England and Wales High Court (Administrative Court) Decisions

IN THE HIGH COURT OF JUSTICE
QUEENS BENCH DIVISION
ADMINISTRATIVE COURT

		28 April 2011

Introduction

1. This is a consolidated claim for judicial review of, and/or damages for breach of the Public Contract Regulations 2006 in respect of, a decision of the Legal Services Commission ("the LSC") dated 5 August 2010. By that decision, it refused the appeal by the Claimant firm of solicitors ("Harrow") against its earlier decision not to award it a contract to undertake publicly-funded immigration work.
2. Harrow's bid failed because it did not secure the 33 points required to gain an immigration work contract in the London area. Instead it only scored 31 points. Had it answered one question on the tender form "Yes" rather than "No" it would have scored another two points and qualified. It contends that it always intended to say "Yes" but by a demonstrably genuine error it said "No". Hence the LSC should have allowed its appeal, given it the extra 2 points and awarded it a contract. The LSC resists the claim.

The Tender Process

3. The LSC invited tenders from law firms in respect of publicly funded immigration work. The tender submission period ran from 30 November 2009 to noon on 28 January 2010. Successful applicants would receive a contract for three years commencing on 1 October 2010 and would be given a certain number of cases which the LSC would fund, known as Matter Starts ("Matters"). The total number of Matters available for allocation in the London area was 43,546. 218 firms bid for this work and 127 were ultimately awarded contracts. After verification and appeals the actual number of Matters allocated was 42,099.
4. The tender was to be completed electronically and submitted through a secure internet site. Initial eligibility was achieved by successful completion of the pre-qualification questionnaire. Thereafter, there were two key elements of the tender. The first set of questions dealt with "Essential Criteria". Failure to meet these criteria rendered the firm ineligible. If the total number of Matters sought by the eligible firms did not exceed the Matters available they would all receive the amounts asked for. But if demand exceeded supply the LSC would have recourse to the second set of questions asked in the tender and answered at the same time as the first. These dealt with "Selection Criteria". Points were awarded for particular answers. This was explained in detail in the Information for Applicants document ("IFA"). The LSC would then use the firms' respective scores to allocate the Matters available. In this case demand did exceed supply. Those firms which scored 34-38 points received their full allocation while those who scored 33 points (the vast majority of successful bidders) received a proportion.
5. The Selection Criteria section of the IFA gave information about the LSC's preferences and the points given for the different answers. On the topic of drop-in sessions (ie when a prospective client could attend the office for advice and assistance without a prior appointment) the IFA stated that:

"Preference will be given to Applicant[s]..that will commit to deliver at least one regular and advertised Drop-in Service Session per week available to Immigration clients from the Office.."

and the Scoring System note against that said:

"Marked out of 2.

Able to deliver at least one Drop-in Service per week from the Office..(2 points)

Unable to deliver at least one Drop-in Service per week from the Office..(0 points)"

6. On the electronic form itself, Criterion 5 stated the preference in the same terms as the IFA. The question then to be answered "Yes" or "No" by selecting a drop-down box was:

"5. A Regular Drop-in Session per week"

7. Harrow answered "No" in the following circumstances which are not challenged as matters of fact for present purposes. Mr Blades, the managing partner of the firm was out of the office in Plymouth on a case on 27 January when the form was to go in ie the day before the closing deadline. It was 80% complete and the remaining 20% was to be filled in that day. He telephoned Mr Sam Ward, the firm's secretary and IT specialist and with his assistance, Mr Ward completed the form which was quickly checked by Mr Blades, after which it was submitted. Mr Blades did not notice at the time that he had answered the question about Drop In Sessions "No". This was wrong because the firm did intend to commit to offering such work. Indeed, as Mr Blades knew, the firm had operated such a service already for a number of years. And from November 2009 it had actively advertised its drop in sessions on Tuesdays and Thursdays. The answer was a genuine error. No further checks were made of the form after it was submitted, whether before or after the deadline.
8. The following were material tender rules contained within the IFA:

"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.

11.6 It is the responsibility of Applicant Organisations to make sure that their tenders are fully and accurately completed and accompanied by the appropriate documents. We are under no obligation to contact Applicant Organisations to clarify their tenders or to obtain missing information or documents, and tenders which are incomplete may not be considered. It is Applicant Organisations' responsibility to obtain at their own expense all additional information necessary for the preparation of their tender.

11.8 We may request Applicant Organisations to give additional information/clarification at any time during the tender process. Applicant Organisations should be prepared to provide additional information and/or clarify any aspects of their tender with us. We reserve the right to validate any part of your tender and information subsequently given to us.

11.20 Applicant Organisations may amend and re-submit their response to the PQQ and/or each ITT at any time up to the closing time and date. If so amended and re-submitted by the Applicant Organisation it is understood that the last response submitted by an Applicant Organisation prior to the closing time and date shall be the response that is considered by the LSC in the evaluation and award process.

