant Organisation fails any PQQ question, the PQQ will be unsuccessful and none of the Applicant Organisation's tenders will be considered further…..
Tender Information Form (Mandatory Form)
9.37 Applicant Organisations must complete and upload with their response to the ITT, the Tender Information Form….
What happens once a response is "published"?
9.55 Responses to ITTs submitted will be treated as sealed bids. This means that the LSC will not open any responses until after the deadline for the tender exercise.
9.56 Applicant Organisations can therefore amend and resubmit their responses to the ITTs up until the closing date for tenders to be submitted.
9.57 Responses will be automatically acknowledged when they are published for the first time. There will be no acknowledgment of resubmitted responses where Applicant Organisations amend and republish their response to an ITT. We will assess the latest published response.
Section 10 : how will tenders be assessed and Matter Starts awarded?
0.3 We expect all Applicant Organisations to confirm compliance with all our PQQ requirements. If an Applicant Organisation fails the PQQ then it will not be considered further and their tender will be unsuccessful….
10.20 A completed tender will consist of (1) a response to the PQQ and (2) a response to the ITT (including the Mandatory Form) submitted prior to the deadline of 12 noon on 31 March 2010….
10.22 There will be no rights of appeal against a decision to reject a tender if it is incomplete or if a tender is received after 12 noon on 31 March 2010 (or after any deadline set by a request for clarification or further information) or is not received by the LSC at all…"
"11.2 Submission of a tender which fails to comply with any Terms and Conditions of Tender, User Agreement or other rules, conditions of contract award and instructions shall, without affecting the Applicant Organisation's liability for non compliance, entitle the LSC to reject a tender, assess the tender as unsuccessful and/or entitle the LSC not to proceed with any decision made to award the Applicant Organisation a Contract or entitle the LSC to terminate the contract pursuant to Clause 25 of the Standard Terms…….
11.7 For a tender to be complete, the Applicant Organisation must, prior to the deadline, submit a tender consisting of (1) a response to the PQQ and (2) a response to an ITT (including the Mandatory Form).
11.8 The Applicant Organisation must not amend or alter any document comprising part of the tender after the deadline.
11.9 After the deadline any information or documents submitted in response to a request for clarification or further information (in accordance with paragraph 11.25) will also form part of the Applicant Organisation's tender.
11.10 In the event of any conflict between the information, answers or documents submitted as part of a tender, the conflict will be resolved by accepting the information, answer or document least favourable to the Applicant Organisation.
11.11 It is the responsibility of Applicant Organisation to make sure that a tender is fully and accurately completed (including any Mandatory Forms). The LSC is under no obligation to contact the Applicant Organisation to clarify its tender or to obtain missing information or Mandatory Forms…..
11.19 A tender will be rejected if it (or any part of it) is submitted after the deadline nor will the LSC consider (1) requests to submit the tender (or any part of it) after the deadline or (2) requests for an extension of the time or date fixed for the submission of the tender (or any part of it)….
11.25 Should the LSC, at any time during the tender process, request the Applicant Organisation to give additional information/clarification the Applicant Organisation should be prepared to provide additional information and/or clarify any aspect of a tender by the deadline set out in the request. The LSC reserve the right to validate any part of the Applicant Organisation's tender and information subsequently given to it."
D. AAR's bid
"RE: Invitation to tender to deliver publicly funded Mental Health Services in Strategic Health Authorities in England and Wales.
Further to what is said below your tender for the above services has been rejected because you submitted a blank Tender Information Form (TIF) in response to the Invitation to Tender (ITT).
As part of the process for tendering to deliver Mental Health Services all Applicant Organisations were required to complete a response to the to the [sic] ITT, including a complete TIF, which was a Mandatory Form, through the eTendering System in accordance with paragraph 11.7 of the Information for Applicants (IFA) document. Whilst we received a response from you to the Pre-Qualification Questionnaire (PQQ) and the ITT questions, we have no record of receiving a completed TIF for your organisation prior to the deadline of 12 noon 31 March 2010.
Accordingly, we are unable to take your tender forward and it has been rejected.
