All About Rights Law Practice, R (on the application of) v The Lord Chancellor [2013] EWHC 3461 (Admin)

[2013] EWHC 3461 (Admin)Case No CO/10602/2010
IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
ADMINISTRATIVE COURT
Venue Royal Courts of Justice, Strand, London, WC2A 2LLDate 15/11/2013
Before
THE HON MRS JUSTICE CARR DBE
Between
THE QUEEN (ON THE APPLICATION OF ALL ABOUT RIGHTS LAW PRACTICE)ClaimantTHE LORD CHANCELLOR (as successor to THE LEGAL SERVICES COMMISSION)Defendant
Simon D Butler and Tom Rainsbury (instructed by All About Rights Law Practice) for ClaimantFiona Scolding (instructed by the Treasury Solicitor) for DefendantHearing Hearing dates: 29th and 30th October 2013
Approved Judgment

Introduction

[1]All About Rights Law Practice (“AAR”) is a niche solicitors’ practice based in Dartford, Kent. It is the trading style of Mr Ranjan Nadarajah, who operates as a sole practitioner. Mr Nadarajah undertakes exclusively mental health work, and nearly all of it on a publicly funded basis. The grant of legal aid is mandatory for mental health work.[2]The Legal Services Commission (“the LSC”) had responsibility for the provision of legal aid in England and Wales. It was a non-departmental statutory corporation established by Part 1 of the Access to Justice Act 1999, replacing the Legal Aid Board in April 2000. In due course the day to day administration of legal aid was passed to the Legal Aid Agency, an executive agency of the Ministry of Justice. The rights and liabilities of the LSC were transferred to the Lord Chancellor pursuant to paragraph 7 of Schedule 4 of the Legal Aid, Sentencing and Punishment of Offenders Act 2012.[3]In or about 2009 the LSC decided to supersede the provision of legal aid through the Unified Contract (Civil) 2007 by granting contracts to those selected through tendering exercises. There were separate exercises in different areas of law, with some 10,000 bids in total across the civil tender round. The LSC’s tendering exercise for the procurement of mental health services in England and Wales took place in 2010.[4]AAR submitted a bid in the 2010 tender for mental health work relating to Strategic Area Authorities in the London south-east coast area. The bid was rejected (in June 2010) in circumstances set out more fully below, but essentially because of a failure by AAR to submit a completed mandatory form. It is that rejection which Mr Nadarajah seeks to quash on this judicial review.[5]There is no dispute that Mr Nadarajah fulfilled all of the criteria such as to be awarded a contract. Nor is it in dispute that, had all the necessary forms been duly completed and submitted before the relevant deadline, Mr Nadarajah would have secured a contract.[6]The consequences of rejection could have been significant. It is estimated that the value of the contract, if awarded, would have been in the region of £270,000. AAR has, however, been awarded interim relief since May 2011 in the form of being awarded 12 “new matter starts” (“NMS”) per month. This is a larger number than would have been awarded under the contract. Moreover, the contract that would have been awarded would have expired by now. A short extension has been granted to March 2014 with a new tender round due to launch in January 2014. The current dispute has therefore become largely academic.[7]The only real issue now between the parties appears to be one of costs. I question whether this exercise has been a proportionate use of court time and resources, or indeed the parties’ resources. The parties have presented 4 bundles of authorities and reference material, 2 core bundles, together with 5 additional bundles of documents including multiple witness statements on either side. The hearing itself lasted 1 ½ days, accompanied by detailed written skeleton arguments. The comments of Lord Phillips M.R in Jameel v Dow Jones and Co [2005] QB 946 at paragraph 54 come to mind :
“An abuse of process is of concern not merely to the parties but to the courts. It is no longer the role of the court simply to provide a level playing field and to referee whatever game the parties choose to play upon it. The court is concerned to ensure that judicial and court resources are appropriately and proportionately used in accordance with the requirements of justice.”

