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||Neutral Citation Number:  EWHC 930 (Ch)
||Case No: HC09 C00498
IN THE HIGH COURT OF JUSTICE
||Royal Courts of Justice
Strand, London, WC2A 2LL
B e f o r e :
MR JUSTICE DAVID RICHARDS
Mr Andrew Henshaw (instructed by Watson, Farley & Williams) for the Claimant
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
HTML VERSION OF JUDGMENT
Crown Copyright ©
Mr Justice David Richards :
- In this action J B Leadbitter & Co Limited claims that its tender has been wrongly excluded from a procurement process being undertaken by the defendant Devon County Council (Devon CC) on behalf of public bodies in the South West of England.
- The claimant is a member of a substantial group of construction companies. The group has an annual turnover of nearly £350m and with long experience of public sector contracts which form the major part of its business.
- The procurement process in issue relates to a 4–year framework agreement under which construction projects may be procured by local authorities and other public bodies in the South West. The framework agreement, and sometimes the consortium of public bodies promoting it, is referred to as Construction Framework South West (CFSW). The anticipated start date for the framework agreement is 1 June 2009. Devon CC is acting on behalf of the participating bodies, including itself, in the procurement and administration of the framework agreement. The number of contractors to be chosen to participate in the framework agreement is not fixed but is anticipated to be about 12. Inclusion in the framework does not guarantee the award of any contract nor does it provide exclusivity to the participants, but in practice it is likely to enhance the prospects of business with participating public bodies. The tender process is detailed and complex, and the tenderers, which include many of the best-known national construction companies, have been prepared to devote considerable time and expense to the preparation of their tenders.
- The relevant legal framework to the tender process is provided by The Public Contracts Regulations 2006 (SI 2006 No 5) (the Regulations) implementing Directive 2004/18/EC of the European Parliament and of the Council of 31 March 2004 on the co-ordination of procedures for the award of public works contracts, public supply contracts and public service contracts (the Directive).
- Devon CC's contract notice was published in the supplement to the Official Journal of the European Union on 24 July 2008, inviting expressions of interest. 25 contractors, including the claimant, were subsequently invited to tender. The Invitation to Tender (ITT) was issued on 26 November 2008. It specified 12 noon on 16 January 2009 as the fixed deadline for the submission of tenders. The ITT required tenders to be supplied electronically to a secure portal. In fact, because of a power failure occurring on 16 January 2009 which prevented one tenderer from submitting its tender by that time, Devon CC extended the deadline for all tenderers by 3 hours to 15.00 on the same day.
- An integral part of each tender, required to be submitted by the deadline, was a minimum of four completed case study templates (case studies) out of a total of seven published with the ITT. The claimant was ready to submit its tender before the deadline on 16 January 2009. With the announcement of the extended deadline of 15.00 it took advantage of the additional time for a final check, submitting it at 12.05. At 14.45 employees of the claimant realised that in error the case studies had not been submitted. It immediately attempted to submit them to the secure portal but no addition to the tender already submitted was possible. A call was made to Devon CC's helpdesk shortly before 15.00 and at 14.59.30 the claimant spoke to a principal procurement officer with responsibility for this project. The case studies were not submitted in any form before the deadline of 15.00. At 15.26 they were sent to Devon CC by email, in the form finalised at 10.28 on that day.
- Devon CC rejected the claimant's tender on the grounds that a complete tender, including the case studies, had not been submitted by the deadline.
- There are legally enforceable obligations owed by Devon CC to tenderers, derived from or arising directly under Community law. Regulation 47(1) of the Regulations provides that "The obligation on … a contracting authority to comply with these Regulations … and with any enforceable Community obligation in respect of a public contract, framework agreement or design contest … … is a duty owed to an economic operator". The claimant and the other tenderers, are economic operators as defined. Regulation 47(6) provides:
"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.
