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You are here: BAILII >> Databases >> Supreme Court of Ireland Decisions >> Advanced Totes Limited -v- Bord na gCon [2006] IESC 17 (23 March 2006)
URL: http://www.bailii.org/ie/cases/IESC/2006/S17.html
Cite as: [2006] IESC 17, [2006] 3 IR 77, [2006] 2 ILRM 425
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Judgment Title: Advanced Totes Limited -v- Bord na gCon Composition of Court: Mc Guinness J., Hardiman J., McCracken J., Kearns J., Macken J. Judgment by: Mc Guinness J. Status of Judgment: Approved
Outcome: Allow And Set Aside | ||||||||||||||
- 37 - THE SUPREME COURT No. 062/2005 McGuinness J. Hardiman J. McCracken J. Kearns J. Macken J. BETWEEN ADVANCED TOTES LIMITED APPELLANT/APPLICANT AND BORD NA gCON RESPONDENT AND AUTOTOTE WORLDWIDE SERVICES LIMITED NOTICE PARTY Judgment of Mrs Justice McGuinness delivered the 23rd day of March 2006 This appeal concerns the public procurement rules of the European Union as applied to a contract for the provision of totalisator services at a number of greyhound racing stadia operated by the respondent. The appellant appeals against the judgment and order of the High Court (Murphy J.) made and delivered on the 20th December 2004. The appellant, Advanced Totes Limited, is a private limited company registered in the United Kingdom which engages in the business of providing hardware, software, consultancy and other services needed to install and operate a totalisator service. The respondent was established under the Greyhound Industry Act 1958 and is a commercial semi-state body having responsibility for the control, regulation, management and development of the Irish Greyhound Industry. Pursuant to its responsibilities and powers the respondent is licensed to operate totalisator facilities at the various greyhound stadia which it operates within the State. The notice party, Autotote Worldwide Services Limited, is the company to whom the respondent decided to award the contract the subject matter of these proceedings in or about September 2003. FACTUAL BACKGROUND The factual background to the proceedings is set out in detail in the judgment of the learned trial judge. It may be summarised as follows. Owing to the status of the respondent as a public body and the value of the contract in question, the respondent, under E.U. Council Directive 18th June 1992 relating to the co-ordination of the award of public service contracts (“The Services Directive”), was obliged to advertise the contract in the Official Journal of the European Union. This advertisement was published in the Official Journal on 15th May 2003. Intending tenderers for the provision of this totalisator contract were furnished with Invitation to Tender documentation. The appellant in fact had received this document by e-mail initially on 11th April 2003. Clause 4 of the Invitation to Tender document set out the respondent’s requirements. Since the nature of these requirements is a major issue in this appeal they will be referred to in detail later in this judgment. Four parties tendered for the contract: (I) The appellant, Advanced Totes Limited; (II) Amtote; (III) Autotote (the Notice Party); (IV) Data Tote Limited. The respondent board established an Award Committee to adjudicate upon the tenders. The members of that committee were Mr Michael Foley, Mr Martin Doolan and Ms Patricia Griffin. Prior to the awarding of the main contract, at a date before 29th July 2003, the respondent had previously awarded the totalisator contract for the Galway Greyhound Racing Stadium to the appellant on a “purchase” basis. Between 29th July 2003 and 5th August 2003 each of the four tenderers made a presentation to the Award Committee of the respondent in respect of the tender which it had submitted. A meeting of the Award Committee was held on 14th August 2003 to evaluate the four tenders received. Somewhat differing accounts of the following events were given in both affidavit and oral evidence before the High Court. It appears to be common case that the members of the Award Committee were in agreement that the tender by Amtote was the most technically suitable but that it could not be accepted because of its high price. It appears from the evidence both of Mr Paul Simpson, Managing Director of the appellant, and of Mr Martin Doolan of the Award Committee that in or about 2nd September 2003 Mr Doolan telephoned Mr Simpson and informed him “off the record” that a decision had been made to recommend the award of the contract to the appellant and that this decision was to be conveyed to Mr Pascal Taggart, chairman of the respondent. Mr Michael Foley, however, particularly in his oral evidence in the court below, denied that any such decision in favour of the appellant’s tender had been made. On 4th September 2003 Mr James Gilmore, managing director of Autotote, wrote a letter to Mr Foley informing him, inter alia, that Autotote was willing to review the pricing element of its tender with a view to increasing its