Rejecting non-compliant bids

Justin Mendelle reviews a High Court ruling on whether a contracting authority was able to reject a non-compliant bid.

In All About Rights Law Practice, R (on the application of) v Legal Services Commission [2013] EWHC 3461 (Admin) a bidder who failed to submit the mandatory element of an ITT had his bid rejected on that basis. The decision to reject was found to be proportionate, rational and not in breach of equal treatment obligations. In reaching this decision, the High Court noted the following:

• the form was not merely incomplete, but blank;
• the form was part of the ITT, not the PQQ;
• the form was the only “mandatory” element of the ITT and the guidance issued to bidders made its significance abundantly clear; and
• other bidders in the same position had been treated in the same way.

This case is a useful reminder to bidders that the responsibility of submitting a properly completed tender is upon them alone and provides comfort to authorities who strictly enforce submission requirements. The threshold for courts to intervene is high and requires a manifest error or unjustifiable conduct. In keeping with the Leadbitter v Devon decision*, the courts have shown that they are not sympathetic to bidder errors.

Case discussion

The claimant, All About Rights Law Practice (“AAR”), is a legal practice run by Mr Nadarajah, a sole practitioner. The defendant, the Legal Services Commission (“LSC”), was the body responsible for the provision of legal aid in England and Wales in 2010.

In 2010, AAR submitted a bid in response to LSC’s tender for mental health work. The tendering exercise followed a familiar format, with a PQQ submission followed by an ITT submission. AAR’s bid was rejected by the LSC on the basis that the mandatory Tender Information Form (the “TIF”), which formed part of the ITT, was blank. AAR sought to quash the decision to reject the bid. A challenge was brought on the basis that (i) the LSC had an obligation to draw AAR’s attention to the shortcoming, (ii) the decision was disproportionate in the circumstances and (iii) there had been unequal treatment of bidders (contrary to the Public Contracts Regulations 2006).

In 2011, the High Court dismissed AAR’s challenge. The court determined that the LSC had no obligation to inform AAR of the shortcomings in its bid and had exercised its discretion rationally and properly. Following publication of the High Court’s judgment, a Freedom of Information request revealed important evidence that had not been disclosed. The challenge was remitted to the High Court and the matter reopened in November 2013.

Because many of the issues considered originally had fallen away, the second challenge focused upon whether LSC’s decision was proportionate and/or irrational and whether there had been inequality of treatment between AAR and other bidders.

AAR argued that the LSC’s decision to reject the bid was disproportionate; it was an obvious and limited mistake that would be “quick and easy” to remedy. Furthermore the tender was not competitive; tenderers were guaranteed a contract so other bidders would not have been disadvantaged. The court disagreed. The significance of the TIF had been made “abundantly clear” and to invite AAR to submit a complete TIF would have disadvantaged other bidders by reducing the pool of work available.

AAR also sought to establish that the decision was “irrational” because in response to incomplete PQQ submissions, the LSC had invited clarifications. The court disagreed, noting that the PQQ was a preliminary stage in the bid whereas the TIF formed a crucial part of the bid itself.

AAR further argued that they had not been treated equally by the LSC. To establish this, a true comparator treated differently without objective grounds for the difference in treatment would have to be identified. The court found two true comparators, both involved in the tender for mental health work and both in the same, or materially the same, position. Each instance was dealt with in the same way and so this argument and the challenge itself was rejected.

Implications

The case demonstrates the crucial importance of submitting a properly completed bid. The High Court made clear that to have allowed a further submission from AAR would have increased the administrative burden in a high volume process and noted that there had been no fault on the LSC’s part. The court also refused to accommodate any concession given the severe economic consequences upon AAR of having its bid rejected. The responsibility for submitting a compliant bid lies with the bidder.

Interestingly, the court indicated two elements that might have led to a less hard-line approach. First, had the TIF been incomplete but not blank, clarification and correction of obvious errors could have been requested by the LSC. Secondly, had the mistake formed part of the PQQ, a more lenient approach may have been taken since it is a “precursor” to the main bid.

*J B Leadbitter & Co Ltd v Devon County Council [2009] EWHC 930 (Ch) (01 May 2009)

Justin Mendelle is Head of Construction at Sharpe Pritchard. He can be contacted on 020 7405 4600 or by email.