QUEEN'S BENCH DIVISION
TECHNOLOGY AND CONSTRUCTION COURT
Strand, London, WC2A 2LL
B e f o r e :
| Mears Limited
|- and -
|Leeds City Council
Andrew Arden QC, and Christopher Baker (instructed by the Solicitor, Leeds City Council) for the Defendant
Hearing dates: 19, 20, 25 and 26 January 2011
Crown Copyright ©
The Hon Mr Justice Ramsey :
Deliverable Questions Ref
Deliverable Questions Ref
|ITPD Marks||ISFT Marks|
(CD for ITCD)
(CD for ITCD)
(CD for ISFT)
(CD for ITCD)
(CD for ITCD & ISFT)
(CD for ISFT)
|Health and Safety||5.2.7||5.3.6||10||10|
Repairs, Renewals & Maintenance
Gas Servicing and repairs
The relevant Lots relate to improvements, refurbishment, repairs, renewals & maintenance ("IRRR&M" in the table above) rather than the Lots relating to Gas Servicing & Repairs ("GS&R" in the table above).
"References at B1, B2, B4, D and E have been made to the comparison exercise of our bid against "Model Answers". This does not assist us in understanding where we have lost marks since we do not have copies of the model answers. Please explain what was required and how marks were allocated accordingly."
"1. The sub-criteria (and related scoring) used within each section of the Quality Submission;
2. The evaluation matrix used; and
3. The scoring sheets relating to our client's bid."
"In terms of your request for sub-criteria and related scoring all the questions identified in the Quality Submissions part of the ITPD were assessed and evaluated by officers from West North West Homes, Aire Valley Homes and the Council and each question received a score out of 10, based on the guidance enclosed at Appendix 2.
Mears submission was evaluated by a number of officers and details of the scores received using the guidance at Appendix 2 for each of the questions are provided at Appendix 3."
"Based on the details submitted in response to each question, Panel Members are to score each of the questions in the sub sections using the following scoring guidance.
Submissions including better overall proposals, better illustrated by an example will score higher.
Marking Guidelines - Single score (out of 10 in line with the table below) to be awarded against each question, evaluation panel members should refer to the guidance within the model answers."
"Each question to be scored between 0 and 10 in line [with] score definition guidance documented at 3.1 when compared against model answer."
The Hearing of Issues
Issue 1: Whether the matters relied upon by way of proposed amendment under paragraphs 20(3) and (4) of the Amended Particulars of Claim in relation to the Model Answers should be disallowed or dismissed as being raised late contrary to Regulation 47(7)(b).
Issue 2: Whether LCC acted in breach of Regulations 4(3) and/or 30(3) to (5) in failing to disclose to Mears prior to the submission of its Outline Solution Submission the matters particularised in paragraphs 20(3) and (4) of the Amended Particulars of Claim.
Issue 3: Whether in any event Mears suffered a loss or a risk of loss of being selected for the ITCD stage of the Procurement.
Issue 4: Whether Mears should be confined to a remedy only in damages in respect of any established breach of the Regulations.
1 a combination of responses either/or both of not matching full response to model answer or lack of evidence which cost a number of points.
2 not listed staff and training undertaken as suggested in the model answer for Q3.5."
Issue 1: Regulation 47(7)(b)
"So far as timing is concerned, an application for disclosure in these proceedings is not affected by any fixed time limit. Whilst late applications may not be granted I do not consider that any such issues arise in this case. In any event, subject to any argument at the trial of the preliminary issues, even if the provisions of Regulation 47(7) did apply to this application then, as dealt with in more detail below, time does not start to run until the date when the claimant knew, or ought to have known, of the infringement of the Regulations. I consider that in this case if there had been an infringement of Regulation 47 in terms either of a failure to provide the model answers as part of the information about contract award procedures or a failure in asserting, as LCC did at the hearing on 10 December, that the model answers might be withheld under Regulation 47(13), Mears would have to know of that infringement. Whilst reference was made to the model answers in the spreadsheet sent on 15 July 2010, I do not at present consider that this would have been sufficient for Mears to know or be in a position where they ought to have known of the infringement. Indeed without knowledge of what the model answers contain, it is difficult to contend that there has been any failure."