11.23 Applicant Organisation must not amend or alter any document comprising part of their tender after the closing time and date set out in paragraph 11.2."

9. I should note here that it is common ground that "the tender process" referred to in paragraph 11.8 includes any appeal so that the power under 11.8 could be exercised within that process.
10. Harrow, along with the other bidding firms, was notified of the tender results by a letter dated 28 June 2010. One reason why this came some 5 months after the bidding closed was because the LSC first needed to see by reference to the number of Matters being sought whether it had to have recourse to the Selection Criteria at all. Once it did, it then needed to score all the bids and decide how to allocate. The letter to Harrow stated that it had failed to meet the minimum number of points because it only scored 31 and not 33. Its score was set out from which it could be seen that it scored 0 points in respect of Regular Drop In Sessions.

The Appeal

11. As a result Harrow appealed. The material appeal provisions state as follows:

"10.19 There will be a right of appeal against a decision by us not to award a 2010 Standard Civil Contract or to reject your application if it is incomplete.

10.20 The right of appeal applies in the following circumstances:...

(c) Where the Applicant Organisation's Individual Bid ranks lower than those of other Applicant Organisations on the Selection Criteria and is subsequently not awarded a contract."

12. The scope of the appeal process is not expressed to be limited in any way.
13. On 6 July 2010 Harrow wrote in support of its appeal stating that it had in fact been offering immigration drop-in sessions and that between October 2009 and July 2010 it held 71 such sessions each lasting about 8 hours over which periods it saw about 115 clients whose details it had retained. The sessions had been positively advertised over this period. Therefore Harrow had been committed to providing at least one drop-in session per week and would continue to be so committed.
14. By a letter dated 5 August 2010 the LSC rejected the appeal. It cited various provisions of the IFA and then the facts relevant to the appeal. In the Decision section the letter stated that the original score of 31 was correct, based on the submitted tender and that the IFA comprehensively set out what was required for a tender response and the responsibility to ensure that it was accurate. It also referred to the purpose of treating all applicants fairly and the LSC's duty under the Regulations to treat them fairly and consistently. As for the ground of appeal based on an error in completing the questions, the LSC regarded this "as an attempt to amend your tender. I do not believe that it would be appropriate to allow an appeal which could have that effect." The letter went on to say:

"I consider that the tender rules...are very clear that it is the Applicants responsibility to submit an accurate tender. The LSC is entitled to assess tenders on the basis of the information directly provided by the Applicant.

I consider that allowing the Applicant to amend its tender response at this stage would be allowing it to improve its tender, and in the context of the Selection Criteria stage of a competitive tender process, would not be fair on other Applicants."

15. Had the appeal succeeded Harrow would have been treated as scoring 33 points. It had sought a total of 850 Matters, but it would have received 243. This allocation would not have been taken from the Matters allocated to all the other successful bidders because there was a notional reserve of Matters kept for successful appeals. This was 10% of the total allocation ie about 4,354 Matters. This did not mean that only 90% of the total available were allocated. 100% were allocated but the LSC knew that in practice not all of the Matters actually allocated were in fact taken up by all of the firms. That expected shortfall in effect constituted the reserve. There is one limited way in which a successful appeal for Harrow would affect the other firms' Matters. Firms which did use up all their allocation (whether they received 100% of what they asked for or only a proportion) were entitled to ask the LSC for more, if more were in fact available. That may be so where other firms did not use their allocations and appeals did not exhaust the reserve. Therefore, it is conceivable that the Matters which would go to Harrow if its appeal succeeded (or this Court made an order to the same effect) would otherwise have ended up, eventually with one or more of the other firms. Whether this would happen would not be known for some time since the allocated Matters had to be used up first and in any event it was up to the LSC whether or not to award them. There was no right to further Matters.
16. In the absence of a successful appeal, Harrow is now faced with having to close its immigration department with the loss of 7 jobs and publicly-funded revenue which is currently worth some £288,000 annually, being about 28% of the firm's total earnings. According to Mr Blades, there is also a real damage of the firm closing altogether, with the loss of 28 jobs.

The Public Contract Regulations 2006 ("the Regulations")

17. The LSC's tender process was subject to the Regulations. These were amended in 2009 but those amendments do not apply here because the relevant contract award procedure was commenced before 20 December 2009.
18. Paragraph 4(3) provides that:

"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."

19. Paragraph 47 provides as follows:

"(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 … is actionable by any economic operator which, in consequence, suffers, or risks suffering, loss or damage and those proceedings shall be brought in the High Court."