- Neither party alleges that the tender process created a contractual relationship or gave rise to contractual obligations, as envisaged as possible in Blackpool and Fylde Aero Club v Blackpool BC  1 WLR 1195. It follows that the claimant does not assert any contractual right for its tender to be accepted for consideration, nor does Devon CC assert any contractual right to reject the claimant's tender or any contractual obligation owed to other tenderers to do so.
- The claimant alleges that in rejecting its tender, Devon CC was in breach of regulation 4 of the Regulations and in breach of enforceable Community obligations to treat tenderers equally and in a non-discriminatory way, and in breach of its obligation under regulation 30 to select contractors only on the basis of the most economically advantageous tenders. It alleges also that as a general principle of Community law Devon CC owed an obligation to act proportionately in relation to the tender and that in rejecting the claimant's tender it was in breach of this obligation.
- The primary remedy sought by the claimant is an injunction requiring Devon CC to consider its tender. Alternatively, it seeks damages for the loss of the chance of being selected as a contractor under the framework agreement. The parties agreed that if damages were to be awarded, their quantum should be dealt with at a further hearing.
- The claimant issued an application for interim relief on 18 February 2009 at the same time as issuing the proceedings. Following a full hearing on 4 March 2009 the Chancellor granted an interim injunction requiring Devon CC to evaluate the claimant's tender, so that there was no loss of time which might preclude acceptance of the tender on its merits if that was warranted. As to the merits of the claimant's case, the Chancellor was concerned on that application only to be satisfied that it was seriously arguable. He said:
"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
- The contract notice published in July 2008 stated that tenders would be required to be made electronically to a specified website and that they would be opened at 12 noon on 16 January 2009 by authorised representatives of Devon CC.
- By a letter dated 3 November 2008 the claimant was informed that it would be invited to tender, and that the return deadline would be 12 noon on 16 January 2009. A further letter was sent to all tenderers on 7 November 2008, informing them that the ITT would be issued electronically on 26 November 2008 and that instructions would be issued for uploading tender submissions to Devon CC which would have to be followed precisely. The return deadline would be "strictly" 12 noon on 16 January 2009.
- The ITT was issued on 26 November 2009 with a covering letter to all tenderers. The requirement for electronic submission of tenders was emphasised in the letter, specifically drawing attention to the need to upload all attachments and asking tenderers to upload their submission "in good time before the submission deadline". It reiterated that the deadline was "strictly" 12 noon on 16 January 2008 and also stated:
"… 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. …"
- The ITT was a 124-page document and contained at the front an executive summary which stated in bold type "Completed Tender submissions must be made by noon on 16 January 2009". It further stated that various "key elements" of the tender had to be provided, including the following. First, overhead and profit percentages and staff costings had to be provided. Secondly, "Case studies: - Seven detailed case study projects are appended to the tender which must be used as a basis to your tender response", of which a minimum of four had to be selected. Thirdly, "Pricing responses in relation to case studies: - Excel templates are appended to the tender for the following pricing information to be provided", followed by seven categories of pricing information.
- Section B1 of the ITT set out the Indicative Procurement Timetable giving key dates which were stated to be indicative, except for the deadline of 12 noon on 16 January 2009 for the return of completed tenders, which was stated to be "fixed and firm".
- Section B2.17 dealt with the required electronic method of submitting tenders to the secure portal. It explained that the tender documents could not be completed online but had to be downloaded to the tenderer's system, completed offline and then uploaded to the portal. Tenderers were "strongly recommended to follow the system user guides in full to ensure that all documents comprising your tender have been uploaded successfully … It is the responsibility of Tenderers to ensure that all relevant Tender documents are uploaded in full". It continued:
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 ~"
- Section B2.27 provided for the avoidance of doubt that fully compliant tender submissions were to be made without qualification, strictly in accordance with the terms and conditions of the tender documents. B2.25 provided as follows for the correction of errors:
"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."
