Council to pay damages after breaching procurement rules in housing services tender

Leeds City Council is set to have to pay damages to social housing services provider Mears over the local authority’s handling of a procurement exercise.

The case involved a public procurement known as the Leeds Housing Arms Length Management Organisation Procurement 2011.

Mears, one of the unsuccessful bidders, had argued that the council had failed to act transparently and/or treat the company equally and in a non-discriminatory way, breaching the Public Contracts Regulations 2006.

At an earlier hearing Mr Justice Ramsey ordered that a confidentiality ring be put in place for the disclosure of documents relating to model answers given to those tasked with evaluating the bidders. However, he also concluded that other parts of Mears’ claim were time-barred.

Mr Justice Ramsey ruled last Wednesday (26 January) in the claimant’s favour in relation to Leeds’ weighting of the measuring process of the tender. The tender process will not have to be re-run, however, and the level of compensation payable to Mears will be assessed later.

A spokesman for Leeds said: “Unfortunately the reality of competitive tendering is there are more losers than winners. Every bidder was treated in same way under this contract and all had the same information on which to base their bids, as well as numerous opportunities to seek clarification on any aspect of the process they didn’t understand. The majority of contractors accept the result of the tendering process.”

He suggested that whilst Mr Justice Ramsey had found for Mears on “a minor technical aspect of its challenge”, the judge rejected the vast majority of the other transparency and disclosure claims made by the company.

The spokesman added: “If Mears had been successful in delaying the start of the contract by having the procurement rewound and re-run, the council would have lost approximately £3m in efficiency savings over the nine months that it would have taken to re-run the process, so we are pleased with the outcome.”

Francesca Day, head of external affairs at Mears, welcomed the ruling. She said: “We had concerns about how the process had been done and wanted to go through the court process to get as much clarity as possible. The court agreed with us that there had been a lack of clarity in this particular area.

“The judge had discretion on how he wanted to respond to it [and that was to order compensation. Oviously we weren’t able to put a bid in that would have represented what they were looking for because the criteria weren’t clear enough. From our point of view it is quite frustrating – we weren’t very interested in the compensation, we were interested in a really good tendering process that helps us get the best service possible out to the tenants.”