The Issues

19. It is common ground that whether the claim is made under the Regulations or by way of judicial review the requirements of rationality and proportionality apply to the appeal decision. Harrow contends that the decision was both Wednesbury unreasonable and disproportionate in circumstances where there was a genuine error which was "objectively verifiable", in the sense that it could be easily and swiftly ascertained that Harrow had indeed intended to offer drop in sessions which it had already been providing for some time, and where the consequences of failure were catastrophic for this firm because its immigration department would have to close as might the whole firm. In this context Harrow further contends that this was not, in truth, a case of amending the submitted bid because there never was any intention to say "No" to the question about drop-in sessions. What happened should be regarded as no more than a clerical error. Nor is there any real prejudice to other successful bidders if Harrow is now let in.
20. The LSC argues that it was entitled to proceed on the basis of an unambiguous tender document and while Harrow's error is most unfortunate, the rules were very clear about the need for an accurate tender to be submitted on time. Moreover whatever was intended there would be an amendment to the tender if the appeal was allowed. Allowing an appeal of this kind would also lead to the risk of tenderer abuse. It would also necessitate the LSC going back to other unsuccessful applicants to see whether their appeals should in fact have been allowed because they were also based on a mistake similar in nature to this one. I am told that there will be some cases of that kind.
21. There is a further issue as to whether Harrow is entitled to invoke the court's judicial review function here at all, given the existence of an alternative remedy under the Regulations.

Analysis of the main issue

22. Both sides relied extensively on domestic and European case-law the latter being relevant because the Regulations implemented the European Parliament and Council Directive on procedures for the award of public contract 2004/18/EC and because Regulation 47 required compliance with any enforceable community obligation. I consider the relevant cases chronologically below.

Adia Interim v. Commission of the European Communities [1996] 3 CMLR 849

23. Here the Defendant detected a systematic error in the Claimant's price calculation which gave rise at least to an ambiguity. But it did not exercise its discretionary power to seek clarification. The Court held that it had no duty to do so because the underlying reasons for the error were not clear and adjusting it may have led to a real change in the price offered or an element in it. Moreover the Defendant treated all tenderers equally because it declined to seek clarification of other tenders where there was a lack of clarity so the Claimant could not say that it had been unfairly singled out. The European Court would not interfere with the exercise of the Defendant's discretion.

Resource Management Services v. Westminster City Council [1999] 2 CMLR 849

24. Here the Defendant had spotted various errors in the bids submitted including a double-counting error by the Claimant which meant that the bid was overpriced. The Defendant invited all tenderers to a meeting to seek clarifications which were provided. The Claimant's double-counting error was put right. Although not itself a subject of challenge the Court considered whether the correction of that error amounted to a change in the bid. The Defendant's Code of Practice permitted it to give tenderers the opportunity to supply information to deal with "ambiguities or arithmetical errors in tenders which would significantly hinder their evaluation" post-submission of the tenders but changes in specification and negotiation on price were ruled out. The High Court held that there was in effect no change to the bid but a clarification of an ambiguity. That is different from the instant case where there was no ambiguity in the tender at all.

Antwerpe Boukewewerken v European Commission T-195/2008

25. Here the Claimant was the original successful tenderer. The bid of another tenderer had been rejected by the Commission because it was non-compliant in that it omitted to state a particular price element. On being notified of this decision, that tenderer made a submission saying that although there was an omission in the bid, it was in fact plain from the document that the missing field should have contained a price which was already stated elsewhere. The procedure allowed for such submissions and a "standstill period" during which the Commission could consider them. The Commission agreed with submission with the result that this bid became more competitive than the Claimant's so that the Claimant ultimately lost out. The relevant rule stated that if after tenders had opened "some clarification is required in connection with a tender, or if obvious clerical errors in the tender must be corrected the [Defendant]..may contact the tenderer, although such contact may not lead to any alterations of the terms of the tender."
26. In general terms, the European Court said that while there was no duty on the Defendant to exercise this power,

"..where a tender has been drafted in ambiguous terms and the circumstances of the case, of which the [Defendant]..is aware suggest that the ambiguity probably has a simple explanation and is capable of being easily resolved.. in principle it would be contrary to the requirements of sound administration for the [Defendant]..to reject the tender in such circumstances without exercising its power to seek clarification...(see Tideland Signal v Commission [2002] ECR II3781 paras. 37 and 38) " [paragraph 56]

and

..the principle of proportionality requires that ..when the contracting authority is faced with an ambiguous tender and a request for clarification of the terms of the tender would be capable of ensuring legal certainty in the same way as the immediate rejection of that tender the contracting authority must seek clarification from the tenderer concerned rather than opt purely and simply to reject the tender.." [paragraph 57]

but

"..where a tender is ambiguous and the Commission is not in a position to establish, quickly and efficiently what it actually means, that institution has no choice but to reject the tender." [paragraph 58]

27. Finally it was for the Court, ultimately, to determine whether the clarifications proferred by the tenderer were just explanations or whether they went beyond that and modified the substantive terms of the tender.
28. On the facts, the Court held that the Commission was right to find that the omission was "a simple clerical error or at least an ambiguity having a simple explanation which could be easily resolved." The power to seek clarification was available not merely when the Defendant took the initiative but where the unsuccessful bidder raised the issue in the suspension period provided for after notification of the bid decisions. Otherwise there would be no point in having the suspension period. Accordingly there was no reason to interfere with the exercise of the Commission's discretion to seek clarification. Again, the instant case is different because there was no ambiguity, defect or obvious error on the face of the tender and the case concerned a challenge to the positive exercise of discretion.