- Section D, running to 35 pages, comprised guidance notes on completion of the tender, including the case studies. Section D7 dealt with case studies and it was stated in D7.2 that CFSW "require two main elements from tenderers in order to comprise a full bid", namely responses to the relevant number of Case Study Pricing Sections and to the relevant number of Case Study Technical Questions. It was noted in bold print that tenderers must ensure that all completed priced spreadsheets were correctly uploaded on to the relevant tender submission area of the portal in full accordance with the instructions. The case studies, containing a large amount of pricing information, are substantial. The four completed by the claimant run to 63 pages. It is these which the claimant did not submit until after the deadline. The claimant's group chief executive officer gives this description of their contents in his first witness statement:
"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."
- The instructions for uploading and submitting tenders set out 20 steps, each illustrated with a window. A clear warning was given on page 1: "Tenderers are strongly advised not to leave uploading their submission until the last moment, as file upload may take some time". Tenderers were warned to ensure that all attachments were uploaded accurately to the correct area of the website and that no attachments were missed. Step 14 stated:
"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. "
- Section B2.20 of the ITT headed "Supplementary information" drew a distinction between supplementary information and "the main elements of the Tender", providing a limited exception in the case of the former from the requirement for electronic submission to the secure portal. The first paragraph read as follows:
"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."
- The final part of B2.20, much of it in bold type, was as follows:
~ 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 ? "
- A number of important points emerge clearly from the ITT and related documents. First, the fixed and firm deadline for the submission of tenders was 12 noon on 16 January 2009. Secondly, tenders had to be submitted electronically to the secure portal. There was no other permitted method of submission. For this purpose, all the main elements of the tender were required to be submitted and, as is common ground, these included the case studies. Thirdly, the tender had to be complete, including the case studies. Fourthly, submission of the complete tender was a once-only option. No provision was made for it to be later changed or added to, except as provided by B2.25. The claimant's witnesses accepted that they had fully understood these points. Fifthly, if absolutely necessary, supplementary information could be sent before the deadline in hard copy form, but this did not extend to "the main elements" of the tender which included the case studies or to any pricing information. This exception provided only for delivery in a correctly addressed package and did not permit submission by open means such as fax or email.
- The County Solicitor explained in his evidence, and it was not challenged, that a principal reason for the limited means by which either the tender or supplementary information could be submitted was to prevent any risk of collusion, by ensuring so far as possible that council officers and employees could not see the tenders, and particularly pricing information, before the deadline. They had no access to tenders submitted to the portal until after the deadline and likewise packages containing supplementary information would not be opened until the formal opening by the authorised persons with witnesses after the deadline. Communications by fax or email could not provide this security. The importance of these considerations is underlined by Annex X to the Directive and regulation 44 of the Regulations.
- On 12 January 2009, an email in the following terms was sent by Devon CC to all tenderers:
"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."
- A total of 22 complete tenders were submitted before the deadline, of which 8 were submitted on 15 January 2009 and the remainder before 15.00 on 16 January 2009. There were two other submissions, one of which was the claimant's and the other was that of another contractor which was submitted incomplete at 14.54 on 16 January 2009.
The events of 16 January 2009
- The sequence of material events on 16 January 2009 was as follows. The last modification by the claimant to its case studies was made at 10.28. They had been separately prepared but in the morning of 16 January they were saved as PDF files in the folder with the rest of the tender submission.
- At 10.53 another tenderer, Apollo, sent a fax to Justin Bennetts, a principal procurement officer at Devon CC with responsibility for this tender, confirming his telephone conversation that there was a power failure affecting its head office which meant that it was then unable to submit its tender. The electricity supplier anticipated that power would be restored at about 11.00 but it would take Apollo about 1½ hours to reboot. Mr Bennetts confirmed the power failure with the electricity company and at 11.13 sent an email to all tenderers to inform them of this power failure, that he had verified that it was outside the control of the tenderer concerned and that the authority "has decided that in the circumstances it is only reasonable to extend the deadline for submission of tenders" by 3 hours to 15.00. Tenders would not be opened until after the revised deadline. The email continued:
"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."
