High Court orders confidentiality ring in procurement dispute

A High Court judge has put in place a confidentiality ring for the disclosure of documents in a dispute over a tender for capital improvement and refurbishment work for social housing in Leeds.

However, Mr Justice Ramsey also ruled that certain allegations made by the claimant, Mears, were out of time and should be struck out.

The case of Mears Ltd v Leeds City Council [2011] EWHC 40 (QB) involved a public procurement known as the Leeds Housing Arms Length Management Organisation (ALMO) Procurement 2011. The procurement related to two out of three ALMOs set up by Leeds City Council in 2007, Aire Valley Homes Leeds and West North West Homes Leeds.

Mears was unsuccessful in its tender for lots 1 and 4 and applied for an interim injunction to suspend the procurement. It is also seeking an order that the council re-run the procurement entirely or from the ITPD (invitation to participate in competitive dialogue) stage.

Mears claims that Leeds was in breach of the Public Procurement Regulations 2006 in that it had failed to act transparently and/or treat the company equally and in a non-discriminatory way.

This was because the council had:

• Issued changes to the pricing aspects of the Outline Solutions Submission (OSS) after having received the tenders from the tenderers whilst evaluating the same (paragraph 20(1) of the Particulars of Claim)
• Provided an inadequate period of time for Mears to respond to the changes to the pricing aspects of the OSS (paragraph 20(2) of the Particulars of Claim)
• Evaluated the OSS using undisclosed criteria and weightings, in particular (a) using the guidance which Leeds attached to a letter of 1 September 2010 “pursuant to which a maximum score could only be achieved where the tender’s response not only met LCC’s requirements fully but exceeded them; (b) on the based that each sub-question under each section of the “Quality Deliverable Questions” carried the same weighting.

At the hearing of the application for an interim injunction, Mears applied for disclosure of certain documents in the council’s possession that – both parties agreed – could have an impact on the application for the injunction. Leeds in turn argued that Mears' claims in paragraphs 20(1) and 20(2) were time-barred under Regulation 47 of the 2006 Regulations.

The parties agreed that prior to deciding the application for the injunction, the court should determine both the application for disclosure and whether the allegations were time-barred.

The issue of disclosure related to model answers given by Leeds City Council to those evaluating the tenders. These were referred to in the authority’s bidder outline submission feedback, but Mears said it had not seen them.

Counsel for Leeds argued that the model answers were not disclosable under Regulation 32 of the 2006 Regulations, in particular on the basis that it would be contrary to the public interest or it might prejudice fair competition between economic operators.

Mr Justice Ramsey ruled that, for the purpose of the application, the model answers should be treated as containing confidential matters. However, he added that the mere fact that they were confidential did not in itself prevent them from being disclosed.

The judge added that he had “no doubt” that the disclosure of the model answers was necessary for disposing fairly of the proceedings and determining whether there were criteria, sub-criteria or weightings which were not disclosed. “The model answers were evidently part of the guidance given by LCC to those evaluating the tenders,” he said.

The judge ruled that any confidentiality should be preserved, but that this could be achieved through a confidentiality ring. “Unlike the claimants in Croft v Durham CC, Mears is a large organisation where the mechanism of a confidentiality ring can be applied,” he said.

Inspection of disclosed documents should be limited in the first place to named solicitors in Mears’ law firm and named counsel, the judge decided.

“If they consider that there are grounds for contending that the model answers contain matters which should have been disclosed to tenderers then Mears should nominate a person, such as a director, manager or recently retired person, who would not have been involved in the Procurement, would not be involved in the Procurement and would not disclose any information to others in Mears including those who might have been or might in the future be involved in the Procurement,” Mr Justice Ramsey said. “His or her role would be to give instructions to the lawyers. In addition, LCC should confirm that they have no reasonable objection to the person nominated by Mears for that purpose.”

The judge added that he did not consider that the provisions of Regulation 32 applied to the application for disclosure, nor was an application for disclosure in the proceedings affected by any fixed time limit. Leeds therefore was ordered to disclose and give inspection to the model answers, subject to the confidentiality ring.

On the issue of whether the allegations were time-barred, Mr Justice Ramsey said a number of propositions could be derived from previous decisions on when time starts under Regulation 47(7) of the 2006 Regulations. These are:

“(1) The ‘date when grounds for the bringing of the proceedings first arose’ will depend on the nature of the claim in the proceedings

(2) The grounds for making certain claims may arise before there has been any decision to eliminate a tenderer from the procurement process or not to award a contract to a tenderer

(3) Where the claim is based on infringement of the Regulations occurring during the procurement procedure and before any decision has been taken to eliminate a tenderer or award a contract to another tenderer, the date when the grounds arise will depend on when the claimant knew or ought to have known of that infringement

(4) Where a claimant knows or ought to know of the infringement, the grounds for bringing the proceedings will then arise. They do not arise only when there has been a decision to eliminate a tenderer or award a contract to another tenderer

(5) Where the claim is based on grounds which arise out of a decision to eliminate a tenderer or award a contract to another tenderer then those grounds will only arise when the tenderer knew or ought to have known of the infringement and this will generally depend on the tenderer being given the reasons for the decision

(6) The requirement of knowledge is based on the principle that a tenderer should be in a position to make an informed view as to whether there has been an infringement for which it is appropriate to bring proceedings. There is not a separate requirement relating to the appropriateness of bringing proceedings.”

Mr Justice Ramsey said that the allegations in paragraphs 20(1) and 20(2) of Mears’ particulars of claim arose from an alleged breach in the tendering process in May 2010.

This was “when Mears contends, first, that Leeds amended pricing aspects of the tender documents after receipt of and during consideration of the tender documents and, secondly, that Leeds did not give sufficient time to respond to the amendments”.

The judge ruled that these were discrete breaches of the Regulations which did not depend on whether or not Mears was ultimately eliminated from the Procurement. “It is clear that in May 2010 Mears had full knowledge of both the contents of the letter of 14 May 2010 and the time allowed to respond,” he said.

Mr Justice Ramsey concluded that by the time the period given in the letter of 14 May had expired – “that is, at the latest, 18 May 2010”, Mears had sufficient knowledge to take an informed view as to whether there had been an infringement of the Regulations for which it was appropriate to bring proceedings.

The three-month period under Regulation 47(7)(b) had therefore expired by 18 August 2010. The proceedings begun on 12 October 2010 were not commenced within time, the judge said, adding that “there were no grounds put forward by Mears for there being a good reason to extend the period and I see not basis for extending time”.

Mr Justice Ramsey therefore ruled that these allegations made by Mears should be struck out.