Background to the Tender

[8]On 30th November 2009 the LSC launched the first wave of civil tenders, covering all areas of work where public funding was available. The contracts to be awarded following tender were for a 3 year period with the possibility of a 2 year extension. The first tender round involved immigration and asylum. The LSC had carried out a public consultation exercise (a document issued in October 2008, and then a consultation response in June 2009) about the nature of the tendering process, the services it wished to procure, and the design of the tender. It had also met with relevant representative bodies. It had designed, following these consultations, a number of tenders best to reflect both the services that those in need of access to justice required and the fact that the budget for the provision of those services was finite. In immigration, asylum, debt, housing, welfare benefits, community care, employment, education, actions against the police, high secure mental health hospitals, fast track immigration detention schemes and family, the LSC used selection criteria so as to award contracts to those who best met the criteria.[9]In public law, clinical negligence and mental health, consumer and personal injury, the process was limited to passing the PQQ and essential criteria. This was because of the smaller number of providers in these areas, and the fact that there was less competition for the available work.[10]The tendering exercise as a whole has proved a fertile source of litigation: see for example the quashing of the entire tender in the family law context : Law Society of England and Wales v Legal Services Commission [2010] EWHC 2550 (Admin) (Divisional Court).

The Tender process

[11]The tender took place by way of an e-tendering system. Paper applications were not allowed. The mental health tender was the second tender to be launched by the LSC. It opened on 10th February 2010. The stipulated deadline for submission was 12 noon on 31st March 2010.[12]The tender had a set of terms and conditions (contained in the Information for Applicants (“IFA”)) and was governed by the Public Contract Regulations 2006 (as amended) (“the Regulations”).[13]Response to the tender involved a bidder completing various forms, namely a Pre Qualification Questionnaire (“PQQ”) and a response to the Invitation to Tender (“ITT”), including a Tender Information Form (“TIF”). The PQQ was the entry point for tenderers. Its purpose was to enable the LSC to assess whether an organisation met the LSC’s minimum standards of suitability for a publicly funded contract. It applied irrespective of the nature of the work bid for. It was a series of questions focussed upon the bidders’ standing with various statutory agencies (such as HMRC) and whether or not they complied with various regulatory requirements. Only if the PQQ was passed would a bidder be considered for the contract bid for.[14]The TIF was described as a “mandatory form”, setting out details of the bid and providing answers to questions about suitability for the grant of a tender. Amongst other things, it included a requirement : a) To confirm the number of NMS bid for and in which procurement area; b) To tender for at least the minimum NMS in the procurement area; c) Not to tender for more than the maximum NMS available.[15]Applicants had to type text into fields in the PQQ and the tender, including the TIF.[16]Upon passing the PQQ and successful submission of the information required, tenderers in the mental health process were guaranteed a contract with a minimum allocation of 30 NMS. Subject to a capacity test, remaining NMS would be allocated up to the level bid for in each of the successful tenders. If that allocation were to exceed the NMS available, then all bids would be reduced on a pro rata basis to ensure a fair allocation of work.[17]The IFA for the mental health tender was divided into twelve sections. Section 1 contained an overview. It stated, amongst other things, that “a completed tender consists of a response to the PQQ and a response to an ITT (including the Mandatory Form”, and that tenders received after the deadline of noon on 31st March 2010 would not be considered. Section 3 advised applicant organisations to familiarise themselves with the Terms and Conditions in section 11. Section 4 identified documents related to the IFA, and stated that the ITT included “(2) Tender Information Form (Mandatory Form)”.[18]Sections 9, 10 and 11 of the IFA merit particular attention. The most material parts of sections 9 and 10 provided as follows :