Pursuant to paragraph 10.22 of the IFA, there is no right of appeal in these circumstances."
"Tender to Deliver Publicly Funded Mental Health Services"
Thank you for your letter dated 28 June 2010.
Further to what is said below, I can confirm that the LSC is unable to progress your tender to deliver Mental Health services further.
The information, instructions, rules, conditions of contract award and Terms and Conditions of tender relating to the tendering process to deliver Mental Health services are set out in the Information for Applicants ("IFA") which was made available to all current and potential providers of these services.
Section 4 IFA makes it clear that a valid tender response consists of the following:
o Pre Qualification Questionnaire
o Response to ITT – Including the Tender Information Form ("Mandatory Form")
As specified in section 10.22 of the IFA there is no right of appeal where a valid tender response was not submitted prior to the deadline of 12 noon on 31 March 2010, however, I have reviewed the eTendering records and I am satisfied, as a matter of fact, you did not submit a completed Tender Information Form before the deadline referred to above.
I am, therefore, satisfied that your tender was validly rejected under the rules of the tender process.
I am also satisfied that the LSC has conducted the tender in accordance with the relevant law, and in particular the Public Contracts Regulations 2006, in so far 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. I do not accept that the process was flawed as you assert in your letter. In the context of a tender where there is direct competition for a limited number of matter starts, I hope that you will accept that we have to insist on these requirements in fairness to other tenders.
Section 11.11 of the IFA states
"It is the responsibility of the Applicant Organisation to make sure that a tender is fully and accurately completed (including any Mandatory Forms). The LSC is under no obligation to clarify its tender or to obtain missing information or Mandatory Forms."
Whilst I do have sympathy for your situation having regard to the circumstances set out above I confirm the decision."
E. Procedural history of this litigation
a) ground 1 : obligation on the LSC to draw to the attention of AAR the omissions in its tender and/or to give AAR an opportunity to remedy;
b) ground 2 : failure on the part of the LSC to exercise its discretion or unlawful exercise of discretion;
c) ground 3 : irrationality or inequality in the LSC's "policy" of dealing with incomplete tenders.
F. The issues
a) whether or not the LSC's decision to reject the tender was proportionate;
b) whether or not there has been inequality of treatment between AAR and others.
G. The evidence
a) Various witness statements and exhibits from Mr Nadarajah, including a lengthy one dated 22nd March 2013 addressing matters for this hearing. Beyond deposing to the events surrounding rejection, much of what Mr Nadarajah has to say is pure submission;
b) Three witness statements made in August and September 2011 from Ms Melena Ward, a project manager in the LSC's central commissioning team, together with exhibits, and one from the previously mentioned Ms Wood dated 23rd September 2011. There is also a very recent statement from Mr Lawrence of the Treasury Solicitor, addressing disclosure and late material from Mr Nadarajah;
c) Schedules of alleged comparators.
"The LSC took a more flexible approach to clarification of PQQ responses, as the answers given could not have provided an advantage over other bidders, as the PQQ merely allowed a bidder to be considered for a contract. The circumstances in which we clarified selection criteria were limited…but we did not clarify any selection criteria where no answer had been given at all to the criterion, even if there was information elsewhere in the tender related to these issues."
