Strand, London, WC2A 2LL
B e f o r e :
| J B LEADBITTER & CO LIMITED
|- and -
|DEVON COUNTY COUNCIL
Mr Michael Bowsher QC, Miss Elisa Holmes and Miss Ligia Osepciu (instructed by Devon County Council) for the Defendant
Hearing dates: 22, 23 April 2009
Crown Copyright ©
Mr Justice David Richards :
"A breach of the duty owed in accordance with paragraph (1) or (2) 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."
As to remedies, paragraphs (8) and (9) provide:
"(8) Subject to paragraph (9), but otherwise without prejudice to any other powers of the Court, in proceedings brought under this regulation the Court may-
(a) by interim order suspend the procedure leading to the award of the contract or the procedure leading to the determination of a design contest in relation to the award of which the breach of the duty owed in accordance with paragraph (1) or (2) is alleged, or suspend the implementation of any decision or action taken by the contracting authority or concessionaire, as the case may be, in the course of following such a procedure; and
(b) if satisfied that a decision or action taken by a contracting authority was in breach of the duty owed in accordance with paragraph (1) or (2) –
(i) order the setting aside of that decision or action or order the contracting authority to amend any document
(ii) award damages to an economic operator which has suffered loss or damage as a consequence of the breach; or
(iii) do both of those things.
(9) In proceedings under this regulation the Court does not have power to order any remedy other than an award of damages in respect of a breach of the duty owed in accordance with paragraph (1) or (2) if the contract in relation to which the breach occurred has been entered into."
Paragraph (9) does not apply because the framework agreement has yet to be made.
"46 There is no doubt that Regulation 4(3)(a) requires tenderers to be treated equally and in a non-discriminatory way. Equally, it must be at least seriously arguable that Devon County Council is required by Community law to act proportionately as explained by Lord Hoffmann in the C Smith case. But if an omission from a hard copy tender might be remedied before the deadline by submitting the completed document, and an electronic tender containing mistakes, genuine mistakes, may be corrected after the deadline under para.B2.25, it does appear to me to be distinctly arguable that it is disproportionate to refuse to allow an amendment to an electronic tender to correct an honest and genuine mistake sought to be made before the deadline. Neither the fact that it is an electronic tender nor the fact that the tender was strictly non-compliant seems to me to make a sufficient difference to give rise to a different consequence.
47. I do not think that the extension in favour of the victim of the electrical fault but refusal in the case of Leadbitters can be stigmatised as discriminatory as the circumstances were quite different, but that does not affect the question whether there is a serious question to be tried on proportionality. Accordingly, I consider that there is a serious issue to be tried and go on therefore to consider questions of damages and the balance of convenience. "
The Invitation to Tender and other documents
"… It is Tenderers responsibility to ensure that the complete set of tender return documents are uploaded correctly to the relevant tender submission area of Devontenders.gov.uk. An incomplete set of documents will mean your tender is invalid. …"
It is not possible to complete the Tender documents online. Documents must be saved locally to your computer, completed offline and then re-attached. The full Tender documents must be completed and submitted electronically via the www.devontenders.gov.uk procurement portal (at any time prior to the closing date and time).
Accordingly, the submission of electronic Tender returns must not be left to the last moment as it may take some time to upload your completed Tender. The server timestamps submissions when they are made, and therefore it will be immediately apparent whether or not a tender has been submitted after this deadline.
~ If your Tender is not fully submitted before the closing date and time it will not be accepted ~"
"Should a material and genuine error be discovered in the Tenderer's submission during the evaluation period by the Tender evaluation team, the Tenderer will be given the opportunity of confirming their offer, or of amending it to correct the error."
"Tenderers are required to select a minimum of four case study projects which they are to submit in order to provide pricing proposals and detailed responses to qualitative questions. The missing case study information included, for each of Leadbitter's four selected case studies, an overall pricing schedule, project specific staff, management and supervision requirements (including pricing), an outline of all other project specific preliminaries (including pricing), a summary and breakdown of the pre-construction management fee, a summary and breakdown of the "develop and construct" fee, and a complete project cost plan, including cost analysis."
"Once you are sure that all files have been uploaded click the "Submit" button. Note: This is a once only option – you only have one opportunity to do this."
Step 15 was as follows:
"Click 'OK' to confirm that you do want to submit your response. Ensure that all documents are uploaded before submitting. "
"All supplementary information must be received within the stated deadline for Tender submissions. Endeavours should be made to return all documentation electronically. The submission of hard copy supporting documentation is not encouraged but if absolutely necessary may be made if in accordance with the instructions below. Any supplementary information must be directly relevant to your organisation's response to a nominated question. Any such documentation may either:
1) be uploaded electronically on to Devontenders with your Tender submission or alternatively
2) may be provided in paper form as per the following instructions. Where your response to any specific question requires a supplementary submission, please clearly reference the information and the question to which it refers. "
The instructions for hard copy supporting documentation provided that "Any package containing paper documents must be received within the stated deadline for Tender submissions" and gave the address. The address made clear that it was supplementary information for tenders under this procurement. It was also stated:
"Except for the provision of supplementary documentation requested by CFSW after the Tender deadline, or where CFSW have expressly allowed it, any submissions which are posted, emailed or faxed directly by return outside of the portal will not be considered."
