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Procurement in a Nutshell – The need for clarity in procurement processes

A recent High Court case, MLS (Overseas) Limited v The Secretary of State for Defence, has highlighted the importance of Contracting Authorities ensuring that there are adequate levels of clarity present in their procurement processes; and in particular in relation to the drafting of tenders and the associated scoring criteria.

The case

Following the retendering of logistical support services for the Ministry of Defence (MOD), the incumbent provider of the services, MLS (Overseas) Limited, challenged the lawfulness of the procurement process after it failed to win the contract.

MLS was particularly aggrieved given that its tender submission was found to be “commercially compliant, offered the lowest price and was awarded the highest score in the technical evaluation”, but was unsuccessful on the basis that it failed to submit a response to question 6.3 – a request for evidence that a safety culture existed throughout its supply chain.

Consequently, MLS sought to challenge the contract’s award on the basis that:

  • The Invitation to Tender did not specify the consequences of a party receiving a “fail” score for an individual question – as such, the MOD had breached its obligations of transparency and equal treatment; and
  • The MOD had made a manifest error in considering MLS’ answer to question 6.3 as a “fail”.

The Judgment

When considering the Judgment, it is important to note that, despite the procurement being subject to the Defence and Security Public Contracts Regulations 2011, the same principles are applicable to procurements governed by the Public Contracts Regulations 2015.

Did the Invitation to Tender breach the MOD’s obligations of transparency and equal treatment?
The court noted that the Regulations must be interpreted by reference to the principles of equal treatment and transparency in respect of the award of contracts. Furthermore:

“[In] the context of invitations to tender for public contracts: the award criteria must be formulated in such a way as to allow relatively well informed and normally diligent tenderers to interpret them in the same way.”

As such:

“[The] question was not whether it had been proved that all actual or potential tenderers had in fact interpreted the criteria in the same way, but whether the court considered that the criteria were sufficiently clear to permit of uniform interpretation by all [such] tenderers.”

Likewise, it was common ground between the parties that the invitation to tender did not include a statement setting out the consequences of a tenderer receiving a “fail” score for question 6.3.

Additionally, when considering other aspects of the invitation to tender such as the statements that:

  • The winning tender would be the most economically advantageous tender;
  • There was a mandatory requirement for the winning tender to be the most commercially compliant; and
  • The winning tender must obtain the minimum requirement where annotated for Technical Evaluations.

Mrs Justice O’Farrell held that

“The Reasonable Tenderer would not understand whether or how a “fail” score against the response to Question 6.3 would, or could, result in a rejection of the tender.

Accordingly, the MOD acted unlawfully, in breach of its obligations of transparency and equal treatment, in applying criteria that were arbitrary or not sufficiently clear… and rejecting MLS’ tender on that ground.”

Did the MOD make a manifest error in considering MLS’s answer to question 6.3 to be a “fail”
In relation to the second claim, as part of its submission, MLS sought to argue that despite failing to provide a direct response to question 6.3, the MOD should have been able to ascertain the required information from its other submitted answers.

In the alternative, MLS argued that where there was a lack of clarity, the MOD should have sought further clarification and evidence.

On the basis that neither of the above took place, MLS alleged that the MOD committed a manifest error by regarding MLS’ lack of submission to question 6.3 as a “fail”.

However, contrary to this, the MOD stated that it was under no obligation to seek further clarification and “had to be careful to avoid overstepping the line and treating MLS in a more favourable way than other tenderers”.

Mrs Justice O’Farrell noted that the MOD had provided MLS with two opportunities to clarify where it could find the relevant information in the tender documentation – both of which were ignored.

“To address the inadequacies identified by the MOD, MLS would have been required to provide additional evidence to support its bid. There is a risk that the submission of additional evidence could be characterised as a fresh tender, giving rise to a claim by other tenderers of unfair advantage.”

Consequently, MLS failed to demonstrate that there had been a manifest error by the MOD. “The evaluation of MLS’ tender by the MOD, including MLS’ response to question 6.3, was based on a consideration of all relevant matters, did not take into account any irrelevant considerations, and was rational.” As such, MLS were unsuccessful with their second claim.

Why is this important?

The facts of the case, as well as the Judgment, are a useful reminder of the need for clarity in all aspects of procurement processes. Contracting Authorities are reminded of the importance of limiting ambiguity in tender documents, while bidding parties must be sure to answer questions as fully as possible if they hope to be successful.

How can I find out more?

If you have any queries on the issues raised or on any aspect of procurement, please contact us via our procurement hotline on 0191 204 4464.

Please note that this briefing is designed to be informative, not advisory and represents our understanding of English law and practice as at the date indicated. We would always recommend that you should seek specific guidance on any particular legal issue.

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