"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."
"Where a contracting authority intends to award a public contract on the basis of the offer which is the most economically advantageous it shall state the weighting which it gives to each of the criteria chosen in the contract notice or in the contract documents or, in the case of a competitive dialogue procedure, in the descriptive document."
"The aim of those provisions is, accordingly to allow all reasonably well-informed and normally diligent tenderers to interpret the award criteria in the same way (see, to that effect and by analogy, case C-19/00 SIAC Construction  ECR I-7725, paragraph 42) and, consequently, to have equal opportunity in formulating the terms of their tenders (see, to that effect and by analogy, Universale -Bau and Others, paragraph 129 above, paragraph 93)."
Issue 2: Claims under Regulations 4 and 30
(1) That the Evaluation Table in paragraph 8.2.1 of the ITPD, which was to be used to evaluate the relevant criteria, failed to state the weightings to be given to the questions under each of the sections of that table.
(2) That the Scoring Table restricted the score which a tenderer could achieve in two ways:
(a) It limited the marks that could be awarded to a maximum 7 out of 10 unless there was innovation and a number of questions did not permit of answers which demonstrated innovation.
(b) It limited the marks so that a score of 10 could only be achieved if the tenderer's answer went beyond or exceeded the specified criteria.
(3) That the Model Answers used by LCC in carrying out the evaluation of the tenders included matters which should have been disclosed to tenderers.
Submissions by Mears
Submissions by LCC
"Similarly, in order to ensure respect for the principles of equal treatment and transparency, it is important that potential tenderers are aware of all the features to be taken into account by the contracting authority in identifying the economically most advantageous offer, and, if possible, their relative importance, when they prepare their tenders (see, to that effect, Case C-87/94 Commission v Belgium  ECR I-2043, paragraph 88, and Case C-470/99 Universale-Bau and Others  ECR I-11617, paragraph 98)."
"In that regard, it must be determined first whether, in the light of all the relevant facts of the case in the main proceedings, the decision applying such weighting altered the criteria for the award of the contract set out in the contract documents or the contract notice. If it did the decision would be contrary to Community law.
Second it must be determined whether the decision contains elements which, if they had been known at the time the tenders were prepared, could have affected that preparation. If it did the decision would be contrary to Community law.
Third, it must be determined whether the jury adopted the decision to apply weighting on the basis of matters likely to give rise to discrimination against one of the tenderers. If it did the decision would be contrary to Community law."
"— does not alter the criteria for the award of the contract set out in the contract documents or the contract notice;
— does not contain elements which, if they had been known at the time the tenders were prepared, could have affected that preparation;
— was not adopted on the basis of matters likely to give rise to discrimination against one of the tenderers."
"Therefore, 'award criteria' do not include criteria that are not aimed at identifying the tender which is economically the most advantageous, but are instead essentially linked to the evaluation of the tenderers' ability to perform the contract in question."
"Therefore, a contracting authority cannot apply weighting rules or sub criteria in respect of the award criteria which it has not previously brought to the tenderers' attention."
"require that potential tenderers be aware of all the features to be taken into account by the contracting authority in identifying the economically most advantageous tender and their relative importance when they prepare their tenders...".
"In accordance with settled case-law, it is, none the less, possible for a contracting authority, after expiry of the period for submission of tenders, to determine weighting coefficients for sub-criteria of award criteria previously established, on [the three conditions set out in the ATI case]".
"35. The court must carry out its review with the appropriate degree of scrutiny to ensure that the above principles for public procurement have been complied with, that the facts relied upon by the public authority are correct and that there is no manifest error of assessment or misuse of power.
36. If the authority has not complied with its obligations as to equality, transparency or objectivity, 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) The matters set out in the Method Statements were criteria which were aimed at identifying the most economically advantageous tender and should have been disclosed.
(2) If the matters set out in the Method Statements were sub-criteria, then the weightings should have been disclosed as they could have affected the preparation of the tenders.