H. Alleged comparators
a) NM1 : mental health tender : the applicant failed to submit a PQQ before the deadline. In upholding the appeal and award the contract, the LSC observed that the tenderer had "attempted to tender but failed to send in the complete documentation required. Rather than being attributed to a technical error I am satisfied that the lack of response to the PQQ was attributable to an oversight or other error on your part. It is evident from your representations and submission of the ITT that you had intended to submit a compliant tender including the PQQ….I accept that you are in a different category from an organisation that has failed entirely to progress any part of its tender. It is my view that you will be allowed a further opportunity to submit your PQQ because this tender process was non-competitive." AAR says that there is no difference between the position of NM1 and AAR. There was oversight and a complete failure to submit a document without which NM1 could not get to the ITT stage;
b) H01: immigration tender : the applicant failed to submit a PQQ before the deadline. In upholding the appeal it was observed that the confirmation email could have been misleading and that: "the issue is therefore whether such oversight or minor error could or should be remedied at this stage. I accept that the Applicant is a different category from an organisation that has failed entirely to progress any part of its tender…I am prepared to accept that the failure to submit the PQQ can be attributed to a simple oversight or other minor error on the part of the Applicant Organisation rather than a more fundamental failure to grasp the rules and instructions of the tender process." AAR submits that the immigration tender was also a non competitive process and the same thought process should have applied to AAR;
c) AM1 : mental health tender : the applicant supplied additional information on the TIF about a new supervisor who had not worked at the firm when the tender was completed. It was a requirement that there had to be a FTE supervisor for every 6 caseworkers. AM1 had stated that it had one supervisor for 7 caseworkers. In its representations AM1 sought to adduce additional information that a new supervisor had joined the firm after the tender. It had listed him as a caseworker rather than a supervisor "in anticipation of him joining our firm". A contract was then awarded. The decision observed that "but for the mistake or error, the appellant would have met the relevant criteria…Therefore it is my view that to allow the appellant to amend its TIF response would not amount to giving the appellant an opportunity to improve its tender";
d) SB1, OM1, JDS1 and PE1 : mental health tender : the applicants were all permitted to "restructure" their bids after they had submitted tenders for NMS below the minimum. SB1 elected to remove its bid for NMS in Yorkshire and Humber and sought to bid for 105 NMS in the East Midlands area. OM1 asked to withdraw its tender in certain areas and clarified that it sought to tender for 100 NMS in East England and 50 NMS in East Midlands. PE1 asked to alter an area after the deadline. In all cases, contracts were awarded. AAR again says that these cases are comparable;
e) F1 : mental health tender : a contract was awarded despite F1 not being in existence when the tender was made. Additional information was sought to satisfy the LSC of the name of the persons who would provide the number of NMS;
f) AAM1 and SC01 : mental health tender : these applicants successfully amended their TIFs after the deadline. The LSC asked for details of contract of employment, date of commencement and hours worked by caseworkers. AAM1 requested that a caseworker's hours be reduced from 17.5 hours to 3.5 hours. SC01 requested that a caseworker's hours be reduced from 3 days per week to 2.5 days per week. In each case the amendments were granted;
g) Firms on Schedules 9A (immigration tender), 9B (mental health tender) and 9C (social welfare law and family tender) : the LSC decided to amend tenders using its own internal database without the applicants' knowledge, having conducted internal checks which revealed that the disclosed peer rating was incorrect. The firms, including 3 in the mental health tender process, were then awarded contracts;
h) Firms on Schedule 20G : social welfare and family tenders : the applicants failed to submit their PQQs before the deadline. In extending time the LSC observed that the "failure to submit the PQQ can be attributed to a simple oversight or other minor error on the part of the Applicant Organisation rather than a more fundamental failure to grasp the rules and instructions of the tender process."
i) PH and TVF1 : social welfare and family tenders : the applicants made a mistake in responding to a request on the PQQ. PH ticked "no" rather than "yes" when asked if it had a member of staff with at least one year's experience at managerial level in the preceding five years. In the case of TVF1, the firm's tender was initially rejected for answering "no" when asked if it provided legal advice. Both were subsequently awarded contracts;
j) CGM1, HCM1, KR1 and NS1 : social welfare and family tenders : the applicants wrongly indicated on their PQQ forms that the firm or staff members had fraud convictions. All were permitted to make amendments.
I. The Law
"55. I conclude therefore that the principle of proportionality is capable of applying to the implementation of the terms of a procurement process. In considering its application in a particular case, there are obviously factors to be borne in mind. First,…the exercise of discretionary powers necessarily involves judgment on the part of the contracting authority. The court must respect this area for judgment and will not intervene unless the decision is unjustifiable. This, I would think, is the proper meaning of a manifest error in this context. It will be remembered that in paragraph 43 of the judgment in Tideland Signal, the court stated that the Commission's decision to reject the tender without first seeking clarification "was clearly disprortionate and thus initiated by a manifest error of assessment". In Lion Apparel Systems Ltd v Firebuy Ltd  EWHC 2179 (Ch)…Morgan J set out a number of principles applicable to procurement distilled from the decision of the Supreme Court of Ireland in SIAC Construction Ltd v Mayo County Councio  IESC 39…and the decision of the court of First Instance in Case T-250/05 Evropaiki Dynamiki v Commission. He said at paras 36 – 38 :
"36. 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.