competitiveness. A number of days later, Mr Foley, who had been away, was made aware of this letter. He then telephoned Mr Gilmore. The appellant in its proceedings alleged that in the course of this telephone call Mr Gilmore was given information about the pricing element of the appellant’s tender; this was forcefully denied by Mr Foley. The Award Committee apparently sought legal advice as to whether it could negotiate on price with an individual tenderer and was advised that it would be necessary to seek a re-tender on price from all four tenderers. By letter dated 11th September 2003 the respondent accordingly sought such re-tenders, which were provided by all four tenderers. The Award Committee evaluated the re-tenders at a meeting on 25th September 2003 and at a further meeting on 26th September 2003 the Committee decided to award the contract to the notice party, Autotote. This was notified to the appellant. The appellant made enquiries as to the reason why the contract was not awarded to Advanced Totes Limited. By letter dated 7th October 2003 Mr Foley on behalf of the respondent informed Mr Simpson of the appellant company that the respondent had regard to a number of considerations in rejecting the appellant’s tender, as follows:
(3) That you did not have operating self-serving terminals. (4) The fact that you had no loyalty card system in operation. (5) The fact that your hand-helds did not have a GPRS Strategy.” THE PROCEEDINGS By Notice of Motion dated the 22nd December 2003 and returnable for 26th January 2004 the applicant sought the following reliefs: 1. A declaration that, in making the decision to award the contract the subject matter of the proceedings herein to Autotote Worldwide Services Limited (“Autotote”), the respondent failed to comply with the requirements of European Union Law on Public Procurement and in particular Council Directive of 18th June 1992 relating to the co-ordination of procedures for the award of Public Service contracts (92/50EEC) as amended; 2. A declaration that in making the decision to award the contract the subject matter of the proceedings herein to Autotote the respondent failed to comply with the requirements of Irish Law on public procurement and in particular the European Communities (Review Procedures for the Award of Public Supply, Public Works and Public Services Contracts) (No. 2) Regulations 1994 as amended and the European Communities (Award of Public Service Contracts) Regulations 1998 as amended; 3. A declaration that the contract the subject matter of the proceedings herein is void; 4. An order of certiorari quashing the decision of the board to award the contract which is the subject matter of the proceedings herein to Autotote. The applicant also sought damages but this issue does not appear to have been pursued to any great extent in the court below. The details of the contract in question and the grounds upon which the applicant relied in seeking relief were set out extensively in the grounding statement of the applicant also dated 22nd December 2003. A Statement of Opposition was filed by the respondent on 4th February 2004. The evidence before the court is set out in some detail in the judgment of the High Court. A majority of the evidence dealt firstly with Mr Doolan’s telephone call to Mr Simpson in early September 2003 informing him that the committee was to recommend that the applicant should be awarded the contract and secondly with the issue as to whether Mr Foley in his telephone conversation with Mr Gilmore had revealed sensitive information to him regarding the price of the appellant’s tender. The evidence also raised issues concerning the formulation of the respondent’s Invitation to Tender document and in particular whether the respondent failed to list the criteria for the awarding of the contract in descending order of importance in an appropriate way. The applicant claimed that an important and indeed crucial factor in the awarding of the contract to Autotote was that Autotote in its tender offered to host the central communications hub of the computerised tote system, whereas the applicant’s tender envisaged this hub being hosted by the respondent itself. The applicant alleged that this criterion appeared to have been of central importance but was not specifically listed in the award criteria. The respondent’s evidence was that the general phraseology of the tender documentation was sufficiently clear for the position to have been understood by all tenderers. THE DECISION OF THE HIGH COURT In his judgment the learned trial judge, having summarised the evidence, set out the relevant provisions of the Council Directive of 18th June 1992 relating to the award of Public Service contracts (92/50/EEC) and of the Regulations made thereunder. He then referred to both European and Irish Case law, concluding in particular that the core principles which emerged from the legislation and case law were those summarised in the case of SIAC v Mayo County Council [2001] E.C.R. 1-7725 and