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The Court of Appeal (Coulson LJ, Fraser LJ, and Zacaroli LJ) has handed down a significant judgment in a procurement dispute, clarifying the circumstances in which a contracting authority is obliged or entitled to seek clarification of errors in a tender.
The claimant (Optima Health) had tendered for a call-off contract under a framework agreement to provide occupational health and employee assistance programme services to the Department for Work and Pensions. Under the framework agreement, suppliers could not charge prices in excess of framework prices for any call-off contract. Optima submitted a pricing schedule in which a small number of items were in excess of the framework prices. DWP considered Optima’s tender to be non-compliant and excluded it from the competition, although it had the highest score on quality and would (but for its non-compliant prices) have been the winning bidder.
Optima alleged that the pricing schedule contained obvious clerical errors and that its disqualification was in breach of the principles of transparency and equal treatment and/or disproportionate. At trial, the Court was asked to determine: (i) whether the tender documentation clearly and transparently set out the consequence of exceeding framework prices (ii) if the tender documents were clear and DWP therefore had a discretion, whether it had acted unlawfully by excluding Optima rather than taking alternative action, such as reducing the prices to the maximum framework prices, waiving the non-compliances, or seeking clarification.
The High Court found against Optima on both grounds, holding that (i) it was clear from the tender documentation (understood in its commercial context) that bids with prices in excess of framework prices would or might be excluded and (ii) DWP had lawfully excluded Optima from the competition.
Optima appealed on the basis that (i) the judge had erred in finding that the tender documentation contained a clear rule of mandatory exclusion and (ii) in the circumstances DWP ought to have permitted to Optima to correct and/or clarify the errors in its tender.
The Court of Appeal allowed the appeal, concluding that: the tender documentation did not contain a clear rule of mandatory exclusion; DWP had failed properly to exercise its discretion in relation to clarifying the errors; in the circumstances it was obliged to seek clarification of them and to do so would not have been a breach of the principle of equal treatment.
The lead judgment of Coulson LJ contains an in-depth consideration of the existing European and domestic authorities, clarifying when corrections to tenders may be permissible and the circumstances in which a contracting authority is required to seek clarification. The judgment emphasises that equal treatment is not an end in itself; rather the principle must be applied with regard to the overall purpose of public procurement, which is to ensure healthy and effective competition and to allow a proper evaluation of tenders. In those circumstances, a contracting authority is obliged is to seek clarification where it is clear that the details of a tender require clarification or where it is a question of the correction of obvious clerical errors; clarifications should then be permitted where they are not substantial and do not amount to the submission of a new bid (which will be a matter of judgment for the evaluators).
This judgment will be of widespread interest to both economic operators and contracting authorities as regards the correct treatment of non-compliant tenders and the circumstances in which exclusion of a tender is permitted.
Valentina Sloane KC acted for Optima Health (instructed by Eversheds Sutherland (International) LLP).
Azeem Suterwalla and Alfred Artley acted for DWP (instructed by the Government Legal Department).
A copy of the judgment can be found here.