- By the time of the receipt of this email, the claimant's complete tender was ready for submission. Following receipt of the email, the tendering team conducted a final review of the tender, given that extra time was available. The tender was uploaded from the claimant's head office at Abingdon and submitted at 12.05. Unfortunately, due to an error on the claimant's part, the case studies were omitted from the tender upload and were not submitted with the rest of the tender.
- Shortly before 14.45 one of the claimant's team at its Bristol office noticed, on reviewing the tender, that the case studies were missing. Rachel Ross-Trevor, the claimant's marketing technical manager, was informed at about 14.45. She and the estimating manager attempted to upload the case studies on to the secure portal at 14.50. They were unable to do so, because, as stated in the ITT and related documents only one upload was possible and the system did not permit the uploading of additional documents.
- At 14.57 Ms Ross-Trevor called the helpdesk number at Devon CC stated in the ITT. She was passed by the first representative to a second, who explained that the e-system was designed so as not to be capable of accepting additional information and advised her to call Mr Bennetts. Devon CC's telephone records do not record this call, but having seen the claimant's telephone records and, in particular, having heard the frank and impressive evidence of Ms Ross-Trevor, I am satisfied that it took place.
- At 14.59:30 Ms Ross-Trevor called Mr Bennetts. She informed him of the problem and he said that the authority would have to assess the tender received so far from the claimant. The call lasted 42 seconds, and thus straddled the deadline. Although Ms Ross-Trevor thought Mr Bennetts' response was positive, it is not suggested that it in any way committed the authority to accepting the tender as having been properly submitted.
- At 15.26 the claimant emailed the case studies to Mr Bennetts. In a covering email, Rob Bradley, a regional director of the claimant, stated:
".. 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."
- On 19 January 2009 Mr Bradley wrote to Mr Bennetts with an account of the events on 16 January 2009 and continued:
".. 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
- Devon CC accepts that it is subject to an enforceable obligation to treat tenderers equally and in a non-discriminatory way. The obligation is set out in regulation 4 of the Regulations which provides:
(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'."
- The claimant alleges that Devon CC acted in breach of the duty of equality and non-discrimination in two ways.
- First, Devon CC had power to waive strict compliance with the requirements of the ITT as to the time and method of submission of tenders. It is said that the requirements were relaxed for two tenderers, Apollo and Midas Group, and that the refusal to do so as regards the claimant amounted to unequal and discriminatory treatment. The claimant alleges that there was no objective justification for this refusal when compared with the decisions in favour of Apollo and Midas.
- I have set out above the material facts as regards Apollo. Its inability to submit its tender was due to a power failure entirely outside its control and resulted in an extension of the deadline for all tenderers. These circumstances are, in my judgment, objectively very different from those of the claimant. First and foremost, the inability of Apollo to submit its tender was demonstrably the result of circumstances outside its control. It could, of course, be said that by leaving its submission to the final morning it took the risk of an outside event preventing it from submitting its tender. It may be, but I do not have to decide, that Devon CC could justifiably have refused to extend the deadline in order to accommodate Apollo, but it is to be noted that 16 out of 24 tenderers waited until 16 January 2009 to submit their tenders. Secondly, the deadline was extended for all tenderers and in fact the claimant, and there may have been others, took advantage of it to conduct a final review of its tender. By contrast, the claimant argues for special treatment for itself only and no doubt for any others if they had been in the same position.
- The facts as regards Midas became known to the claimant only on receipt of a second witness statement made by Mr Bennetts on 17 April 2009, and Devon CC did not oppose an amendment of the particulars of claim to rely on them. Midas contacted Mr Bennetts at approximately 10.30 on 16 January 2009, saying that they were not sure whether they had correctly uploaded their case studies and seeking an assurance that they had been received. Mr Bennetts explained that he had no access to submissions before the deadline and said that they could, if they wished, supply a back up copy by sending it to Devon Procurement Services "as per the instructions" in B2.20 of the ITT. Midas delivered hard copies of their case studies in an envelope addressed as specified in B2.20. In the event Midas' case studies had been uploaded onto the portal and the envelope was never opened.