SIAC v Mayo County Council [2002] 2 ILRM 401. The correctness of this view was accepted by the parties. Prior to dealing with the law under the Directive, however, the learned trial judge dealt with the factual issues which had arisen between the parties. He pointed out that the role of the Award Committee was not to decide but to recommend a tenderer to the respondent Board which was the Contracting Authority. He did not find it necessary to resolve the conflict of evidence between Mr Foley, Mr Doolan and Mr Simpson, but felt that the conflicts in their evidence “would not appear to be critical” (page 43 of judgment). He concluded: “There was no evidence of any decision to recommend much less of a decision to accept the applicant’s tender.” (Page 43 of judgment). The decision that was made was to invite a re-tender on price. The learned judge was also satisfied that there had been no improper disclosure regarding price by Mr Foley to Mr Gilmore. Mr Simpson’s allegation in that regard was “un-substantiated and speculative” (page 44). The judge felt that the amount of contact between the Board and the parties tendering during the tender process was to some extent imprudent and lacking in propriety but that “any such imprudence or impropriety (if such there was) was resolved by the subsequent invitation to re-tender.” (Page 45). The Board had received legal advice concerning the re-tendering and was correct in following that advice. Finally the learned trial judge dealt with the issues arising from the Award criteria set out in the tender documents. At page 47-48 of his judgment he stated:- “The letter of 7th October 2003 listed five considerations which had been advised to the applicant who argued did not correspond with the invitation to tender of 15th May 2003 (sic). The respondent had argued that all of these were expressed or, at least implied in paragraph 4.4 of the invitation to tender. The court accepts that, while it is difficult to reconcile the considerations with the criteria, as the tender was for a totaliser service to be provided rather than a specific specified hardware product, some flexibility in design and implementation was, not alone understandable, but may also have been desirable. The invitation to tender required proposals to be ‘forward looking’ as well as having certain specific capabilities. Any proposed system was to have been ‘robust and functional at all times’.” The judge continued: “In this regard, while the location of the hub was not specified and no preference was indicated it is clear that the proposals on streamlining the existing infrastructure would have to be costed and would be assessed and evaluated by the respondent.” The learned judge concluded:- “It is not clear that all of the strict requirements of the Directives have been met. There would appear to be no ranking of criteria in descending order of importance, for example. It does not seem to breach the principle of equal treatment or of transparency.” In the light of these conclusions the court refused the relief sought by the applicant. THE NOTICE OF APPEAL The applicant filed a notice of appeal on 16th February 2005. Sixty four somewhat repetitive grounds of appeal are set out in the notice. The first ground set out summarises many of the more detailed grounds as follows:- “The learned trial judge erred in law and/or in a mixed question of law and fact in refusing to grant the relief sought despite the manifest breaches of the requirements of public procurement law on the part of the respondent, a number of which breaches are clear from the findings of the trial judge.” In a number of later grounds emphasis is placed on the question of the internal or external communications hub and the failure to set out the award criteria in descending order of importance in accordance with the Directive. A number of other grounds claim that the trial judge erred in the manner in which he dealt with the evidence concerning the contacts between the parties during the tender process. In particular Ground 34 states:- “The learned trial judge erred in fact and/or in a mixed question of law and fact in concluding that the statements of fact and belief in paragraph 50 of the first affidavit of Mr Simpson are unsubstantiated and speculative.” THE APPLICABLE LAW The Council Directive 92/50/EEC of 18th June 1992 relating to the co-ordination of procedures for the award of public service contracts (“the Services Directive”) sets out mandatory procedures governing public service contracts which are defined as being contracts for pecuniary interest concluded in writing between a service provider and a contracting authority. Contracting authorities are defined as meaning the State, regional or local authorities, bodies governed by public law, associations formed by one or more of such authorities or bodies governed by public law. (Article 1) Chapter 3 of the Services Directive deals with criteria for the award of contracts. Article 36 provides as follows:
(b) the lowest price only.