"Admittedly, one could argue that there was not a true breach of transparency as long as these topics were reasonably predictable by an informed bidder and were consistent with the published criteria. I find that was true of these topics. But that argument is undermined by the fact that they are then given weightings which vary from topic to topic. It did not seem to me to be made out or indeed even argued, that the weightings for each topic were predicted or predictable by a reasonable bidder. There may not have been anything irrational about them but they were very much subjective judgments formed by the panel collectively. I find that the sub-weightings were not predictable. It seems to me therefore that on that basis the topics as I have called them beginning with "data base of costs information" under whole life costs in BO1 down to "liaison with employer/ICT" in EO2 are elements which ought to have been disclosed with their weightings to the plaintiff and other bidders."
"The defendant's attempt at a rigid stratification does not seem to me borne out by the case law of the European Court. It seems to me that the language of ATI in particular is designed to secure, as it says, that the bidders know all the elements or sub-elements which could affect their preparation of the bid.
However, having chosen to have a Framework Agreement for all those tasks it is clear that at least so far as the 39 items are concerned that they and their weightings did have to be furnished to the bidders in advance to comply with the decisions of the European Court. I find as a fact that this material, and the evidence before me, could have affected the preparation of the document. Indeed I consider it likely that it would have affected such preparation. A bidder would be bound to take it carefully into account in allocating its strictly limited number of characters in each section."
"48. A separate important issue is whether the 186 items to be found under these various 39 sub-criteria or elements or sub-elements are permissible. Although there was some brief reference in the oral argument it has not been substantially addressed in the written submissions which the court received in writing in lieu of oral submissions. Given that I am making a finding against the defendant in any event I am therefore minded not to make an express ruling in connection with them. However, to assist the parties I would indicate that I consider there is force in the evidence of Mr Rowsell that to have provided these in such detail to the bidders would have in fact undermined the efficacy of the process. One wanted to find the most economically advantageous tender bids. If you provided all 186 items even an incompetent tenderer might manage to and quite possibly would manage to put together a bid which referred to all 186 leaving the panel uncertain as to which the preferable bidder was. Although not a point I think made on behalf of the defendant it may be that the 186 are properly described as pieces of evidence for performance of the criteria or sub-criteria rather than ranking as either of those themselves. To approach it in another way, while unattracted by the defendant's attempt at a rigid classification beginning with quality and price being the only two criteria, one might, on a view which I prefer, nevertheless acknowledge that the 186 were sub-sub-criteria. Also bear in mind the approach of the Court in Lianakis which drew a distinction between award criteria and what might be described as performance criteria. They are not directly analogous but they do seem to contemplate that not everything taken into account by a panel needs to be disclosed in advance to the bidder.
49. A further distinction can be drawn between the 186 items and the 39 or 49 sub-criteria. The individual items have not been given weightings whereas the former, of course, have been given weightings. That may make their use more defensible by the defendant."
"Against that background, counsel for Morrison submitted that it is seriously arguable that, by applying the matters set out in the aide memoire and taken into the scoring sheets, the Council had in the present case applied additional criteria to the evaluation of the bids which had not been disclosed to the bidders in advance as required by the Directive and the 2006 Regulations. Against that, counsel for the Council submits that everything that was set out in the aide memoire and taken into the scoring sheets was something that was implicit within the fairly detailed criteria that were set out in the invitation to tender. Moreover, he made the point that, as can be seen from the example of Question 1, which I quoted earlier, the criteria on their face were non-exhaustive and exemplary. Accordingly, he submitted that it is not arguable that the Council has acted in breach of its obligations."
"… there is a serious issue to be tried as to whether the Council complied with the obligation to disclose the evaluation criteria in advance to prospective tenderers. I consider it arguable that it did not do so, in the same way as the Defendants in the Lettings International and McLaughlin and Harvey cases were held not to have done so."
"My reasons for concluding that the return schedule in this case, unlike the method statements considered by Silber J. in the Letting International case, are not award criteria, are as follows. First the relevant stated award criterion in that case of 'Compliance with Specification' was somewhat broad and vague and so it is not difficult to see why the judge considered that the method statements, which were much more specific, were distinct award criteria. Second, Silber J. determined that the method statements were distinct criteria by reference to the dictionary definition of 'criterion' as 'principle, standard or test by which a thing is judged, assessed or identified'. Applying that definition, it seems to me that the relevant principles or standards or tests in the present case were 'customer satisfaction' and 'price' and the return schedules were not separate principles or standards or tests but no more than (in the case of Return Schs1-15) sub-sets of those principles or standards or tests. Return Schedule 16 simply dealt with the criterion of price."