“Section 9 : how to submit a tender (responding to the PQQ and ITT s) Introduction 9.1 This section covers how Applicant Organisations must submit a compliant tender and how to use the eTendering system to do so. … 9.3 A completed tender will consist of a response to both a PQQ and an ITT: (1) PQQ • Response to the questions • Response to the Applicant Information Form (non-mandatory); and, if applying for the SQM: • -the Applicant Organisation must as part of the PQQ response submit a completed QM1 Form its Office Manual and (2) ITT • Response to the questions • Response to the Tender Information Form (Mandatory Form); and • A completed Supervisor Declaration Form for each Supervisor (non-mandatory). Mandatory and non-mandatory forms 9.4. The Tender Information Form is the only Mandatory Form, which must be submitted with the applicable ITT in order for a tender to be completed. The SQM documents are dealt with in Section 6……. Bidding for Matter Starts 9.7 To tender for Matter Starts: • Depending on the ITTs you respond to, you must confirm on the Tender Information Form the number of Matter Starts that you are tendering to deliver from each Procurement Area and if applicable for each High Security Hospital…….. • You cannot tender for more than the maximum capacity, set at 150 Matter Starts per full time equivalent staff member delivering Mental Health Services (full time equivalent equates to at least 35 hours per week). • You do not need to have employed all caseworkers and Supervisors by the date you submit your response to the ITT but you must be able to provide evidence that you have recruited all staff when we contact you 8 weeks before the contract start date…… Steps to submitting a tender 9.14 Below we provide an overview of the steps that an Applicant Organisation must follow in order to tender to deliver Mental Health Services. Introduction • Response to the questions • Response to the Applicant Information Form (non-mandatory); and, if applying for the SQM: • -the Applicant Organisation must as part of the PQQ response submit a completed QM1 Form its Office Manual and (2) ITT • Response to the questions • Response to the Tender Information Form (Mandatory Form); and • A completed Supervisor Declaration Form for each Supervisor (non-mandatory). Bidding for Matter Starts • Depending on the ITTs you respond to, you must confirm on the Tender Information Form the number of Matter Starts that you are tendering to deliver from each Procurement Area and if applicable for each High Security Hospital…….. • You cannot tender for more than the maximum capacity, set at 150 Matter Starts per full time equivalent staff member delivering Mental Health Services (full time equivalent equates to at least 35 hours per week). • You do not need to have employed all caseworkers and Supervisors by the date you submit your response to the ITT but you must be able to provide evidence that you have recruited all staff when we contact you 8 weeks before the contract start date…… Organisation must follow in order to tender to deliver Mental Health Services. 9.15 A tender will consist of your responses to the: (1) PQQ; and (2) ITT (which includes the Mandatory Form (Tender Information Form) Essential Criteria and where applicable Selection Criteria). 9.16 … • Tender Information Form You must complete a Tender Information Form, providing details for each Strategic Health Authority or High Security Hospital you are tendering to deliver work at, giving details about the volume of work you are tendering for, and information about how the work tendered for will be delivered, including staff details….. • PQQ and ITT Declarations You must confirm that the PQQ is up to date and certify on behalf of the Applicant Organisation that your response to the ITT is accurate….. Pre Qualification Questionnaire 9.22 The PQQ’s purpose is to enable us to assess whether an applicant Organisation meets our minimum standards of suitability for a publicly funded legal aid contract and to gather certain other information about Applicant Organisations….. 9.27 It is the Applicant Organisation’s responsibility to ensure that it makes full use of this opportunity in order to provide comprehensive details of any exceptional circumstances. We are under no obligation to seek further information or clarify a response – and will not do so where in our opinion this would give an Applicant Organisation an unfair opportunity to improve their response…… 9.29 If an Applicant Organisation fails any PQQ question, the PQQ will be unsuccessful and none of the Applicant Organisation’s tenders will be considered further….. Tender Information Form (Mandatory Form) 9.37 Applicant Organisations must complete and upload with their response to the ITT, the Tender Information Form…. What happens once a response is “published”? 9.55 Responses to ITTs submitted will be treated as sealed bids. This means that the LSC will not open any responses until after the deadline for the tender exercise. 9.56 Applicant Organisations can therefore amend and resubmit their responses to the ITTs up until the closing date for tenders to be submitted. 9.57 Responses will be automatically acknowledged when they are published for the first time. There will be no acknowledgment of resubmitted responses where Applicant Organisations amend and republish their response to an ITT. We will assess the latest published response. Section 10 : how will tenders be assessed and Matter Starts awarded? … PQQ … 0.3 We expect all Applicant Organisations to confirm compliance with all our PQQ requirements. If an Applicant Organisation fails the PQQ then it will not be considered further and their tender will be unsuccessful…. Appeals … 10.20 A completed tender will consist of (1) a response to the PQQ and (2) a response to the ITT (including the Mandatory Form) submitted prior to the deadline of 12 noon on 31 March 2010…. 10.22 There will be no rights of appeal against a decision to reject a tender if it is incomplete or if a tender is received after 12 noon on 31 March 2010 (or after any deadline set by a request for clarification or further information) or is not received by the LSC at all…”

