High Court dismisses procurement challenge over rejection of bid for non-compliance

The Department for Work and Pensions (DWP) did not act improperly when it exclude a non-compliant bid from a tender process, the Technology and Construction Court has found.

It had invited bids for a call-off contract under a framework agreement to provide occupational health and employee assistance services to the Department.

Bidder Optima Health submitted a pricing schedule in which some items were in excess of the framework prices and the DWP excluded it as non-compliant even though it had the highest score on quality and would otherwise have won.

Optima alleged that its disqualification was in breach of the principles of transparency and equal treatment.

Mr Justice Freedman was asked to determine whether the tender documentation clearly and transparently set out the consequences of exceeding the framework prices and whether the DWP had acted unlawfully by excluding Optima rather than - for example - reducing its prices to the maximum framework prices, waiving the non-compliances, or seeking clarification.

He found against Optima, holding that it was clear bids with excess prices might be excluded and that the DWP had lawfully excluded the company.

Monckton Chambers - barristers from which acted for both sides - commented: “The judgment contains an in-depth consideration of the relevant case law along with a detailed application of the principles to the instant case.

“It will therefore be of widespread interest to both economic operators and contracting authorities as regards the correct treatment of non-compliant tenders, the circumstances in which exclusion of a tender is permitted, and in particular the application of the principles of transparency and equal treatment in the context of errors in a pricing schedule for a call-off under a framework agreement.”

Freedman J said Optima had argued that its non-compliance on bid prices amounted to only £600 and so the DWP should have been lenient.

It said the DWP did not exercise discretion over its exclusion, but instead felt compelled to disqualify the bid due to its understanding of the expression ‘discounted’ in the bidding process, and that even if that meaning was correct, the DWP did not consider waiving the right to disqualify for non-compliance.

“In my judgment, those arguments must fail,” Freedman J said. “The defendants did exercise the discretion in favour of proceeding with the disqualification. That can be demonstrated in a number of ways.”

He also rejected Optima’s argument that there was a failure to evidence the decision in writing so it could be tested whether the discretion was exercised.

It also said the extent of the redaction for legal professional privilege was such that it was impossible to identify the basis for accepting one option and rejecting the others.

“In my judgment, there was adequate evidence to evaluate the basis for the rejection of the bids,” Freedman J said.

“First, it is possible to identify the options by reference to the contemporaneous documents. Second, it is possible to see within the documents the outline reasons for rejecting the options.”

He said there was “nothing in Optima’s complaint about a lack of reasoning for DWP’s decision”.

Freedman J also rejected Optima’s submission that there was nothing wrong per se in a tenderer changing its bid provided it did not infringe equality of treatment and transparency.

“The case law is that it generally does lead to an infringement if the clarification is about the merits of the tender such as price or quality features on which tenders are compared because prior to the clarification, there was no effective bid for the item in question,” he said.

“After the clarification, there is for the first time a potentially effective bid for the item in question to the detriment of the compliant tenderer at least. Further, there is the real danger that the price provided might be a change of bid in a different sense, namely departing from what had been originally intended in order to give the tenderer the best opportunity to win the bid.”

The judge said the bid requirements “were not complex” and that Optima had “embarked upon a copy and paste method, which was clearly unsatisfactory”, with “insufficient attention to checking” and there was no reason why Optima could not have produced a complaint bid, as its rival PAM did so.

Freedman J also dismissed arguments that the DWP had acted irrationally.

Mark Smulian