The unsuccessful challenge: Wilmott Dixon Partnership Limited v London Borough of Hammersmith and Fulham

Angelica Gavin, Browne Jacobson

Wilmott Dixon Partnership (WDP) was the incumbent supplier of repair and maintenance services to the London Borough of Hammersmith & Fulham (HF). There had been problems with the performance of the initial contract which the authority acknowledged had not been the fault of WDP. In June 2012 HF ran a competitive procurement process to re procure the repair and maintenance services, in which WDP bid unsuccessfully. WDP then brought a challenge against HF which was heard in the High Court. The judgment was handed down on 9 October.

The procurement process

In June 2012 HF published an Official Journal of the European Union (OJEU) notice and subsequently ran a pre-qualification round. WDP was successful at the pre-qualification round. At that stage it intended to perform any contract without the assistance of a sub-contractor and it indicated the same in the pre-qualification questionnaire (PQQ). The tender was structured so that there was one lot which required the provision of services to the whole borough (lot 1) and two further lots which provided for the provision of services for the north and south of the borough separately (lots 2 and 3 respectively). WDP was invited to tender for lots 1 and 3.

HF issued an invitation to tender (ITT) which stated that the contract would be awarded on the basis of the most economically advantageous tender. Shortly before submitting its tender, WDP made the decision to appoint PH Jones Facilities Management Limited (Jones), an incumbent gas servicing contractor to HF, as its sub-contractor for the purposes of supplying the gas appliance services under the contract. HF became aware of the decision to sub contract to Jones at the time WDP’s tender was submitted on 10 January 2013.

Following the evaluation process, WDP was informed by HF that it had decided to award a contract for the whole of the borough only (lot 1) and that WDP’s bid had been unsuccessful. The contract was awarded to Mitie Property Services UK Limited (Mitie). WDP was advised that although the bids were extremely close (Mitie being awarded a total score of 86.5 as opposed to WDP’s 85.32) and WDP’s bid being the lowest overall price, Mitie had been awarded the contract because HF felt its submission, particularly on the ICT proposal had been of better quality. In particular WDP was told that HF was looking for a ‘sea change’ in the approach to the delivery of the services which had not come across in WDP’s proposals. WDP had asked why, when the scores were so close it had not been favoured and was advised by HF that HF had concerns over WDP’s performance of the original contracts.

In May 2013 WDP commenced proceedings against HF for breach of statutory duty under the Public Contracts Regulations 2006 (the 2006 Regulations); breaches of principles of EU law, and breaches of an implied contract.

WDP’s claims included the following:

  • That the tender had been evaluated by reference to criteria which were not aimed at identifying the most economically advantageous tender; in particular WDP claimed that HF had taken into account Jones’ ability to provide the gas compliance services under the contract when it scored WDP’s submission.
  • That HF evaluated the tender by reference to award criteria which were not specified (or not clearly specified) in the ITT; including the requirement to demonstrate a ‘sea change’ in the way the services were provided, the general political desire to move from the incumbent supplier, and the evaluation of the ICT submission by reference to criteria not in the ITT.
  • That HF failed to score the qualify submissions in accordance with the methodology specified in the ITT.
  • That HF failed to treat the economic operators in a fair and non-discriminatory way when they scored the tenders, by scoring Mitie and WDP the same or scoring WDP worse than Mitie when WDP’s submission was of the same or better quality than Mitie’s.
  • That, even if the scoring was fair, the award criteria were insufficiently sensitive to distinguish between different qualities of submission to the extent that this breached the principle of equality and non-discrimination?
  • That HF failed to verify Mitie’s compliance with the award criteria in breach of the principle of equal treatment.
  • That there was an implied contract between HF and WDP that WDP would award the contract in accordance with the 2006 Regulations, general principles of EU law and common law principles of equality, non-discrimination, transparency and fairness.

Judgment

The High Court considered the law in relation to public sector procurement and confirmed the established position that under Regulation 4(3) of the 2006 Regulations HF was obliged to “treat economic operators equally and in a non-discriminatory way; and act in a transparent way”. It was also required to conduct the procurement in a manner free from any manifest error, conduct an objective valuation of tenders by reference to criteria and sub-criteria which it was appropriate and lawful to apply to the process of tender evaluation and which had been sufficiently disclosed to the economic operators including WDP; and to evaluate all of the tenders fairly and objectively and without either actual or apparently basis.

Each of the above obligations was owed by HF to WDP and the breach of any of the above obligations was enforceable as a breach of statutory regulations.