- The suggestion made to Midas by Mr Bennetts was made without legal advice. It does not appear to be in accordance with the instructions in B2.20. As already noted, while B2.20 permits the delivery of supplementary information in hard copy form, it does not permit any of "the main elements" of the tender, or pricing information, to be submitted in that way. The case studies were both main elements and pricing information. In fact it was an unnecessary concession and the County Solicitor was rightly relieved, as he explained in evidence, that it was not necessary to consider whether Devon CC was bound by it.
- As Midas had in fact correctly submitted a complete tender to the portal and did not need to rely on delivery of the hard copy versions, it is difficult to see that the claimant can rely on Mr Bennetts' suggestion to Midas as a basis for an allegation of unequal and discriminatory treatment. Even if Midas had needed to rely on the submission of its case studies in hard copy form, it would not in my judgment assist the claimant's case. First, Midas was required to, and did, deliver the case studies before the deadline. In this respect it was fortunate that its offices were in Exeter and it had time to deliver the documents to Devon CC's procurement offices in the same city. This could raise the possibility of discriminatory treatment, but on the facts it does not assist the claimant which did not discover the problem until 15 minutes before the deadline. There is no evidence that, even with offices in Exeter, hard copy versions could have been delivered so late. Secondly, the only means by which the claimant might have been able to supply the case studies was by email to Mr Bennetts or other officers at Devon CC. This was not a permissible means of submitting such confidential information for the reasons of security to which I have referred. Supplementary information in a sealed envelope would in accordance with the tender procedures be opened with the tenders after the deadline. By contrast, emails could be immediately read by the recipient and perhaps others.
- The second and distinct way in which the claimant alleges that it was subject to unequal and discriminatory treatment is that while B2.25 of the ITT provided an opportunity to rectify errors after the deadline in tenders which were submitted before the deadline and accepted by the authority, no such opportunity was given to a tenderer whose tender was not accepted as properly submitted. It is alleged that if the claimant had not pointed out the omission of the case studies, its tender would have been accepted and it would have been given an opportunity to rectify its error by supplying the case studies.
- It is wrong in my judgment to describe the claimant's tender, as submitted before the deadline, as containing an error, as contemplated by B2.25. It was substantially incomplete, by reason of the omission of the case studies. It is in my view clear, from the terms of B2.25 when read with B2.27 and the rest of the ITT and related documents, that B2.25 neither obviates the need to submit a complete tender nor provides a means by which tenderers can supply substantial documents or substantial sections of documents after the deadline so as to complete their tenders. I can see no reason to think that as and when Devon CC discovered that the case studies were missing, if their omission had not been pointed out by the claimant, its reaction would not have been to reject the tender as incomplete.
- The claimant goes on to argue that in order to remedy the alleged inequality of treatment and discrimination against it, Devon CC should have exercised its power to waive strict compliance with the ITT by allowing the claimant to rectify the error in its submission by supplying the case studies prior to the deadline. This likewise involved no inequality of treatment or discrimination. Save for what is said later about resetting the system, it was not open to any tenderer to supply missing case studies before the deadline. They could not be supplied by uploading them on to the portal after submission of the tender, as the ITT made clear, because the system would not permit it nor was submission by fax or email permitted for security reasons nor did the ITT permit delivery of hard copy versions. These rules applied equally to all tenderers.
Duty to select contractors only on the basis of the most economically advantageous tenders
- In the contract notice published in July 2008, Devon CC stated the award criteria to be the most economically advantageous tender in terms of the criteria stated in the ITT and elsewhere. The claimant submits that identification of the most economically advantageous tenderer requires a procurement process which is both procedurally fair and fair in substance. The claimant does not challenge the award criteria or their application but submits that by excluding the claimant's tender, Devon CC denied itself the opportunity of considering a bid which had at least a serious prospect of meeting the award criteria.