Article 4 provides:- “4.(1) In awarding Public Service contracts, a Contracting Authority, where appropriate, shall apply procedures adapted to the provisions of the Council Directive, and shall follow the relevant procedures, if any, set out in the Council Directive…. As noted by the learned trial judge the core principles which emerge from the legislation and the case law concerning Public Service contracts are summarised in the case of SIAC Construction Limited v Mayo County Council E.C.R.1-7725 and [2002] 2 ILRM 401. This is accepted to be the position by the parties. That case concerned a dispute where the County Council had advertised for tenders for a Public Works contract to be awarded by open procedure and involving, inter alia, the laying of sewers, storm overflows, ventilating columns, stone water drains, rising mains and water supply pipes. SIAC Construction Limited had submitted the lowest price tender. The County Council appointed a consulting engineer to judge the tenders. The engineer, while accepting that the three lowest tenders were equal from the point of view of their technical merit, expressed a number of reservations concerning SIAC’s tender. In his report he concluded that another tenderer, Mulcair, had submitted a tender that was “more balanced” than that of SIAC, and that Mulcair’s tender might give better value for money and might even cost less. The County Council accordingly entered into a contract with Mulcair. SIAC instituted two separate proceedings in the High Court. Both sets of proceedings were dismissed by the court. SIAC appealed, submitting that the County Council was required to accept the lowest priced tender. Since the County Council had accepted that all tenderers had the requisite technical merit the only relevant criterion could be cost which had to be understood as synonymous with the tender price. Against this the County Council claimed that it was entitled to exercise a discretion and to award the contract on the basis of a recommendation from its consulting engineer as to which tender the latter judged to have been most advantageous in respect of costs and technical merit. This court stayed the appeal proceedings and submitted a question to the Court of Justice for a preliminary ruling. In summary the question submitted was whether the County Council was entitled to act as it did. The Court of Justice held that the procedure used by the County Council was permissible, but only “on condition that the transparency and objectivity of the procedure are respected, which presupposes that the criterion is mentioned in the contract document or contract notice, that it is there formulated in such a way as to allow all reasonably well informed and normally diligent tenderers to interpret it in the same way, and that the adjudicating authority must keep to that interpretation throughout the procedure and apply the criterion in question objectively and uniformly to all tenders.” On page I.7727 at paragraph 39 to 42 of the Judgment of the Court it is stated:
40. However, in order for the use of such criterion to be compatible with the requirement that tenderers be treated equally, it is first of all necessary, as indeed Article 29(2) of Directive 71/305, as amended, provides, that that criterion be mentioned in the contract documents or contract notice.
The Court of Justice held that in the context of a public contract for the provision of urban bus transport services the contracting authority may take into consideration ecological criteria such as the level of nitrogen oxide emissions or the noise level of the buses provided that they are linked to the subject matter of the contract, do not confer an unrestricted freedom of choice on the authority, are expressly mentioned in the contract documents or the tender notice, and comply with all the fundamental principles of community law, in particular the principle of non-discrimination. SUBMISSIONS OF THE PARTIES Comprehensive written submissions were provided to the court by both the applicant and the respondent. In oral argument before this court senior counsel for the applicant delineated two key issues: 1. The circumstances in which the re-tender on price was sought. 2. The failure clearly to state the criteria for the award of the contract. In regard to the first issue Mr Hogan argued that the original decision to award the contract to the applicant, as stated by Mr Doolan, had been overturned due to the letter of 4th September 2003 from Mr Gilmore to Mr Foley, the subsequent telephone conversation between Mr Gilmore and Mr Foley, and the implied improper disclosure of price information regarding the applicant’s tender to the notice party. Mr Hogan presented a detailed analysis to the judgment of the High Court and was critical of what he described as the failure of the learned judge to resolve the conflict of evidence between the various parties and to make findings in that regard. Mr Hogan contended that the contact between the parties during the tender process was indefensible in public procurement terms. In regard to the second issue Mr Hogan submitted that the actual criteria on which the contract was awarded were in the main those set out by Mr Foley in his letter of 7th October to the applicant explaining why the applicant was not awarded the contract. These criteria had not been clearly stated, and in some cases had not been stated at all, in the award criteria in the tender document. Counsel laid particular stress on the question of the internal or external communications hub. Mr Foley had given as a reason that the applicant did not get the contract “that your proposal involved the Board hosting and managing the IT infrastructure”. The applicant, Mr Hogan said, would have been quite capable of providing an external hub; Mr Simpson’s evidence was to this effect and in addition his evidence was that in the course of the business relationship which already existed between the applicant and the respondent the respondent