Evaluation of the tender response by reference to criteria which were not aimed at identifying the most economically advantageous tender

WDP argued that HF’s quality evaluation team (QET) had taken into account Jones’ ability to provide the gas compliance services under the contract when it scored WDP’s submission, and that this was contrary to the requirement upon HF only to take into account factors aimed at identifying the most economically advantageous tender. Evidence was heard which demonstrated that one of the concerns the QET had taken into account was the performance of Jones on the existing contract it had with HF, and that this was taken into account both in the evaluation and the final consensus making stage.

The High Court considered the case of Lianakis v Alexandroupolis (Case C-532/02), in which the court held that “award criteria do not include criteria that are not aimed at identifying the tender which is economically the most advantageous, but are instead essentially linked to the evaluation of the tenderers ability to perform the contract in question”. However, it considered that the concerns of the QET had been directed towards two considerations:

  1. Why had WDP suddenly disclosed at a late stage that it would be sub-contracting the gas works to Jones?
  2. Did this mean that there was not an established supply chain in place?

The court felt that these were legitimate matters which the QET was entitled to take into account under the published criteria. They had nothing to do with the past performance of Jones and therefore could not be seen to have taken into account criteria which were not appropriate to consider at the supply stage.

WDP had also raised a concern that the QET had interpreted wording used in WDP’s bid to mean that WDP would guarantee Jones’ compliance with gas servicing would be 99.75% rather than the 100% required by the ITT. The court felt that the wording as drafted could naturally read that WDP was proposing to maintain Jones’ current level of performance, at 99.75 %, and that this was not such a plainly wrong interpretation as to amount to a manifest error. Ultimately, on this point the court found that HF did not wrongly take into account the ability of Jones to perform the services when it scored WDP’s quality submission

Additionally, WDP argued that HF had formed an unfavourable view of the ability of its general manager and taken this into account in its scoring of WDP’s quality submission. The court found that although there was evidence that the particular manager’s ability was held in low esteem, there was no evidence that this had been taken into account in the scoring.

Evaluation of the tender by reference to award criteria which were not specified (or not clearly specified) in the ITT

HF informed WDP that one of the reasons it had been unsuccessful in its bid was that HF was expecting to see a ‘sea change’ in the proposal for running the contract because of the recognised problems with the way in which the current contracts were being run. HF said that they had “never made a secret of the fact that [they] were looking for a significant change”. The High Court felt that WDP had chosen at various places in their tender to “place a great deal of emphasis on what they portrayed as the successes of the existing contract. They did so although HF thought that the existing contract was far from successful, had made that plain and that WDP were well aware that HF was looking for radical change”. The court felt that HF was entitled to want a ‘sea change’ but that it did not follow that this meant that it wanted a new contractor. HF had made clear the change that it wanted to see: “if a bidder included responses to a particular sub-criteria in a manner which did not recognise the need for change but suggested a future performance based on what had happened before, there is nothing objectionable about saying that this did not represent a good response to the sub-criterion”. The court therefore held that HF had not impermissibly evaluated WDP’s tender on the basis of criteria which were not in the ITT – they considered the manner in which WDP chose to demonstrate how it would comply with the requirements of the new contract.

In relation to the argument that HF had taken into account a general desire to move away from the incumbent supplier the court found that there was no evidence of any political pressure being applied through the chain of command on to the QET. In fact, at the PQQ stage WDP had been awarded the top score, which did not sit with the argument that there was pressure placed on officers to move away from WDP as a supplier.

WDP also claimed that its ICT submission had been marked with reference to criteria which were not included in the ITT, on the basis that the QET had marked it down because it did not use a specialist interfacing software tool and did not have a financial interface (conditions which were not specified in the ITT). The court considered the evidence and held that all bidders had been asked to provide an overview of their full ICT solution. On application of the case of Varney & Sons Waste Management Ltd v Hertfordshire County Council [2011] EWCA Civ 708, in which the court held that defining ‘criterion’ as the “principle, standard or test by which a think is judged, assessed or identified” was not appropriate because “if that definition is appropriate it would mean that Regulation 30 requires every standard by which a bid is evaluated, no matter how minor or subsidiary to be disclosed as such with its proposed weighting. That would seem to me to be impracticable and I do not think it is what Community law requires.” It was therefore not necessary for the contracting authority to spell out anything and everything that would improve a bid if it is included and lose credit if it was omitted. Accordingly, the court held that there was no evaluation by reference to criteria which had not been included in the ITT.