Bidding for Matter Starts

[19]Section 11 of the IFA governed the applicable terms and conditions and included the following :
“11.2 Submission of a tender which fails to comply with any Terms and Conditions of Tender, User Agreement or other rules, conditions of contract award and instructions shall, without affecting the Applicant Organisation’s liability for non compliance, entitle the LSC to reject a tender, assess the tender as unsuccessful and/or entitle the LSC not to proceed with any decision made to award the Applicant Organisation a Contract or entitle the LSC to terminate the contract pursuant to Clause 25 of the Standard Terms……. 11.7 For a tender to be complete, the Applicant Organisation must, prior to the deadline, submit a tender consisting of (1) a response to the PQQ and (2) a response to an ITT (including the Mandatory Form). 11.8 The Applicant Organisation must not amend or alter any document comprising part of the tender after the deadline. 11.9 After the deadline any information or documents submitted in response to a request for clarification or further information (in accordance with paragraph 11.25) will also form part of the Applicant Organisation’s tender. 11.10 In the event of any conflict between the information, answers or documents submitted as part of a tender, the conflict will be resolved by accepting the information, answer or document least favourable to the Applicant Organisation. 11.11 It is the responsibility of Applicant Organisation to make sure that a tender is fully and accurately completed (including any Mandatory Forms). The LSC is under no obligation to contact the Applicant Organisation to clarify its tender or to obtain missing information or Mandatory Forms….. 11.19 A tender will be rejected if it (or any part of it) is submitted after the deadline nor will the LSC consider (1) requests to submit the tender (or any part of it) after the deadline or (2) requests for an extension of the time or date fixed for the submission of the tender (or any part of it)…. 11.25 Should the LSC, at any time during the tender process, request the Applicant Organisation to give additional information/clarification the Applicant Organisation should be prepared to provide additional information and/or clarify any aspect of a tender by the deadline set out in the request. The LSC reserve the right to validate any part of the Applicant Organisation’s tender and information subsequently given to it.”
[20]It can be seen from the above and in particular, from section 9, that the submission of a TIF was a mandatory requirement. Opportunities to amend an ITT were available up to but not beyond the tender deadline. No responses would be opened until after the deadline. Further information or clarification could be sought by the LSC, although there was no obligation on the LSC to do so, but only in respect of any exceptional circumstances relating to the PQQ.