"100. Mr Coppel emphasised that what Silber J held in the Letting International case that a contracting authority is obliged to disclose any sub-criteria which not merely did affect the preparation of the tender but which could have affected that preparation, so that the authority will only be excused from failure to make such disclosure if that disclosure could not have affected the preparation of any of the tenders. He submitted that the council simply could not demonstrate that this was the case here.
101. In contrast, Mr Howell submitted that this is where the statement by the council in the ITT that 'any queries arising from the tender documents which may have a bearing on the offer to be made should be raised' was of considerable significance. In the event, none of the potential tenderers raised any query about sub-criteria or the weightings attached to them. He submitted that this showed that, in the present case, there was no need for notification of such matters, as the tenderers themselves did not consider that such further information could affect their offers.
102. It seems to me that this submission is correct: in reality it was perfectly obvious that the award criteria were going to be marked by reference to the information provided in response to the return schedules and if any of the tenderers had wanted clarification of that or of what marks would be attached to each return schedule, they would surely have asked. Accordingly I am satisfied that this is a case where within the ATI principle, there was no requirement to discloses in advance the sub-criteria or the weighting attached to each of them, because such disclosure could not have affected the preparation of any of the tenders. In the circumstances, the council was not in breach of the obligation of transparency in that regard."
(1) The contracting authority must disclose to tenderers those award criteria or sub-criteria which it intends to apply to the award.
(2) The contracting authority is obliged to disclose to tenderers any rules for the relative weighting of the selection criteria which it intends to use.
(3) The contracting authority could attach specific undisclosed weight to sub-criteria by dividing among those sub-criteria the points awarded to a particular criterion if that weighting:
(a) does not alter the criteria for the award of the contract set out in the contract documents or the contract notice;
(b) does not contain elements which, if they had been known at the time the tenders were prepared, could have affected that preparation;
(c) was not adopted on the basis of matters likely to give rise to discrimination against one of the tenderers.
(4) There is a distinction to be drawn between award criteria which are aimed at identifying the tender which is economically the most advantageous and criteria which are linked to the evaluation of the tenderers' ability to perform the contract in question.
(5) There is a level of assessment below the criteria, sub-criteria and weightings which the contracting authority may use in evaluating the award criteria which it does not have to disclose for a number of reasons. First, because it does not, on a reasonable view, introduce different or new criteria, sub-criteria or weightings. This aspect must be considered in the light of what would be reasonably foreseeable to a reasonably well-informed and normally diligent tenderer. Secondly, because it could not have affected the tenders. Thirdly, because it is not a matter aimed at identifying the most economically advantageous tender but instead is linked to the evaluation of the tenderers' ability to perform the contract in question. In each case it will be a matter of fact whether the matters alleged come, on balance, within any of those categories.
The Evaluation Table
The Scoring Table
The Model Answers
"4. Detail what they require from our ICT applications and development teams.
5. Detail what we would need to do to access their software if this is proposed by them. This should include minimum client PC hardware and software requirements.
6. Confirm that they are willing to let their staff access our applications if required. This includes the use of Vasco tokens to do so."
"6. Describe what happens when there is a signal loss.
7. Explain what can be done if the PDA solution is unavailable for a period of time for any reason."
Summary on Issue 2
Issue3: Causation of loss
"A breach of the duty owed in accordance with paragraph (1) and (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."
"The argument is that in order to be entitled to pursue a claim of any kind a bidder, in this case the contractor, has to show that were it not for the alleged breaches of the regulations, his tender would have been successful. I find it difficult to accept that submission. The purpose of regulation 47(6) is to render a breach of the regulations actionable at the suit of an economic operator who has suffered or risks suffering loss or damage as a result. In other words, it is concerned with providing a cause of action, not with establishing a precondition to the commencement of proceedings. If a tenderer seeks a remedy in damages, it will of course, be necessary for it to prove its loss at trial, but I doubt whether in every case it need go so far as to show that it would have been successful in obtaining the contract. If the breach of duty has compromised the transparency and fairness of the process as a whole, the claimant will have lost the opportunity of taking part in a properly constituted and properly operated tender process, and it is at least arguable that the loss of a significant chance of obtaining the contract is enough to found a claim. That is really what the contractor is saying in this case. In my view, therefore, regulation 47(6) does not provide a complete answer to the contractor's claim in the present cases."