The Principles

29. Pausing there, from those three cases it seems to me to be possible to discern the following principles:

(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.

30. In my judgment, the critical factor which gives rise, or may give rise, to a duty to seek clarification is where the tender as it stands cannot be properly considered because it is ambiguous or incomplete or contains an obvious clerical error rendering suspect that part of the bid. If the inability to proceed with a bid, which may be an advantageous addition to the competitive process, can be resolved easily and quickly it should be done, assuming there is no change to the bid or risk of that happening. If there is an obvious error or ambiguity or gap, clarifying it does not change the bid because, objectively the bid never positively said otherwise.
31. What those cases do not establish is that a tenderer which has made a mistake which does not render the tender in any way ambiguous or deficient on its face, but which is objectively verifiable, is nonetheless entitled to have it rectified, as contended for by Mr Clarke, for Harrow. He argued that this right should follow as a matter of principle because, either way, the mistake is innocent and can be verified as such. Consequently although it is a constant theme in the case-law (both European and domestic), any emphasis on prior ambiguity as the trigger for correction is wrong. I disagree. The reason why apparent ambiguity or other deficiency is required is because it is only in those cases where there is an obstacle, as perceived by the awarding authority, to considering the bid. If the awarding authority perceives no such obstacle it is entitled to consider it in the usual way. If, on occasion, this may work against a tenderer which has not taken care with its tender, that is unfortunate but it is a function of the overriding need to have properly prepared, timely and accurate tenders as a matter of good administration. If it were otherwise and tenderers could assert a mistake even when there was no problem on the face of the tender, which the awarding authority had to investigate, it is likely that it would become involved in lengthy and time-consuming investigations, often with no clear outcome, and which would be likely to slow the tendering process down and where there would be the risk of abuse. The process of evaluating the evidence as to the cause of the mistake may not always be straightforward and there would be the risk of not treating all tenderers equally.
32. It is in my judgment no answer to say that this will be avoided by limiting the required intervention to cases where the error is "objectively verifiable". If any disappointed tenderer can invoke this process (whether through an appeal or otherwise) there is a real risk that a change in the bid might occur and either way, much more investigation will take place than otherwise. All of this is illustrated by the present case. It is said that the error is "objectively verified" because in fact Harrow did offer drop-in centres before, but the actual question sought an expression of intent: "would the tenderer commit to offering it?" It is not necessarily an answer to point to prior experience, even though the mistake is accepted as having been made in this case. And suppose the Claimant was a tenderer who had not done drop-in sessions before, but who claimed that it had answered "No" instead of "Yes". How is this failure to express the correct intent to be judged? If the critical point was prior experience of drop-in work that approach would arguably discriminate against new tenderers.
33. But there is another serous problem. I posed it to Mr Clarke by asking what the position would be if a tenderer had mistakenly priced one particular element at £30 instead of £20 and then saw that the bid had failed because its quoted price on that one element made the bid too high. On appeal, would the awarding authority be bound to substitute the intended £20, assuming that this could be proved by, for example, some documentary instruction? Mr Clarke said that in such a case, the correction should be allowed. It was no different from an obvious clerical error (eg a decimal point in the wrong place). But first, it is not an error which would be obvious and second, objectively speaking, it is a change in the terms of the bid. The bid clearly said one thing and now it says something different. The fact that the bidder did not intend it to be thus is irrelevant in my view. The correction of the error in this case from the answer "No" to "Yes" is equally a change to the bid. The idea that an awarding authority should have to start investigating whether such a change was the result of the mistaken expression of a prior intention as opposed to change of heart after the event only has to be stated to be rejected. It gives rise the problems set out in paragraph 32 above. HHJ Purle QC said much the same thing at paragraph 66 of his judgment in the case of JR Jones, discussed below
34. Ambiguity, or inability otherwise to proceed with the tender, works as the essential threshold for interference because (a) resolving the problem does not necessarily entail a positive change in the bid and (b) it constitutes a sensible and workable limit to the obligation of the awarding authority to investigate beneath the surface of a bid. And even here, not every case of ambiguity or inability to proceed will require relief to be granted by the awarding authority. See the Tideland principle referred to in paragraph 27 above. Properly considered, the cases referred to above favour the LSC not Harrow. The broad principle contended for by Mr Clarke simply does not exist.
35. I was referred to a number of other cases but they did not seem to be to be directly in point. For example, Dynamiki v Commission 9 September 2010 T-387/08 was essentially concerned with a claim to the Commission's assessment or "marking" of the submitted tender. The same applies to Varney v Hertfordshire [2010] EWHC 1404.
36. I now turn to four recent English cases which in my judgment clearly reflect and apply the principles set out above. They all favour the position of the LSC, not Harrow.