AAR’s bid

[21]In good time Mr Nadarajah and his secretary set about completing the necessary forms. He intended to tender for 150 NMS. He submitted his forms electronically on 26th March 2010. Automatically generated acknowledgments (stating that the responses had been “successfully published”) were received at 1530 hours (PQQ response) and 1630 hours (ITT response) on the same day.[22]Unbeknownst to Mr Nadarajah (and his secretary), however, the TIF that had been submitted by them was in blank. This was an inadvertent error on their part.[23]On 10th June 2010 Mr Nadarajah received a letter from the LSC stating that his tender had been rejected because of the blank TIF:
“RE: Invitation to tender to deliver publicly funded Mental Health Services in Strategic Health Authorities in England and Wales. Further to what is said below your tender for the above services has been rejected because you submitted a blank Tender Information Form (TIF) in response to the Invitation to Tender (ITT). As part of the process for tendering to deliver Mental Health Services all Applicant Organisations were required to complete a response to the to the [sic] ITT, including a complete TIF, which was a Mandatory Form, through the eTendering System in accordance with paragraph 11.7 of the Information for Applicants (IFA) document. Whilst we received a response from you to the Pre-Qualification Questionnaire (PQQ) and the ITT questions, we have no record of receiving acompleted TIF for your organisation prior to the deadline of 12 noon 31 March 2010. Accordingly, we are unable to take your tender forward and it has been rejected. Pursuant to paragraph 10.22 of the IFA, there is no right of appeal in these circumstances.”
[24]Mr Nadarajah challenged the rejection by email of 25th June 2010, stating that the decision was “disproportionate and unjust in all the circumstances” and that he would be lodging grounds of appeal. In response, he was told that there were no rights of appeal.[25]Mr Nadarajah then wrote to the LSC on 28th June 2010. Amongst other things, he asserted that the “bid process was flawed as it did not have a very clearly defined validation process to ensure that nothing is missing at the receiving end. There should have been an automatic alert to inform bidders of incomplete applications…”. He complained that he had no reason to think anything had been amiss. Mr Nadarajah further stated that he had himself attended an LSC meeting on 4th March 2010 in central London where, he said, speakers had assured attendees that the process was “fail safe” and “automatic alerts would prevent incomplete applications”. Other points were made, and it was repeated that rejection was “disproportionate and unjustified”.[26]But the LSC was not to be moved. On 8th July 2010 it wrote :
“Tender to Deliver Publicly Funded Mental Health Services”
Thank you for your letter dated 28 June 2010. Further to what is said below, I can confirm that the LSC is unable to progress your tender to deliver Mental Health services further. The information, instructions, rules, conditions of contract award and Terms and Conditions of tender relating to the tendering process to deliver Mental Health services are set out in the Information for Applicants ("IFA") which was made available to all current and potential providers of these services. Section 4 IFA makes it clear that a valid tender response consists of the following: ◦ Pre Qualification Questionnaire ◦ Response to ITT – Including the Tender Information Form ("Mandatory Form") As specified in section 10.22 of the IFA there is no right of appeal where a valid tender response was not submitted prior to the deadline of 12 noon on 31 March 2010, however, I have reviewed the eTendering records and I am satisfied, as a matter of fact, you did not submit a completed Tender Information Form before the deadline referred to above. I am, therefore, satisfied that your tender was validly rejected under the rules of the tender process. I am also satisfied that the LSC has conducted the tender in accordance with the relevant law, and in particular the Public Contracts Regulations 2006, in so far as they concern Part B services contracts. In this context the Commission's obligations are broadly that it treats economic operators equally and that it acts in a transparent way. I do not accept that the process was flawed as you assert in your letter. In the context of a tender where there is direct competition for a limited number of matter starts, I hope that you will accept that we have to insist on these requirements in fairness to other tenders. Section 11.11 of the IFA states “It is the responsibility of the Applicant Organisation to make sure that a tender is fully and accurately completed (including any Mandatory Forms). The LSC is under no obligation to clarify its tender or to obtain missing information or Mandatory Forms.” Whilst I do have sympathy for your situation having regard to the circumstances set out above I confirm the decision.” Section 4 IFA makes it clear that a valid tender response consists of the following:

Section 11.11 of the IFA states

[27]Two other solicitors’ firms in the mental health tender suffered the same fate. I will call them CC and GN. CC and GN also submitted blank TIFs. No clarification was sought of them by the LSC and their bids were also rejected.