"The bidder will be able to show that a breach of duty will cause him to suffer loss or damage, or the risk of loss or damage, if he had a chance (which the law recognises sufficiently good to merit consideration) that if the breach had not been committed, the contract would be awarded to it and the breach causes the bidder to lose that chance: Matra Communications SA v Home Office."
Issue 4: Remedy
"...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."
"… Member states are required to ensure that the contracting authority's decision prior to the conclusion of the contract as to the bidder in a tender procedure with which it will conclude the contract is in all cases open to review in a procedure whereby an applicant may have that decision set aside if the relevant conditions are met, notwithstanding the possibility, once the contract has been concluded, of obtaining an award of damages."
"On the other hand, it is important to bear in mind that the primary objective that the 1993 Regulations and Council Directive 92/50/EEC are intended to implement is the open and transparent award of public service contracts. Such open and transparent competition is not only in the interest of the applicant but also that of the general public. Indeed it seems to me that it might well be argued that the European jurisprudence reflected in the Remedies Directive as interpreted by the decisions such as Alcatel  ECR 1-7671 intended injunctive relief to the primary remedy. After giving the matter careful consideration I am not persuaded, given the particular circumstances of this case, that damages would be an adequate remedy."
"I see nothing in the Regulation, nor in the Remedies Directive 92/13, which justifies the submission made by Mr Carr that the effectiveness of enforcement of the Regulations requires or supports a presumption in favour of the grant of restraining relief rather than confining a provider to a claim for damages. I think the factors with which the courts are familiar are material to what is expressed to be a general discretion as to whether to grant relief and if so to decide the appropriate relief to be granted. Those factors include delay, prejudice, the adequacy or otherwise of damages and the general policy considerations to which I have referred."
"14. Where the relief is sought in respect of breaches of the Regulations...the remedies will turn on the effect in English law, including therein the relevant Community law of Regulation 29(6). That is a question to be determined in the light of Alcatel. The court's duty is to interpret legislation purporting to transpose the Directive in the light of that Directive. That very familiar proposition is to be found not least in a case shown to us by Mr Béar, Case C-106/89 Marleasing, in which, to generalise somewhat the dispositif of the European Court, the court held that a national court hearing a case which falls within the scope of a Council Directive is required to interpret its national law in the light of the wording and the purpose of that Directive."
Summary of Conclusions
(1) By failing to notify the tenderers of the weighting which they intended to apply in evaluating the individual sections in the table at paragraph 8.2.1 of the ITPD, LCC breached both the transparency provision in Regulation 4(3) and the express provision as to weighting in Regulation 30(3).
(2) There was no such breach in relation to the reference to innovation in the scores of 8, 9 and 10 in the Scoring Table or in the reference in the score of 10 to responses "being capable of exceeding expectations".
(3) The breach in relation to weighting could have affected the preparation of the tender and Mears suffered a risk of loss because of the loss of a chance of being one of the three tenderers who were selected to go through to the next round.
(4) There was a limited breach of Regulations 4(3) and 30(3) in relation to the Model Answers but no risk of loss as Mears would not have been successful in proceeding to the next round and their risk of loss comes into realms of being fanciful on this aspect.
(5) The submission that Mears' claim under Regulation 4(3) in respect of the Model Answers was out of time under Regulation 47(7)(b) is rejected.
(6) The breach of the Regulations in respect of weighting means that Mears has lost the chance of being included as one of the three tenderers. The possible remedies under Regulation 47(8)(b) are therefore setting aside decision as to which tenderers succeeded at the ITPD stage or an order damages or both.
(7) The question of remedy depends on the exercise of discretion based on a balance between the public interest in LCC proceeding with the award of contract and the private harm to Mears by not having the chance to be included in the next stage of the tender, taking account of the underlying principle that public tenders should be carried out in compliance with the Regulations. In my judgment, overall, the balance lies in favour of limiting the remedy to damages and not setting aside the procedure.