37. 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".
38. 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.""
"1) All tenderers must be treated equally;
2) It would violate that principle and the principle of good administration in the tendering process if any tenderer were permitted to change its bid after bidding had closed;
3) If the awarding authority had a discretion to seek clarification about a bid from the tenderer, the court would not normally interfere with the exercise of that discretion unless a) it was exercised unequally or unfairly across the relevant bidders or b) it was not exercised, yet it appeared to the awarding authority that there was an ambiguity or obvious error which probably had a simple explanation and could be easily resolved; seeking clarification in the latter case was required in order that consideration of what might be an advantageous bid should not be excluded; it would be for the awarding authority to determine whether the clarification exercise would be simple or not.
4) But any purported clarification must not amount to a change in the bid."
"40. Nonetheless, Article 2 of that directive does not preclude, in particular, the correction or amplification of details of a tender where appropriate, on an exceptional basis, particularly when it is clear that they require mere clarification, or to correct obvious material errors, provided that such amendment does not in reality lead to the submission of a new tender…."
"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."
It is common ground that the LSC was a "contracting authority" and AAR an "economic operator" within the meaning of the Regulations.
a) who is in a comparable position and who is not, and
b) if two bidders are in a comparable position, whether there are objective grounds for different treatment.
"In my judgment, in order to succeed on this issue, the Appellant must first point to one or more instances in which an applicant whose application was as fundamentally flawed as were here was permitted to change its application or applications was or were then accepted as complaint with the tender rules. It is only if the Appellant can show that there were such instances that the question can arise whether the Commission acted in breach of its duty to treat applicants equally and consistently when it rejected the Appellant's applications."
J. Findings on issue 1 : proportionality
a) this was a non-responsive tender by AAR;
b) the IFA made it abundantly clear completion of the TIF was mandatory (for example in section 4 and paragraphs 9.3, 9.4, 9.16 and 9.37) and that it was AAR's responsibility to complete the tender fully and accurately (for example in paragraph 11.11) and that tenderers could not amend or alter any part after the closing deadline (in paragraph 9.56);
c) the TIF was of fundamental importance – it was the heart of the bid, setting out amongst other things the number of NMS sought, in what area and using what staff the services were to be provided;
d) even if there were other necessary documents, including the PQQ, the TIF was singled out in the IFA as being the only "mandatory form" that had to be completed and submitted (see paragraph 9.4);
e) to have allowed submission of a completed form would have been effectively to allow submission of a new bid. This was not a situation of clarification of ambiguity or an obvious error arising out of information provided. The TIF had been submitted completely blank;
f) moreover that new bid would have improved AAR's position and disadvantaged that of others (by reducing the pool of NMS available to other bidders);
g) contrary to AAR's contention, the necessary information could not have been obtained (reasonably or at all) from other material submitted by AAR, specifically as to the number of NMS being bid for and also the address(es) from which the legal services were to be provided. As to the size of the bid, the LSC had no knowledge. As to address, whilst the LSC could have identified the address of AAR, it could not have identified whether or not any other addresses might be used. And here Mr Radnajarah did indeed wish to practise from another address, namely his home in London. Moreover, to the extent that other information was available from other documents, such documents were non-voluntary. There is at least a question mark over whether or not information from such documents could properly have been used (see paragraph 36 of R (on the application of Hossacks) v LSC  EWCA Civ 788);
h) following on from g), it was not clear that remedy would be "quick and easy". The LSC did not know if AAR had in fact completed the TIF and just failed to submit it, or whether the TIF had been completely overlooked. Before me, Mr Nadarajah could not say whether the completed TIF put in evidence had been completed before or after submission of his bid;
i) the mistake could not be attributed to any fault on the part of the LSC (or indeed to any outside factor). The fact that there may have been only limited fault on the part of AAR is irrelevant – see paragraph 40 of Ministeriet for Forskning, Innovation og iderergaende Uddannelser (supra);
j) to have allowed further submission would have jeopardised implementation and increased the administrative burden in a high volume process, as well as give rise to the risk of abuse;
k) the potentially "harsh economic consequences" for AAR (to adopt the words of Richards J in Leadbitter (supra)) should not induce the court to accommodate a failure by AAR to comply with an obviously mandatory requirement of the bid.