Procedural history of this litigation

[28]The claim has a chequered and controversial history. It was lodged on 8th October 2010, AAR having previously sought to intervene in the judicial review proceedings which led to the disposal of the family law tendering exercise. Permission to apply was granted on paper on 21st October 2010. A three day hearing took place before Davis J (as he then was), who dismissed the claim on 14th April 2011 - see the judgment at [2011] EWHC 964 (Admin). Three grounds of challenge were rejected by Davis J : a) ground 1 : obligation on the LSC to draw to the attention of AAR the omissions in its tender and/or to give AAR an opportunity to remedy; b) ground 2 : failure on the part of the LSC to exercise its discretion or unlawful exercise of discretion; c) ground 3 : irrationality or inequality in the LSC’s “policy” of dealing with incomplete tenders.[29]In disposing of the third ground, Davis J concluded, amongst other things, that there had been no inequality of treatment and that the approach could not be described as irrational, disproportionate or arbitrary. In doing so, at paragraph 71 of his judgment, he cited the LSC evidence (from Ms Kerry Wood) that the LSC had never sought clarification from tenderers where no response had been received to a question.[30]This evidence was in fact materially and demonstrably inaccurate. On 18th April 2011, having seen Davis J’s judgment on the internet, a firm of solicitors called Hersi & Co contacted AAR, disclosing a response by the LSC to a Freedom of Information Act request dated 11th January 2011. That response identified 54 instances where clarification had been sought by the LSC from tenderers in the immigration tender. In particular, it identified that clarifications had been sought in 3 instances where there had been “blank staff details in tender information form” and in 6 instances where a “blank tender information form” had been submitted. Such evidence had never been disclosed to AAR. It was inconsistent with the case presented by the LSC to Davis J.[31]AAR put the LSC on notice of this development on 19th April 2011. A notice of appeal was lodged on 4th May 2011. On 5th May 2011 the LSC accepted that it would be proper for the matter to be remitted. On 1st September 2011, by consent, the order of Davis J was set aside and the matter remitted to this Court to re-open the hearing in relation to grounds (2) and (3) in the judgment of Davis J. Ms Wood of the LSC has apologised for any past misunderstanding or misinformation in her evidence to the Court. The LSC has paid AAR’s costs of the first trial and the appeal.[32]Since then two substantive hearing dates have been vacated (in September 2012 and February 2013 respectively), largely due to disclosure issues. Various case management orders have been made, including a confidentiality order dated 19th September 2012 by Wilkie J. A large quantity of previously unseen material has been disclosed to AAR and further evidence has been filed.

The issues

[33]Many issues have fallen away since the hearing of the claim started out before Davis J. Following an order of Mitting J on 21st February 2013, there is now agreement as to the scope of the issues remaining in dispute and for my determination, namely : a) whether or not the LSC’s decision to reject the tender was proportionate; b) whether or not there has been inequality of treatment between AAR and others.