~ Packages containing supplementary information must not contain any of the main elements of the Tender.
The main elements of the Tender (including all pricing information) must be uploaded to www.Devontenders.gov.uk and submitted by the stated deadline. ~
CFSW must not have access to any pricing information from Tenderers prior to the deadline for Tender returns. CFSW does not accept any responsibility for the premature opening (and therefore rejection) or mishandling of envelopes not sealed, which are delivered late or which are incorrectly marked or that may wrongfully contain pricing information.
? Failure to comply with this instruction may mean that your tender will not be considered ? "
"Tenderers are reminded that the CFSW tender return deadline is strictly 12.00 mid day on Friday January 16 2009.
All Tenderers are asked to please be particularly mindful of the following:
1) Tenderers are requested to ensure the guidelines for submitting your tenders electronically are followed precisely.
2) Tenderers are strongly reminded to begin the tender upload and submission process well in advance of the deadline. Depending on the extent of your documentation the upload process may take some time.
3) Tenderers must ensure all attachments, including the tender return, all your case study responses and any other attachments are uploaded and submitted to the appropriate area of the devontenders e- tendering website. Tenderers must ensure they have uploaded and submitted all relevant documents which comprise their tender submission. Please ensure all case study responses are each clearly referenced to the question to which they relate.
4) Confirmation that a submission has been made by your organisation can be obtained. To receive confirmation of that your submission has been made please refer to the document entitled: "e-tender file upload and submission instructions". Please note this receipt will prove you have submitted some document(s) but does not check which documents you have submitted. This is to your discretion."
The events of 16 January 2009
"CFSW wishes to reassure all tenderers whether or not you have already submitted your tender that this decision has not been taken lightly and that it will in no way affect the probity or integrity of the tender process."
".. I understand that you may not wish to consider this late part of our submission, but after all the hard work that has been put in to putting our bid together, I hope that you will consider it."
".. In an attempt to submit our missing case studies for your consideration, I emailed them to you directly at 15.26. I appreciate that this wasn't in accordance with your instructions and was after the deadline; however, I would be pleased if you were to consider the following factors….
In summary, I would ask you to seriously consider allowing our Case Study Pricing Templates to be considered as part of our submitted tender. They were genuinely completed prior to the deadline and whilst we had intended that they be included within the original tender upload, we were unaware that we would be unable to add or modify our submission, prior to the tender deadline."
Devon CC replied by letter dated 21 January 2009, drawing attention to some of the relevant statements in the ITT as to the need to submit a complete tender by the deadline and stating:
"…The purpose of stating these requirements is to ensure certainty, integrity and probity in the tendering process and without which we lay ourselves open to claims that we are not being fair and transparent."
The decision had been taken not to consider the claimant's tender. Correspondence followed, but Devon CC refused to change their decision and on 18 February 2009 the present proceedings were issued.
Duty to treat tenderers equally and in non-discriminatory way
(2) When these Regulations apply, a contracting authority shall not treat a person who is not a national of a relevant State and established in a relevant State more favourably than one who is.
(3) A contracting authority shall (in accordance with Art. 2 of the Public Sector Directive)-
a) treat economic operators equally and in a non- discriminatory way; and
b) act in a transparent way
Regulation 4(3) reflects Art. 2 of the Directive in substantially the same language:
"Contracting authorities shall treat economic operators equally and non-discriminatorily and shall act in a transparent way"
These duties reflect principles which are themselves derived from fundamental Community principles, such as the free movement of goods, the freedom of establishment and the freedom to provide services, as is made clear by recital (2) to the Directive:
"The award of contracts concluded in the Member States on behalf of the State, regional or local authorities and other bodies governed by public law entities, is subject to the respect of the principles of the Treaty and in particular to the principle of freedom of movement of goods, the principle of freedom of establishment and the principle of freedom to provide services and to the principles deriving therefrom, such as the principle of equal treatment, the principle of non-discrimination, the principle of mutual recognition, the principle of proportionality and the principle of transparency. However for public contracts above a certain value, it is advisable to draw up provisions of Community coordination of national procedures for the award of such contracts which are based on these principles so as to ensure the effects of them and to guarantee the opening-up of public procurement to competition. These coordinating provisions should therefore be interpreted in accordance with both the aforementioned rules and principles and other rules of the Treaty."
More specifically, recital (46) provides:
"Contracts should be awarded on the basis of objective criteria which ensure compliance with the principles of transparency, non-discrimination and equal treatment and which guarantee that tenders are assessed in conditions of effective competition. As a result, it is appropriate to allow the application of two award criteria only: 'the lowest price' and 'the most economically advantageous tender'."