Leadbitter v Devon County Council [2009] EWHC 930

37. This was a claim made under the Regulations in relation to a failed construction contract tender. The Claimant realised just before the deadline that it had forgotten to attach some case studies which were part of the bid materials. The Defendant refused to allow it to do so after the deadline as a result of which its bid failed. David Richards J dismissed the claim. He held first that the principle of proportionality (as for example discussed in Tideland) applied to the decision before him. However he rejected the argument that where, as in this case, the missing material had already been prepared but by an oversight was not sent with the rest of the tender it was disproportionate of the Defendant not to extend time to allow it in later. He accepted that "a deadline was a deadline" and that its importance had clearly been spelled out to the other tenderers along with other key elements of the process such as the requirement for a single submission and the lack of provision for changes. Fairness to all tenderers, as well as equal treatment and transparency meant that these key features should be observed. Proportionality might exceptionally require the late acceptance of the whole or part of a tender, most obviously where the problem was the fault of the awarding authority. But generally even if there is a discretion to accept late tenders there is no requirement that this be done particularly where the fault lies with the tenderer. So the fact that it may well have been possible to identify a clearly genuine mistake, being the mistaken failure to submit that part of the tender which had always been intended to go in, did not rescue the Claimant.
38. Mr Clarke invites me to distinguish Leadbitter on the grounds that it is concerned with lateness, not some other defect in the bid. But it seems to me that the general reasoning of David Richards J goes beyond the question of time limits and emphasises the need to maintain firm rules for the tendering process which are applicable to all. The fact that the result may be extremely unfortunate for the unsuccessful Claimant does not displace that need. Also, it may not be straightforward to distinguish an "error" from a "time" case. Suppose that Harrow had discovered the error one day after the deadline and sought to resubmit the corrected bid. One might well characterise that as a case where what was really required was a brief extension of time to cure an innocent mishap just like the omission of the case studies in Leadbitter. And if so, it immediately raises the problem of unequal treatment of tenderers.
39. The approach taken by David Richards J was approved by the Court of Appeal in Azam v Legal Services Commission [2010] EWCA Civ 1194, another "time" case. There Rimer LJ observed, admittedly in the context of time, that the essence of a competition is to "provide all competitors with an equal opportunity to make their case". But that notion applies equally to ensuring that the intended answers are given. This decision, in upholding the Judge's decision that the exclusion of the Claimant there was not disproportionate, also stressed the lack of fault on the part of the Defendant and the absence of any circumstances beyond the control of the Claimant. Those factors are relevant here, also.

JR Jones v Legal Service Commission [2010] EWHC 3671 (Ch)

40. This was a case on almost identical facts, save that the mistake was about a different question in the tender for immigration work. HHJ Purle QC rejected a claim made under the Regulations that there was a breach thereof by reason of the LSC's refusal of the Claimant firm's appeal. Like Harrow, the Claimant lost out on the bid and would not get an immigration contract absent the award of more points. Mr Clarke accepted that Jones is not distinguishable and therefore and he had to, and did, contend that it was simply wrong.
41. HHJ Purle QC took the view that correction of the error would have amounted to an impermissible change in the bid and that unlike other cases there was no ambiguity. I have taken the same view above. Mr Clarke criticised the learned judge because of his emphasis on those matters but for reasons which I have already given that criticism is misplaced.
42. In paragraph 46 of his judgment HHJ Purle QC also said that there was force in the point that if the LSC is told that the appeal should have been allowed on the basis of an obvious mistake, it will need to review other cases to ensure that others can have relief where there was such a mistake on their part, or that they can now make such a submission, in the interests of equality of treatment. There is this possibility here also (see paragraph 21 above). I see force in the point and do not accept that firms in this position would necessarily have come forward first time around, after learning of the decision against them.
43. Mr Clarke also took issue with the notion expressed by HHJ Purle QC in paragraph 55 that the process would be potentially subverted if an appeal like that before him were to be allowed. He argued that there was no such risk created by the correction of genuine mistakes. But that ignores the very real practical risks of abuse and unworkability referred to above. As HHJ Purle QC put it in paragraph 67:

"..although there is no element of potential abuse on the facts of this case, given the objectively verifiable nature of the mistake, if mistakes are allowed to be corrected after the deadline which are not evidence on the face of the tender, that would give rise to the risk of tenderers having second thoughts, and portraying their original thoughts as erroneously recorded when there was in truth a change of position."

44. It is not necessary for me to recite further from JR Jones which I should follow unless it is clearly wrong. Not only is it not clearly wrong but with respect it is clearly right.