had indicated a preference for itself operating the hub infrastructure. Senior counsel for the respondent, Mr McCann, submitted that while minor criticisms might be made of the judgment of the High Court, the learned trial judge had made the findings necessary to decide the case and that these findings were soundly based on the evidence before the court. It was clear that in fact no decision to recommend the award of the contract to the applicant had been made by the award committee as a whole. The third member of the committee, Ms Griffin, who was in fact the member with the greatest expertise in the practical side of the technicalities involved, had no knowledge of any such decision. There was in fact no evidence that Mr Foley had given information to Mr Gilmore concerning the pricing of the applicant’s tender and the learned trial judge was fully justified in dismissing that allegation in the way he did. In his submissions on these aspects of the case Mr McCann relied on the well-known decision of this court in Hay v O’Grady 1 I.R. 210. Mr McCann also pointed out that the applicant had raised no objection to the re-tendering procedure at the time. As regards the award criteria, Mr McCann accepted that the external hub was a preference for the respondent but argued that the evidence was that it was merely a factor in the decision. The matter of external or internal infrastructure could be implied or inferred from the criteria as set out in the tender documents. The tender documents set out the award criteria, as was stated by the Court of Justice in the SIAC case, “in such a way as to allow all reasonably informed and normally diligent tenderers to interpret them in the same way.” CONCLUSIONS 1. The circumstances in which the re-tender on price was sought – the conflict of evidence. The learned trial judge had before him both the comprehensive affidavit evidence and the oral evidence in cross-examination and re-examination of Mr Simpson of the applicant company, Mr Gilmore of the notice party company, and all three members of the Award Committee appointed by the respondent Board. Counsel for the applicant in his submissions to this court was strongly critical of the trial judge’s failure to resolve the conflict of evidence between the two members of the Award Committee, Mr Dooley and Mr Foley, and of the trial judge’s statement that the differences in their evidence might have been a misunderstanding and did not appear to be critical (page 43 of judgment). In this context, however, it is essential to have regard to the positive findings of fact made by the learned trial judge together with the evidence on which these findings were based. Firstly the trial judge held that the role of the three person Award Committee was not to decide on the award of the contract but to recommend (or decline to recommend) any of the tenderers to the respondent Board. This conclusion was based on the clear documentary evidence of both the notice advertising the tender in the Official Journal and the Invitation to Tender documents themselves. Any decision of the Award Committee could not constitute a binding decision in regard to the contract. The position was also made absolutely clear in the re-examination of Mr Foley by Mr Clarke, senior counsel for the respondent (Day 3 page 64-65, questions 245-253):
A.: Mr Foley: O.K., well, the Board, we are governed on the executive by a code of corporate governance. The code empowers the chief executive to make decisions in relation to contracts up to €100,000. All other matters have to be referred to the Board. So in respect of this particular process, the Board empowered the Committee to make a recommendation to the Board for sanction by the Board. I or Martin Doolan could not make that recommendation ourselves. That was to be a recommendation by the Committee. The Committee made that recommendation following its decision of the 24th and that was ratified by the Board. 246. Q.: So the Committee’s role was to make a recommendation to the Board?
Q.: But the final decision remained one for the Board. A.: The final decision remained one for the Board.
Q.: Do you attend Board meetings in your capacity? A.: I do. 252. Q.: Did the Board ever consider – when I say the Board, I mean the Board in the formal sense of the word, the members of the Statutory Board, did the Board ever consider anything to do with this tender between the start of the process and receiving the recommendations of the Committee in late September? A.: No. 253. Q.: So far as the Statutory Board is concerned, did not do anything during this process at all; is that correct? A.: That is correct.” It was suggested on behalf of the applicant that any reference from the Award Committee to the Board was a mere formality. Whether this was true or not it cannot in my view affect the undoubted fact that the respondent Board was the contracting party and that the learned trial judge’s analysis was entirely correct. Secondly the learned trial judge held that the common position on the Award Committee following its meeting 14th August 2003 was that the Committee favoured the Amtote tender, considered that Amtote’s price was too high and wished to re-negotiate on price. There had been no decision to recommend any tenderer; the only decision was, subsequent to legal advice, the decision to seek re-tenders on price from all four tenderers. In holding as he did the trial judge had before him the evidence of Mr Foley, who was firm in his view that the Award Committee had not met subsequent to the meeting of 14th August and that therefore no decision to recommend had been taken (Day 3 Question 9). He stressed the importance of Ms Griffin in the making of any decision to recommend. At Day 3, Question 35-36 there was the following exchange between Mr Hogan and Mr Foley:-
In Ms Griffin’s own evidence she stated firmly that she did not consider that a decision had been made to award the contract to ATL (Day 2, Questions 359-360 and 380).