Duty to select contractors only on the basis of the most economically advantageous tenders
Duty to act proportionately
"25 The Advocate General did not enlarge upon what kind of conditions might be regarded as appropriate for this purpose. But in general European law would require them to satisfy the principle of proportionality in its broad sense, which, following German law, is divided into three sub-principles: first, a measure must be suitable for the purpose for which the power has been conferred; secondly, it must be necessary in the sense that the purpose could not have been achieved by some other means less burdensome to the persons affected and thirdly, it must be proportionate in the narrower sense, that is, the burdens imposed by the exercise of the power must not be disproportionate to the object to be achieved. ….
27 In the present case, however, I have great difficulty, for the reasons I have already explained, in seeing how a provision insisting not merely that the documents disclose the apportionment of consideration but do so in a particular form can be said to be "suitable for the purpose" of preventing avoidance. The additional burden upon suppliers would in my opinion be disproportionate to any effect the measure would have in addressing the alleged problem. On the other hand, if the specific objective is to prevent surreptitious or retrospective value shifting, then it seems to me that all that is required is disclosure of the apportionment without insistence on any particular form.
28 Mr Paines said that proportionality was concerned with imposing disproportionate burdens and that there was nothing more burdensome in imposing a requirement that the amount be stated as a self-contained figure than in requiring it to be stated referentially. Either was perfectly easy to comply with. In my opinion this is disingenuous. Any additional formal requirement, non-compliance with which may result in denial of exemption, is an additional burden. If the Note had required invoices to be on A4 paper, it could equally have been said that A4 paper was just as easy to obtain as any other kind of paper. But the imposition of such a requirement, which did nothing to advance any legitimate objective, would be disproportionate. Likewise, a requirement that information be communicated in any particular form is more burdensome than a requirement that it may be communicated in any form. And where, as in this case, the addition of a requirement of form appears to serve no legitimate purpose, I think that it is also disproportionate."
"39 It is also relevant to recall, in the present context, that the principle of proportionality requires that measures adopted by Community institutions do not exceed the limits of what is appropriate and necessary in order to attain the objectives pursued and that where there is a choice between several appropriate measures recourse must be had to the least onerous. See, for example, Case C-157/96, R. v. Ministry of Agriculture, Fisheries and Food and Others, Ex parte National Farmers' Union and Others:  ECR I-2211;  2 C.M.L.R. 1125, para. ."
Having concluded that the principle of good administration required the Commission to seek clarification of the tender, it continued:
"43 In addition, as regards the principle of proportionality, the Court finds that in the present case the Evaluation Committee, faced with the applicant's ambiguous tender, had a choice between two courses of action, either of which would have produced the legal certainty referred to at paragraph 34 above, namely to reject the tender outright or to seek clarification from the applicant. Given the likelihood, noted at paragraph 41 above, that the tender was indeed intended to remain valid for 90 days from 11 June 2002 until 9 September 2002 as required by section 8.1 of the Instructions to Tenderers and the fact that the applicant would have been obliged to provide within 24 hours any clarification sought so that the tender procedure as a whole would have suffered only minimal disruption and delay, the Court holds that the Evaluation Committee's decision to reject the tender without seeking clarification of its intended period of validity was clearly disproportionate and thus vitiated by a manifest error of assessment."
"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."
"Since most breaches of formalities will not, however, create any significant inequity between tenderers, and since the scope for material abuse of discretion is very limited, it is submitted that the general principle should be that procuring entities have a right to waive compliance or to allow corrections. Whether or not a power to waive formalities is expressly reserved in the contract documents should not affect the position: the power of waiver should normally exist even if not expressly reserved. The equal treatment principle will require that this is exercised in the same manner for all bidders: for example, if a particular requirement is waived for one bidder, it must generally also be waived for others.
However, there is probably an exception to the right of waiver for certain "fundamental" formalities contemplated in the procurement legislation itself or set by the procuring entity. For these formalities, as well as for fundamental requirements of the specifications and conditions, the equal treatment principle probably requires strict compliance for a tender to be considered.
This probably applies, first, to the deadline for tenders, which is a matter of importance under the legislation. ….. Whilst late tenders may probably not be accepted, however, the better view is that there is an exception when there are special and exceptional reasons for accepting a late tender, including fault by the procuring entity. ….. In cases in which prejudice does [not] exist it would, it is submitted, be acceptable to extend the tender deadline. There is no violation of equal treatment since a tenderer who has been misled, or affected by some other exceptional circumstance, is not in a comparable situation to one who has not.
It is probably also permitted to extend the deadline for one or all tenderers in certain cases."
"Although an authority may not be required to reject bids which do not comply with formalities, it no doubt has a general discretion to do so: otherwise, bidders would be free to disregard requirements imposed to ensure the smooth functioning of the process. However, there might be a duty to allow correction when there is an ambiguity in the tender, at least when the intended meaning is clear. Any general discretion to reject bids that do not comply with formalities is also subject to the equal treatment principle. Thus, if an entity rejects one tender for non-compliance with a requirement, it must also reject others that fail to comply with the same requirement."