Hoole & Co v Legal Services Commission [2011] EWHC 886

45. The facts were different in this case where the Claimant firm said that it had filled out all parts of the form but that as submitted, it came out blank so the bid failed. Having heard evidence Blake J held that there was no system error and that although the principal of the Claimant thought he had completed the drop-down section of the form, he had not in fact done so. He rejected the claim that the LSC should have sought clarification and accepted the completed form after the event. At paragraph 26 he stated:

"Although paragraph 11.8 of the defendant's IFA gave it the right to seek additional information/clarification, I conclude that Tideland cannot assist the claimant in the present because:

i) There was no ambiguity in the bid, simply an uncompleted section of the form. Although some parts of the data required to score points might have been culled from information provided elsewhere in the bid, not all of the information that the claimant needed to supply to gain 51 points could have been so derived. The LSC could have identified that the claimant's firm was a qualified solicitor's practice based at an address in Bristol, but other information it had supplied elsewhere was subtly distinct from the questions asked in the selection criteria part of the form. The provision of information relevant to the selection criteria and the non-completion of that part of the application form, did not constitute an ambiguity that the defendant was bound to inquire into.

ii) The exercise of the power of inquiry did not arise in circumstances where the imprecision of the tender terms or the defendant's subsequent conduct required it to exercise the power. The defendant had not caused the claimant's failure to provide the relevant material.

iii) An overbroad exercise of the power to seek clarification would be contrary to the principle of equality and fair treatment of all tenderers. The CFI acknowledges this limit at

[38] in Tideland and a similar emphasis has been attached to this principle in the decision of David Richards J in Leadbitter... approved by the Court of Appeal in Azam..

iv) It would be unfair to rival tenderers for the defendant either to have allowed the claimant to amend its application by completing it, or to fill in the selection criteria on behalf of the claimant from information that might have been available to it extraneously. Paragraph 11.6 of the IFA makes clear it is the responsibility of applicants to make sure all tenders are fully and accurately completed and there is no obligation on the defendant to obtain missing information or documents. Paragraph 11.7 explains that information already provided to the LSC in a previous contract could not be used to populate the PQQ and ITT "to ensure that we can assess each tender in a fair, like for like and reasonable manner". Paragraph 11.23 indicates that applicants must not amend or alter any document comprising part of their tender after the closing time and date. All tenderers would expect those rules to be consistently applied."

46. And then, in paragraph 30:

"Viewed entirely from the point of view of a public law duty to act fairly, it may well be that the exercise of a discretion to grant a benefit should be based on all matters that could or should be known to the authority, and that fairness might well include a reasonable opportunity to correct obvious errors without changing the fundamental nature of the bid submitted. It is after all in the public interest that a well-qualified and experienced provider of legal services in the field of immigration should be permitted to continue in business. However, any such duty is severely circumscribed where there is a competitive tender and an over-riding duty to treat all tenderers equally. Here for reasons that were not the responsibility of the defendant, the claimant had failed to supply the information that would have lead them to being ranked in priority where there was competition for the award of [new matter starts]...Any general duty to give an applicant an opportunity to correct errors in the absence of fault by the defendant, yields to the duty to apply the rules of the competition consistently and fairly between all applicants, and not afford an individual applicant an opportunity to amend the bid and improve its prospects of success in the competition after the submission date had passed."

47. In my judgment, that is entirely consistent with the approach as a matter of principle which I have set out above. Mr Clarke invites me to pay less attention to Hoole & Co on the basis that the mistake involved there was not objectively verifiable and was more like a late tender submission case. But I do not see the reasoning of Blake J as being reliant upon or even mainly reliant upon such factors.

AAR v Legal Services Commission [2011] EWHC 964

48. Here one of the mandatory documents (the Tender Information Form) had been duly completed at the Claimant's office. But by error the version transmitted was blank. The form as actually filled in which was intended to be transmitted was later recovered from the computer and so was available to show what the Claimant had intended to send.
49. In paragraph 28 Davis J referred to Tideland. In paragraphs 30-32 he referred to Leadbitter, in paragraphs 33-34 he cited Azam and in paragraph 35 he referred to JR Jones. In paragraph 60 he explained that the principle in Tideland did not require the Defendant to have allowed the information to come in late:

"Regrettably, as I have found, the mistake here was that of AAR and AAR alone. Under the terms of the Information for Applicants, it was obliged to gets its completed forms in before the deadline and failed to do so. There can be no good reason, under the principles of equality of treatment or proportionality, for permitting it to put in a complete TIF – for that is what the additional information would in reality amount to even if some aspects could be gleaned elsewhere from the PQQ or ITT -after the deadline. Indeed to do so would run counter to the whole tender process and would be unjust to other tenderers, bound by the same terms and who had made no such mistake."

50. In paragraph 64 he concluded that there was no requirement of proportionality or rationality or "overarching exceptionality" that justified the relief sought by the Claimant. Any other conclusion would go against the approach consistently adopted by the courts for example in Leadbitter, Azam and JR Jones. That last point is important. In paragraph 82 he expressed sympathy for the Claimant in that failure to obtain a legal aid contract would probably mean that he would have to cease practice. But there were wider considerations and the equal treatment of other tenders and due process of tendering had to be respected. For the Claimant to have succeeded would have set a bad legal precedent and would be out of line with the approach in other cases.
51. Hoole & Co and AAR both make clear that any proportionality review is not to focus exclusively on the particular consequences for the failed tenderer, severe though they may be. The wider principles of the good administration of competitive tenders and equal treatment come into play and act as a limiting factor. Absent a case to interfere along Tideland lines or the mistake being due to fault on the part of the awarding authority or possibly circumstances beyond the control of the tenderer, disproportionality is most unlikely to be established where the tenderer has made a mistake in the bid.