A.: No I was not. 360. Q.: But you accept, nonetheless, that a decision was made in early September to award the contract to ATL? A.: No. 361. Q.: You do not accept that? A.: No. I don’t. 380. Q.: But are you saying so far as you were concerned, no decision had been made to award the contract? A.: That is correct.” Again at Day 2 questions 398-401 the evidence was: “398. Mr. Hogan: Q.: Now, it may well have been – it is not for me to say – I am quite sure that you would feel aggrieved that you had not been involved in this or that you had not been told, as you say you were not, but would you not further agree with me that if Messrs Doolan and Foley, two of the three members of the Committee had made this decision already that, in all probability, all other things being equal, that ATL would have got the contract?
A.: Maybe so, but I feel that I should have been consulted. Resulting from the meeting on the 14th, the position that I…(interjection).
In re-examination by Mr Clarke, Ms Griffin reaffirmed this position. Thus, in deciding as he did, the learned trial judge had, it appears to me, ample evidence before him on which he could base his conclusions. The approach of this court to conclusions reached by a trial judge on the evidence, in particular oral evidence, before him has been authoritatively set out in the well known judgment of this court in Hay v O’Grady [1992] 1 I.R. 210, on which Mr McCann has correctly relied on behalf of the respondent. In that case in a much quoted passage McCarthy J. articulated the position of this court on a trial judge’s findings of fact as follows: “The role of this court, in my view, may be stated as follows:- 1. An appellate court does not enjoy the opportunity of seeing and hearing the witnesses as does the trial judge who hears the substance of the evidence but, also, observes the manner in which it is given and the demeanour of those giving it. The arid pages of a transcript seldom reflect the atmosphere of a trial. 2. If the findings of fact made by the trial judge are supported by credible evidence, this Court is bound by those findings, however voluminous and, apparently, weighty the testimony against them. The truth is not the monopoly of any majority. 3. Inferences of fact are drawn in most trials; it is said that an appellate court is in as good a position as the trial judge to draw inferences of fact (see the judgment of Holmes L.J. in “Gairloch” The S.S., Aberdeen Glenline Steamship Co. v Macken [1899] 2 I.R. 1, cited by O’Higgins C.J. in The People (Director of Public Prosecutions) v Madden [1977] I.R. 336 at page 339]. I do not accept that this is always necessarily so. It may be that the demeanour of a witness in giving evidence will, itself, lead to an appropriate inference which an appellate court would not draw. In my judgment, an appellate court should be slow to substitute its own inference of fact where such depends upon oral evidence or recollection of fact and a different inference has been drawn by the trial judge. In the drawing of inferences from circumstantial evidence, an appellate tribunal is in as good a position as the trial judge.” It is clear that in the present case the learned trial judge’s finding that no decision to recommend an award had been reached by the Award Committee either at its meeting of 14th August or in the period prior to the issuing of the invitation to re-tender on price and his conclusion that the only decision reached was the decision to seek re-tenders on price were based on amply sufficient credible evidence. In my view this court should not interfere with these conclusions. Similarly I would not disturb the conclusion of the learned trial judge that there was in reality no credible evidence to support the allegation that Mr Gilmore of Autotote wrongly received confidential or sensitive information about the pricing of the applicant’s tender from Mr Foley. This allegation was based on pure suspicion arising from the fact that Mr Gilmore and Mr Foley had a telephone conversation in early September 2003 in which there may have been a fleeting reference to price and from the fact that the eventual tenders of Autotote and the applicant appear to be similarly priced. On behalf of the applicant it was alleged that this could not have been a coincidence but other equally credible evidence suggested that the range of possible competitive pricing of such a contract was in fact quite small and that a coincidence of pricing was by no means peculiar. There was, in fact, as was held by the learned trial judge, no substantive evidence of improper disclosure regarding pricing. As a general rule, however, I would also entirely agree with the opinion of the learned trial judge that it would have been more prudent to decline any contact during the tender period except for the purpose of clarification (at page 44 of judgment). 2. THE CRITERIA FOR THE AWARD OF THE CONTRACT – THE “HUB” ISSUE The respondent Board’s requirements under the proposed contract were set out in section 4 in the Invitation to Tender documentation as follows:-