- In my judgment, this line of argument cannot provide the claimant with an independent ground of objection. It is inevitable that the application of the rules of a procurement process may exclude consideration of a tender which might otherwise have been successful. The issue is not whether that result has followed, but whether the rules have been drawn and applied in ways which are transparent and ensure equal and non-discriminatory treatment and, as the claimant submits, which are proportionate. Provided those requirements are satisfied, the claimant cannot object that its tender was excluded from consideration.
Duty to act proportionately
- The claimant submits that in applying, or considering whether to waive strict compliance with, the terms of the ITT, Devon was under a duty to act proportionately. In excluding the claimant's tender in the particular circumstances of this case, rather than permitting it to supply the missing case studies either before or shortly after the deadline, Devon CC acted in breach of this duty, imposing a sanction which was disproportionate to the claimant's error.
- By way of exposition of the principle of proportionality, the claimant relies on paragraphs 25-28 of the speech of Lord Hoffmann in Smith Glaziers (Dumfermline)Ltd v Customs and Excise Commissioners  1 WLR 656. The case concerned the validity under Community law of conditions imposed under national law for exemption from VAT for insurance related services. Lord Hoffmann said:
"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."
- Mr Bowsher QC submitted, on behalf of Devon CC, that the principle of proportionality did not apply to the actions of a contracting authority in a procurement process. He pointed out that while it was referred to in Recital (2) to the Directive, it is not mentioned in Art. 2 which expressly imposes on contracting authorities obligations of equal treatment, non-discrimination and transparency, but not an obligation to act proportionately. Likewise, the Regulations expressly impose those obligations but not a duty of proportionality. At least in his skeleton argument, he submitted that it was a principle which applied only to legislative and similar measures, for example in relation to exceptions to fundamental principles such as the free movement of goods. He pointed out that many of the cases to which the claimant referred, including C R Smith Glaziers (Dunfermline) Ltd v Customs and Excise Commissioners, were concerned with legislative measures.
- I am not satisfied that the principle of proportionality is restricted in this way. First, recital (2) states clearly that "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 principle of proportionality". While the absence of any reference to it in Art. 2 and the rest of the operative part of the Directive might in accordance with the domestic principles of construction suggest that the intention was that it should not give rise to an enforceable obligation, it is not easy to follow therefore why it was included in recital (2) or to reconcile that conclusion either with the importance given to recitals to Directives or with the enforceable obligation under regulation 47 of the Regulations, reflecting Community law, to comply not only with the express provisions of the Regulations but also with "any enforceable Community obligation in respect of a public contract".
- Secondly, Mr Henshaw for the claimant relied on the judgment of the Court of First Instance (First Chamber) of 27 September 2002 in Case T - 211/02 Tideland Signal Ltd v Commission of the European Communities. The applicant successfully challenged a procurement process undertaken by the Commission for the supply of navigation equipment to three central Asian republics. The applicant had made an error in the tender as regards the period for which the tender was valid. It was obvious to any reader of the tender that it was likely to have been an error. Rather than exercise the express power reserved by the invitation to tender to seek a prompt clarification, the Commission rejected the tender as not compliant with the tender terms. The Court held that the Commission acted unlawfully in proceeding in that way. The first ground for the decision was that in accordance with the Community law principle of good administration, there was an obligation to exercise the express power to seek clarification in circumstances where it was both practically possible and necessary. Such circumstances existed where the ambiguity probably had a simple explanation and was capable of being easily resolved. It was said further that it would be contrary to the principle of equality for the authority to enjoy an unfettered discretion as to whether to seek clarification of a tender. The court went on to state:
"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."