The Approach taken by Arrowsmiths' Law of Public Utilities Procurement

52. Mr Clarke argued that certain passages in this work favoured his approach. First I do not think that they necessarily do. In paragraph 7.91 Arrowsmith refers to the case for allowing the correction of errors where there is no potential for abuse. The example given is where the price was quoted in euros not sterling as required. But that falls into the category of an inability to proceed with the tender as framed. Paragraph 7.92 says that the position is less clear where there is an opportunity for abuse. Paragraph 7.151 refers to RMS and the fact that the nature of the error and the correct prices were clear on the face of the tender. That is not so here. In paragraph 7.152 Arrowsmith says that it does not necessarily violate equal treatment to allow a correction where the tenderer has made a genuine error. That seems like a very wide statement, but she goes on to say that it is supported by what Smedley J said in RMS, namely reference to the possibility to "clarify any apparent ambiguities or discrepancies" on the face of the documents. But that is not this case. It is not clear to me that Arrowsmith would necessarily disagree with my analysis of the principles set out above. But if she did I would have respectfully to disagree with her.

Irrationality and proportionality in this case

53. Both as matter of principle and by reference to the cases, it is impossible to conclude that the decision on the appeal here was irrational. Nor does it follow, as Mr Clarke suggested that the dismissal of the appeal means that the appeal process is devoid of meaning. There could be many other issues arising after rejection of a bid where an appeal might succeed, for example mis-counting or mis-analysis by the LSC of a particular bid, or (if it arose) some incorrect evaluative judgment on the part of the LSC. Or resolving an ambiguity falling with the Tideland principle where the LSC had declined to seek clarification first time round.
54. Mr Clarke also submitted in this context that the LSC effectively proceeded on a counter-factual basis. It refused the appeal by reference to the submitted bid even though it "knew" that the bid was factually wrong in one respect and this was irrational. But the bid itself was "true" in the sense that it consisted of a set of clear answers. The fact that Harrow said that it had not intended one of its answers did not make the bid untrue. Nor did the LSC "adopt" Harrow's error. Rather it said that Harrow was not entitled to change the answer after the deadline. In the context of the rule against amendments and my analysis above, that approach is not irrational. Mr Clarke also submitted that this Court should interfere on the basis that this case was like that considered by the Court of Appeal in E v SSHD [2004] EWCA Civ 49. Here the issue was whether the Court of Appeal could review the decision of the Asylum and Immigration Tribunal where it was shown that an important part of its reasoning was based on ignorance or mistake as to the facts and whether it could admit fresh evidence to prove the mistake. In paragraph 66 the Court accepted that a mistake of fact giving rise to unfairness is a separate head of challenge in an appeal on a point of law at least in those statutory contexts where the parties shared an interest in co-operating to achieve the right result. The ordinary requirements of unfairness would include: mistake as to an existing fact, the establishment of that "fact", that the appellant must not have been responsible for the mistake and that the mistake must have been material. This case does not assist Harrow here. First there was no mistake of fact by the LSC on appeal. It was aware of the facts and Harrow's contention that it had made a mistake. It did not itself proceed under any mistaken impression. And that conclusion cannot be sidestepped by arguing that it somehow "adopted" the mistake, for the reason already given. Furthermore, the mistake here was the fault of the appellant. It is no answer to that point to say that thereafter the mistake somehow became the fault of the LSC because it proceeded according to the tender as drawn. There is only one party who was responsible for the mistake relied upon and that is Harrow.
55. Nor is the result disproportionate. The governing principles stated above are themselves a proper balance between the interests of individual tenderers and the tenderers collectively within the process to which they are subject. It is true that the consequences of the mistake here are very serious for this particular firm. But on the other hand, it had 8 weeks to produce and perfect the tender. Yet it was 20% incomplete on the last full day. That final part could even have been checked in the evening of 27 January. The relevant answer could have been changed and a further version of the form submitted on 28 January. A relevant consideration is the need to treat all tenderers equally in terms of getting a properly filled-in and accurate form in on time. The strict requirements for this tender process were clearly made known in advance to all tenderers including Harrow. And it also needs to be said that it does not follow, for example, that Harrow's failure on appeal means that the needs of those requiring immigration services in its area will go unserved, when over 120 such firms will be giving immigration legal services in London and where all the Matters have been allocated.
56. It is said by Mr Clarke, however, that the result is still disproportionate because there is no real prejudice to the other tenderers even if Harrow is now allowed a contract. I accept that any prejudice is not likely to be large nor is it possible to estimate its scale but the fact remains that absent a successful appeal here there would be a further 243 matters available for take up by others at some stage in the next three years. Allowing Harrow in would also mean that there was a further applicant for such Matters as might later become available. Such prejudice cannot be discounted as insignificant. But in any event I do not consider that proof of actual prejudice is required so as to render proportionate a decision not to permit a correction. The principles set out above do not depend on it being shown and it is noteworthy that in paragraph 38 of his judgment in Azam Pill LJ states that while the grant of an extension of time may well adversely affect the position of other tenderers this was not essential to his conclusion. For his part Rimer LJ referred simply to the "potential" to affect other awards which the introduction of a late bidder would have – see paragraph 51.
57. Finally, Mr Clarke pointed to the fact that the LSC had in fact allowed certain tenderers to correct their bids so that they changed. However this is not so, as the evidence of Melena Ward makes clear:

(1) At the essential (non-competitive) criteria stage the LSC checked the accuracy of those tenders where it was stated that the firm concerned had been the subject of confirmed peer review ratings of 4 or 5 which was a disqualifying factor; the LSC was able to check this because it had the underlying records. A confirmed rating meant after appeals etc and the LSC discovered that this was not always understood so that some firms might have been in effect disqualifying themselves wrongly; in 9 cases, this had happened. See paragraphs 3 – 12 of her witness statement; I do not regard this as a change to the bid or something which offends against the principles set out above;

(2) At the selection stage, firms gained 5 points if they had a level 5 caseworker and if so they were expected to identify who it was on the staff information section of the bid. The LSC wanted to verify such information as it was entitled to do under paragraph 11.8 referred to above. If no name was given it had to contact the firm concerned to get it. If a firm could not confirm the identity of that person the bid was remarked to remove the 5 points claimed. That was done to prevent a false claim in the bid. See paragraphs 13 – 20 of the witness statement. I do not see how that process begins to constitute permitting tenderers to change their bids.

Conclusion

58. For all the reasons given above the principal challenge to the appeal decision of the LSC must fail. This is so whether the claim is made by way of judicial review or under the Regulations.

Remedy

59. In the light of that conclusion it is not necessary for me to determine the subsidiary issue as to whether a claim by way of judicial review was appropriate at all, given the alternative remedy available under the Regulations. However, in deference to the arguments addressed to me on the point, I consider it briefly below.
60. In JR Jones HHJ Purle QC considered, obiter, that the judicial review claim was not appropriate – see paragraph 73. In AAR the LSC expressly did not take the point that such a claim was not justiciable. In Hoole & Co Blake J considered obiter that the proper forum for the claim was under the Regulations – see paragraphs 33 and 34.
61. Under the Regulations as they stood before the 2009 amendments the only remedy was damages. Mr Clarke argued that this was not an adequate remedy because Harrow did not want damages (unless it could obtain nothing else) but an order requiring the LSC to reconsider which, here, would inevitably have led to a contract being awarded. Only judicial review could provide this. I see the force of this. When considering alternative remedies in the context of judicial review the Court is entitled in my view to look at the specifics of what exactly is available under the purported alternative remedy and, here, its failure to provide the most obvious relief required in a case of this kind (a lacuna now rectified by the increased powers given to the Court under the 2009 amendments).
62. But Mr Rawlings submits that there is also the question of whether in this type of case there is really a public law function involved at all. He says that in reality, this is the LSC acting in the commercial context of awarding contracts for legal services and Harrow is the economic operator. He points out that while in Law Society v LSC [2007] EWHC 1848 Beatson J held that the judicial review claim there was appropriately brought by the Law Society, this was because although it was not an "economic operator" for the purpose of the Regulations (and it brought no direct claim thereunder), it was directly affected by the LSC's actions and it represented all solicitors and had statutory functions relating to the profession. He also relies upon the case of R (Menai Collect) v Department for Constitutional Affairs [2006] EWHC 724 in which McCombe J held that there was no relevant public law obligation in issue in relation to the DCA's activities concerning the awarding of a contract to provide certain enforcement services in respect of Magistrate's Court orders. I see that, but in my view the position here is more akin to that before Ognall J in R v Legal Aid Board ex p Donn & Co. [1994] 3 All ER 1, cited in paragraphs 32 – 34 of the judgment of McCombe J., where Ognall J upheld the justiciability of the judicial review claim. There is a public dimension to the activities of the LSC in relation to its tendering process concerned with the allocation of publicly-funded legal service work. That remains so even where the case concerns its refusal of an appeal in one particular case concerning one particular firm. So had the point arisen, I would have found that Harrow had a right to bring judicial review proceedings. In the event this issue has been rendered unnecessary, first by my decision on the substantive claim and second because Mr Rawlings made it clear in argument that had Harrow succeeded on substance, the LSC would then have awarded a new contract even though the Regulations themselves did not allow for this.

Conclusion

63. In the event both claims are substantively dismissed. I am most grateful to both Counsel for their helpful submissions.