2. The totes at each of the tracks not included as part of this tender will continue to be owned and operated by the Board. It is a requirement that these totes continue to interface with whatever tote operates at Shelbourne Park and Harolds Cross for the purposes of facilitating inter-track betting. Similarly, the system at these Dublin tracks must be capable of co-mingling pools from the Euro-Off Track hub and from other tote providers. 3. As part of this tender the Board is open to proposals and suggestions on how its existing tote infrastructure over the seventeen stadia may be streamlined. 4. Proposals should be forward looking and the technology specified should be easily adaptable to enable the Board to develop its existing markets and expand into new markets. Specifically any system proposed should be capable of the following: (I) Enabling a track to act as a host or a guest. (II) Interfacing with the totes of other providers. (III) Data from the system should be able to electronically interface with the Board’s tote database. (IV) Tracking player details to enable the Board to offer a royalty reward scheme. (V) Logging all meeting activity. (VI) Providing a management information system (MIF) to monitor a real time activity. (VII) Providing detailed analysis reports for each meeting. (VIII) Offering a full complement of betting pools excluding exotics and jackpots. A list of pools covered should be provided. (IX) Complying fully with totaliser regulations operated by the Irish Greyhound Board. (X) Offering hand-held and stand-alone self-serve units. (XI) Offering individual betting terminals for selected customers. (XII) Facilitating credit betting. (XIII) Offering a web interface to a betting platform.”
2. Where the contract is to be awarded to the economically most advantageous tender the Contracting Authority shall state in the contract document or in the tender notice the award criteria which it intends to apply, where possible in descending order of importance.” In the case of the tender in question, therefore, there was a mandatory requirement to set out the award criteria. Paragraph 1(a) of Article 36 indicates the type of criteria that are envisaged under the Directive; they indicate a detailed and comprehensive list. The criteria are to be set out “where possible” in descending order of importance. There seems to be little reason why it would not be possible for the proposed criteria in the present case to be set out in descending order of importance. As was pointed out earlier in this judgment, Mr Foley on behalf of the respondent wrote to Mr Simpson of the appellant company on 7th October 2003 informing him of the considerations to which the respondent had regard in rejecting he appellant’s tender. Those were listed as follows:
(3) That you did not have operating self-service terminals. (4) The fact that you had no loyalty card system in operation. (5) The fact that your hand-helds did not have a GPRS Strategy.” The letter went onto state:- “We also specifically advised you that you would create additional management resource issues for the Board. I should put on record that the saving to the Board in the Autotote proposal is significantly in excess of €300,000 over the life of the contract. Your assertion that this was mainly attributable to staff savings is without foundation and incorrect.” In the appellant’s submissions both to the High Court and to this court reference was made to a large number of aspects of the Award Criteria as set out in the Invitation to Tender documentation. It was alleged that these were significantly different from the criteria actually applied by the respondent in awarding the contract. The whole procedure, the applicant argued, was lacking in transparency and was neither in accord with the requirements of Article 36 of the Directive nor in accordance with the principles set out in the SIAC case. The greatest emphasis, however, was placed on the issue of the management of the IT infrastructure – the internal or external hub. This was particularly so in the case of the applicant’s oral submissions to this court. From Mr Foley’s letter it is clear that the fact that the applicant’s tender did not provide for the external hosting of the IT infrastructure played an important part in the rejection of the applicant’s tender. From the oral evidence before the court below it became very clear that the “management issues” referred to in Mr Foley’s letter were management issues that would arise from the operation of an internal hub by the respondent. In addition it became clear that the “savings to the Board” in Autotote’s proposal arose because Autotote had proposed an external hub. The issues arose in the cross-examination and re-examination of a number of witnesses, in particular of Mr Doolan and Mr Foley. On Day 2, page 157 (questions 798 to 808) Mr Clarke S.C. re-examined Mr Doolan as follows:-