- Mr Bowsher did not seek to argue that the principle of proportionality as applied in Tideland Signal was limited to the actions of the Commission and other Community institutions. He submitted that the decision showed that, if the principle of proportionality applied, an action would be unlawful only if it constituted a manifest breach of the principle. I will return to this point, but it seems to me that Mr Bowsher's basic submission, that the actions of procuring authorities in implementing a tender process are not subject to the principle of proportionality, is irreconcilable with the judgment in Tideland Signal. In Federal Security Services Ltd v The Northern Ireland Court Service  NIQB 15, a decision of the High Court in Northern Ireland, the principle of proportionality was applied to a decision to discontinue an existing procurement process.
- Thirdly, in the course of his submissions, Mr Bowsher accepted that the principle of proportionality could apply to the formulation of the terms of a procurement process, including an invitation to tender, as well as, for example, to legislative measures. I agree with Mr Henshaw that if the formulation of terms is subject to this principle, there is no good reason why their application should not be subject to the same principle.
- I conclude therefore that the principle of proportionality is capable of applying to the implementation of the terms of a procurement process. In considering its application in a particular case, there are obvious factors to be borne in mind. First, as Mr Henshaw accepts, the exercise of discretionary powers necessarily involves judgment on the part of the contracting authority. The court must respect this area for judgment and will not intervene unless the decision is unjustifiable. This, I would think, is the proper meaning of a manifest error in this context. It will be remembered that in paragraph 43 of the judgment in Tideland Signal, the court stated that the Commission's decision to reject the tender without first seeking clarification "was clearly disproportionate and thus initiated by a manifest error of assessment". In Lion Apparel Systems Ltd v Firebuy Ltd  EWHC 2179 (Ch),  EuLR 191, Morgan J at paras 26-38 set out a number of principles applicable to procurement distilled from the decision of the Supreme Court of Ireland in SIAC Construction Ltd v Mayo County Council  IESC 39,  EuLR 1 and the decision of the Court of First Instance in Case T-25-/05 Evropaiki Dynamiki v Commission. He said at paragraphs 36-38
"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."
- Secondly, a waiver of terms which are stated as applying without exception is a departure from the terms of the procurement process and is therefore an exceptional course. A waiver of such terms carries the very risks of unequal treatment, discrimination and a lack of transparency which the contracting authority is required to avoid. It is to be noted that the Commission's action under review in Tideland Signal involved a failure to exercise an express power under the invitation to tender, not a failure to waive express terms.
- The claimant submits that Devon CC acted disproportionately in refusing to waive strict compliance with the tender terms and accept the submission of the case studies either before the deadline by email or shortly after the deadline, so as to enable it to complete its tender.
- For the reasons of security to which I have earlier referred, Devon CC could not on grounds of proportionality or otherwise be required to accept the case studies by email before the deadline. In any event the claimant did not attempt, or request that it should be permitted, to email them before the deadline. There was evidence given by Mr Bennetts in his second witness statement that it was technically possible for the system provider to reset the system so as to remove an already submitted tender and allow a substitute tender to be uploaded and submitted. The County Solicitor knew nothing of this possibility until he saw Mr Bennetts' evidence. It was not mentioned in the ITT or other documents and it was never considered or approved for use by Devon CC in relation to this procurement process. In any event, the claimant's discovery of its error at 2.45 p.m. left insufficient time for this to be adopted.
- The issue is therefore whether the principle of proportionality required Devon CC to permit the claimant to send its case studies after the deadline.
- Both parties rely on passages from The Law of Public and Utilities Procurement (2005) by Professor Sue Arrowsmith. At para 7.94 she poses the question whether it is permissible for a contracting authority to accept tenders which do not comply with formalities, including tenders which are late. On the one hand, formalities are imposed for a contracting authority's convenience, so that it can be argued that it should be able to waive them and it is also harsh on tenderers to exclude their bids in such circumstances. On the other hand, waiving formalities or allowing late tenders may result in an advantage for the tenderer concerned that is not available to others. By accepting a late tender, the tenderer may gain time over others. Waiving formalities may violate equal treatment and create the potential for abuse, since it might be exercised only for favoured tenderers.