"It is for similar reasons that I cannot accept the Claimant's final head of submission that it had been treated unequally by comparison with others. I am satisfied that the examples of more favourable treatment relied upon by the claimant are not treating like with like. Some were separate competitions such as the criminal tender where the rules were different and where there was no competition between tenderers at all. All those eligible to provide services were afforded NMS. In other cases, any opportunity granted to correct errors was in respect of the PQQ part of the application as to whether a firm was qualified at all. This was not a competitive issue and the Defendant was entitled to give greater assistance to applicants whose claims could be seen to unintentionally defective on their face. For this reason, also, the Defendants could lawfully assess the bid of another competitor in this competition (Immigration Advisory Services) in a way that both rendered it eligible for the competition at all and improved its points score marginally from information already held…."
and to similar effect in R (on the application of Hossacks v LSC  EWHC 2700 (Admin) at first instance, again at paragraph 31. Although in each case the Judge in both those cases was dealing with mistakes in PQQs, as opposed to blanks, it does not seem to me that this distinction undermines the essential principle that, objectively, greater flexibility where PQQs are concerned is justified.
K. Findings on issue 2 : equal treatment
a) as to NM1, the bid did not get off the ground since the PQQ gateway was not passed. This was a different stage of the process to that reached by AAR. For the same reasons as those set out in paragraph 61 above, I do not accept that inequality of treatment has been established. There was a valid and lawful distinction to be drawn between the respective situations;
b) as to AM 1, the applicant's appeal was allowed because the amendments in question did not improve the bid. The staff member was already named within the TIF submitted. This was a clear case of ambiguity arising from information provided in the TIF and in answers to the essential criteria, as opposed to submission of a blank form;
c) as to SB1, OM1, JDS1 and PE1, these are not comparable situations. Ms Ward addresses them in paragraphs 84 to 86 of her third witness statement. The LSC accepts that SB1 should not have been awarded a contract because the terms of the tender were not met; the LSC made a mistake in granting the contract. But this does not affect the question of whether AAR was treated fairly. It was appropriate for the LSC to seek clarification in circumstances where SB1 had completed a TIF. It had set out the information as to staff and hours – unlike AAR which had not provided any information. OM1 had fully completed its tender and only a reduction in bid was allowed. Similar positions arose with JDS1 and PE1 where information had been provided and a reduced bid was allowed as a result of clarification;
d) as to F1, it was entirely permissible for the tendering organisation not to have staff at the time of the bid or even to exist at the time of the bid – see the essential criteria set out in Annex A of the IFA – although the organisation did have to exist at least 8 weeks before 14th October 2010. This was to create a level playing field between existing contractors and new entrants. The clarification sought resulted in the bid being reduced, a member of staff was removed to create a vacancy, as set out in paragraphs 79 and 80 of Ms Ward's third witness statement;
e) as to AAM1 and SC01, the situation is similar to that with F1. There was staff duplication. Clarification was sought of existing information that led to a reduction in award;
f) as to the 3 firms on Schedule 9B, a situation quite different to that with AAR arose. The LSC had the relevant peer review rating records with which to make the corrections in question, because the peer review system was operated by the LSC. The relevant information was uniquely within the knowledge of the LSC. It would have been wrong for the LSC to disqualify tenderers for information which the LSC knew to be wrong and where the errors were obvious. The amendments by the LSC were legitimate, as reflected in paragraph 58 of the judgment in Harrow (supra). The situation was not comparable to the failure to by AAR to provide any information within the TIF and where the central missing information from AAR was not within the LSC's knowledge.