A. Yes. 801 Q. Were there any other financial differences between the two proposals on matters that had a direct financial impact, if you like? A. Apart from the ones I just mentioned? 802 Q. Apart from those, yes. A. No, I would say that would include them. Obviously if we were to have the hub hosted outside by a third party, such as the existing racing office system with EIRCOM in City West, then that would be another way of doing it and that would add significant costs as well. 803 Q. Yes, but as I understand it, the basic facts were that Autotote was prepared to host its own hub and pay the costs of posting its own hub? A. Yes. 804. Q. The Advance Totes bid required you to host the hub? A. Yes, it did, 805 Q. And you have said to us that you felt that would have been a cost to the Board? A. That would have been a cost to the Board. 806 Q. And, therefore that that would have to be factored into determining which was the most – the best financial deal from the Board’s point of view? A. It would. 807 Q. Of what order of magnitude did you consider these costs to be. The cost of hosting the hub yourself? A. I think we worked it out at something in excess of €300,000. 808 Q. Now that figure, I think, is mentioned in your notes of the telephone conversation and it varies – and in the letter of the 7th October, that is where that figure came from? A. Yes.” “It was not specifically important. What was relevant was you had to weigh up two things – if it was external and if it was internal. If it was internal, there was going to be added costs in terms of resource requirements, in terms of staffing requirements and, to some extent, some elements of commercial risk by taking on board something and managing it. But it was not important per se to have it internal or external. It was a case of weighing up the advantages both and taking the one which was more economically advantageous. So, therefore, if a proposal came in to me, if it was to be an internal hub and was significantly cheaper and so much cheaper that I could put in the labour, put in the IT infrastructure, put in a clean room, then, of course, I would have considered it.” Mr Foley went on to suggest that Mr Doolan had underestimated the cost of maintaining an internal hub as he had omitted to include the costs of the necessary “clean room” and a full-time IT programmer. He accepted that if everything was equal the Board had a preference for an external hub. In reply to re-examination by Mr Clarke (Day 3, questions 283-287) Mr Foley reiterated his view that Mr Dooley’s figure of €300,000 was an under-estimate on the grounds of the two factors that a clean room would have to be provided and that at least one full-time IT person would have to have been employed. The criterion of the external or internal hub was referred to in the evidence of other witnesses, but it seems crystal clear from the evidence of both Mr Doolan and Mr Foley, who themselves constituted a majority of the Award Committee, that this issue was of very considerable importance on grounds of both convenience and cost, and that it played a large part in the respondent’s decision to award the contract to Autotote. While Mr Foley asserted that if a tenderer proposing an internal hub had proffered a sufficiently low price to off-set the cost of the internal hub all things might have been equal, this proposition has, in the light of the financial figures and the physical requirements, a distinct air of unreality. Taking both the documentary and the oral evidence into account, it appears to me that the location of the IT communications hub was a criterion of considerable importance in the award of the contract. Both counsel for the respondent and the respondent’s witnesses argued that Clause 4 in the Invitation to Tender documentation which required that “proposals should be forward looking and the technology specified should be easily adaptable to enable the Board to develop its existing markets and expand into new markets” would have made the IT criteria clear to “reasonably well informed and normally diligent tenderers”. In this context, however, this court must have regard to the entire of the condition set down in the judgment of the Court of Justice in the SIAC case. The condition laid down by the Court of Justice was:
In his judgment the learned trial judge accepted, in regard to the letter of 7th October 2003, that it was “difficult to reconcile the considerations with the criteria”. He went on to note that while the location of the hub was not specified and no preference was indicated, he felt that it was clear that the proposals on streamlining the existing infrastructure would have to be costed and would be assessed and evaluated by the respondent (page 48 of judgment). Despite the fact that in the learned judge’s view it was not clear that all the strict requirements of the Directives had been met and that there appeared to be no ranking of criteria in descending order of importance, he concluded that the tender procedure did not seem to breach the principle of equal treatment or of transparency. For the reasons set out above I consider that the learned trial judge erred in this conclusion. The necessary requirements of Article 36 of the Services Directive were not met in the Award Criteria set out in the Invitation to Tender documents. The criterion of the internal or external IT communications hub was not even mentioned, yet alone listed in its proper ranking of importance. Neither do I consider that, as laid down in the judgment in the SIAC case, the criterion was mentioned in the contract document or contract notice or was formulated in such a way as to allow all reasonably well informed and normally diligent tenderers to interpret it in the same way. In my view the procedure was in this aspect seriously lacking in necessary transparency. I would allow the appeal on this ground. It is unnecessary to deal with the matters raised by the applicant in connection with other criteria of the Award. Advanced Totes Limited | ||||||||||||||