- Professor Arrowsmith's conclusions on this issue are at paras 7.94-7.96:
"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."
- These conclusions are qualified by para 7.97
"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."
- Mr Henshaw accepted that it would not generally be appropriate to accept a late tender, having regard to the requirements of transparency and equal treatment. But he relied on the exception suggested by Professor Arrowsmith for special circumstances. He submitted that twelve factors cumulatively establish that in the particular circumstances of this case Devon CC acted disproportionately. First, the claimant passed the initial pre-tender stage and was invited to submit a tender. Its bid can therefore be assumed to be serious. This is uncontroversial. Secondly, its tender excluding the case studies was uploaded and submitted before the deadline. Thirdly, as Devon CC accepts, its case studies were last modified at 10.28 on 16 January 2009, before the deadline. The claimant was not taking advantage of its error to submit a document revised after the deadline. Fourthly, the case studies showed the application to those cases of the basic pricing structures contained in the part of the tender submitted before the deadline. Fifthly, the claimant gave evidence of instances where other public authorities had allowed gaps in tenders to be filled after the deadline. Sixthly, Devon CC's witnesses had accepted that it might in principle be permissible to correct a tender. Seventh, the claimant tried to upload the missing case studies before the deadline. Eighth, the claimant contacted Devon CC shortly before the deadline to seek a solution. Ninth, the ITT contained in B2.25 a power to correct genuine and material errors after the deadline. Tenth, there was no problem of certainty, because the submission of the missing case studies would fill a gap, not change any part of the tender as already submitted. Eleventh, there was no real issue of transparency. Twelfth, the consequences of exclusion were serious for the claimant.
- The position of the claimant may be considered stronger than that of many tenderers who are simply late. In particular it can be demonstrated that the claimant had completed the case studies in good time before the deadline; the failure to attach the case studies to the rest of its tender was an unintended technical error; the rest of the tender was submitted in time; no issue of unequal treatment need arise with the acceptance of the case studies.
- Nonetheless, Devon CC was in my judgment entitled to reject the claimant's tender and was not acting disproportionately in doing so.
- Fundamentally, Devon CC relies on the simple proposition that a procurement process requires a deadline for the submission of tenders and that a deadline is a deadline. The ITT could not have been clearer on the requirement for a single upload and submission before the deadline, and the claimant's witnesses readily accepted that they knew this was the requirement. In addition, there are clear statements of policy and practice in Devon CC's code of business conduct that late tenders are not considered. True it is that the deadline was extended for three hours to accommodate a particular tenderer, but the extension of the deadline was agreed before the expiry of the existing deadline, it was caused by an event outside the control of the tenderer in question, it applied to all tenderers and was communicated to them all, and complete submissions had to be made by the new deadline.
- As well as the deadline, the other key elements of submitting tenders, such as the requirement for a single submission and the lack of provision for changes to submitted tenders, were clear and well understood by the claimants, as their witnesses' evidence made clear. Fairness to all tenderers, as well as equal treatment and transparency, required that these key features should be observed.
- There may be circumstances where proportionality will, exceptionally, require the acceptance of the late submission of the whole or significant portions of a tender, most obviously where, as noted by Professor Arrowsmith, it results from fault on the part of the procuring authority. But in general, even if there is discretion to accept late submissions, there is no requirement to do so, particularly where, as here, it results from a fault on the part of the tenderer. In addition to the considerations already mentioned, the particular facts on which the claimant relies to characterise its case as exceptional would require investigation and determination by Devon CC and I do not see that it was required to undertake those tasks. In my judgment, the decision of Devon CC to reject the claimant's tender was well within the margin of discretion given to contracting authorities.
- Accordingly I do not consider that Devon CC's rejection of the claimant's tender was unlawful on any of the grounds advanced by it and I dismiss the action.
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