Failing to score quality submissions in accordance with specified methodology

WDP complained that three quarters of WDP’s scores appeared to be the mode score which had been awarded by the QET without any discussion, and that accordingly this meant that different scores could be awarded to two tenderers without any discussion as to whether the different scores were justified on the basis of the tender submissions. In addition to this, some of the scores were awarded by majority vote, neither of which were methodologies set out in the ITT. The court held that the ITT should be interpreted in a way which was consistent with practical workability. It would have taken a great deal of time to have a meaningful substantive discussion about every score. The court felt that there was nothing in the word ‘consensus’ which required a specific discussion of every score and therefore there was no evidence that the quality element of the tender was not decided by way of consensus. The scoring was carried out with the methodology specified in the ITT.

Failing to treat the economic operators in a fair and non-discriminatory way when they scored the tenders
WDP argued that contrary to its obligation to treat all economic operators in a fair and non-discriminatory manner, HF had not applied the award criteria objectively and uniformly as the scores awarded to Mitie and WDP do not properly reflect the difference in quality between the submissions in relation to a number of areas. In considering the evidence on this point, the High Court took the approach set out by the decision in Letting International Ltd v Newham London Borough Council [2008] EWHC 1583 (QB) in which the judge said “… it is not my task merely to embark on a re-marking exercise and to substitute my own view but to ascertain if there is a manifest error which is not established merely because of on mature reflection a different mark might have been awarded… the issue for me to determine is whether the combination of manifest errors made by Newham in marking the tenders would have led to a different result”. The court therefore considered WDP’s arguments as to the elements of the scoring that were wrong, and then took a view as to whether the complaints were justified, bearing in mind the level of discretion owing to the contracting authority.

The court found only one case where a manifest error had been made which had been carried through to the scoring but found that the error would not have changed the final outcome. Overall the court did not find that there had been any systematic unfairness in the marking of the bids and that WDP had therefore not established that there were numerous breaches of the principle of equality and non-discrimination.

If the scoring was fair, the award criteria were insufficiently sensitive to distinguish between different qualities of submission

The court held that on the basis that WDP had not been able to give an example of the criteria being insufficiently sensitive, nor of what would have made the criteria sufficiently sensitive the court was unable to conclude that the award criteria were insufficiently sensitive, or that in the design of the criteria HF breached the principles of equality and non-discrimination.

Failing to verify Mitie’s compliance with the award criteria in breach of the principle of equal treatment

It was argued by WDP that aspects of Mitie’s tender were unrealistic and accordingly should have been verified by HF. The court found that as a matter of common sense it would not be practical or necessary for HF to ‘second guess’ the relative effectiveness of different ways in which a bidder’s business might be run. WDP had not established what it thought HF should have done in terms of verifying Mitie’s compliance with award criteria. Ultimately the court did not feel that this was a case where verification after the PQQ process was required or would have been appropriate. Ultimately there was no breach of the principle of equal treatment.

An implied contract between HF and WDP that WDP would award the contract in accordance with the 2006 Regulations, general principles of EU law and common law principles of equality, non-discrimination, transparency and fairness

The court held that on the basis that this was a case governed by the 2006 Regulations, there was no room for implication of a contract.

Additional questions for the court to answer

WDP also asked the court to answer a number of other questions, including whether WDP would have won the contract but for the breach of statutory duty by HF. On the basis that WDP was not able to establish any breach of statutory duty by HF, it was held that there was no need to consider the question of whether WDP would have won but for the breach. Again, with regards to the question of whether WDP was deprived of the chance of winning the contract but for HF’s breaches, the court found that there was no need to answer this question on the basis of the dismissal of WDP’s other claims.

In reference to the argument of HF that a number of the issues raised by WDP were time barred, the court held that the claims which HF considered to be time barred were merely further, more specific pleadings on issues of the case which had already been pleaded in more general terms within the time limit. If this were not the case, the judge held that he would have allowed the amendments in any event under CPR 17.4 (2) which permits an amendment to be made “if the new claim arises out of the same facts or substantially the same facts as a claim in respect of which the party applying for permission has already claimed a remedy in the proceedings”. The court felt that no prejudice would have been caused to HF because they were able to deal adequately with the claims arising out of the amendments to the claim.

Ultimately, the High Court dismissed all of the claims made by WDP against HF. The approach taken in this case demonstrates the practical approach the courts are taking to procurement challenges, allowing contracting authorities some measure of discretion in scoring bids, in particular moderating to achieve a ‘consensus’ score. Nevertheless, the case demonstrates the importance for local authorities of carefully planning their procurement processes and ensuring that as far as possible every aspect is compliant with procurement law, and in particular the overriding considerations of transparency, non-discrimination and equal treatment of all economic entities as potential claimants will draw out any potential flaws in order to strengthen their chances of success.

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