The evidence

[34]For the purpose of deciding those issues I have before me : a) Various witness statements and exhibits from Mr Nadarajah, including a lengthy one dated 22nd March 2013 addressing matters for this hearing. Beyond deposing to the events surrounding rejection, much of what Mr Nadarajah has to say is pure submission; b) Three witness statements made in August and September 2011 from Ms Melena Ward, a project manager in the LSC’s central commissioning team, together with exhibits, and one from the previously mentioned Ms Wood dated 23rd September 2011. There is also a very recent statement from Mr Lawrence of the Treasury Solicitor, addressing disclosure and late material from Mr Nadarajah; c) Schedules of alleged comparators.[35]The third witness statement of Ms Ward dated 23rd September 2011 is important. Ms Ward was the project manager for the 2010 Civil Contract tender exercise and oversaw the whole process. She provides an overview of the civil tender exercises, including an explanation of the nature of the PQQ.[36]She then sets out the general approach taken by the LSC to clarifications in the exercises. She states that she was aware that when running a tender exercise, the LSC had an obligation under the Regulations and as a matter of public law to treat applicants fairly and equally, and to be transparent about the rules of the exercise. She describes how it was decided at the outset that in each tender there would a clear rule for applicants who did not submit a fully and accurately completed tender – that late amendments or alterations would not be permitted. There was no written policy on clarification, but training material was produced and delivered in April and May 2010.[37]However, in the first (immigration) tender exercise immediate problems were encountered and clarification was sought. Ms Ward states that the immigration exercise was relatively small. Even though the mental health tender was not of the same scale as the family and social welfare tender exercise, the tender processes overlapped and she did not have enough staff to consider the mental health and family and social welfare tender if the same proportion of issues arose in those tenders for clarification as had arisen in the immigration process.[38]In relation to PQQ responses, Ms Ward says this (at paragraph 40) :
“The LSC took a more flexible approach to clarification of PQQ responses, as the answers given could not have provided an advantage over other bidders, as the PQQ merely allowed a bidder to be considered for a contract. The circumstances in which we clarified selection criteria were limited…but we did not clarify any selection criteria where no answer had been given at all to the criterion, even if there was information elsewhere in the tender related to these issues.”
[39]Ms Ward also addresses the clarification approach undertaken in specific civil tender exercises. Where she addresses the approach relevant to specific bids relied upon by AAR as comparators, I refer to that evidence below.

Alleged comparators

[40]AAR relies on the following alleged comparators : a) NM1 : mental health tender : the applicant failed to submit a PQQ before the deadline. In upholding the appeal and award the contract, the LSC observed that the tenderer had “attempted to tender but failed to send in the complete documentation required. Rather than being attributed to a technical error I am satisfied that the lack of response to the PQQ was attributable to an oversight or other error on your part. It is evident from your representations and submission of the ITT that you had intended to submit a compliant tender including the PQQ….I accept that you are in a different category from an organisation that has failed entirely to progress any part of its tender. It is my view that you will be allowed a further opportunity to submit your PQQ because this tender process was non-competitive.” AAR says that there is no difference between the position of NM1 and AAR. There was oversight and a complete failure to submit a document without which NM1 could not get to the ITT stage; b) H01: immigration tender : the applicant failed to submit a PQQ before the deadline. In upholding the appeal it was observed that the confirmation email could have been misleading and that:
“the issue is therefore whether such oversight or minor error could or should be remedied at this stage. I accept that the Applicant is a different category from an organisation that has failed entirely to progress any part of its tender…I am prepared to accept that the failure to submit the PQQ can be attributed to a simple oversight or other minor error on the part of the Applicant Organisation rather than a more fundamental failure to grasp the rules and instructions of the tender process.”
AAR submits that the immigration tender was also a non competitive process and the same thought process should have applied to AAR; c) AM1 : mental health tender : the applicant supplied additional information on the TIF about a new supervisor who had not worked at the firm when the tender was completed. It was a requirement that there had to be a FTE supervisor for every 6 caseworkers. AM1 had stated that it had one supervisor for 7 caseworkers. In its representations AM1 sought to adduce additional information that a new supervisor had joined the firm after the tender. It had listed him as a caseworker rather than a supervisor “in anticipation of him joining our firm”. A contract was then awarded. The decision observed that “but for the mistake or error, the appellant would have met the relevant criteria…Therefore it is my view that to allow the appellant to amend its TIF response would not amount to giving the appellant an opportunity to improve its tender”; d) SB1, OM1, JDS1 and PE1 : mental health tender : the applicants were all permitted to “restructure” their bids after they had submitted tenders for NMS below the minimum. SB1 elected to remove its bid for NMS in Yorkshire and Humber and sought to bid for 105 NMS in the East Midlands area. OM1 asked to withdraw its tender in certain areas and clarified that it sought to tender for 100 NMS in East England and 50 NMS in East Midlands. PE1 asked to alter an area after the deadline. In all cases, contracts were awarded. AAR again says that these cases are comparable; e) F1 : mental health tender : a contract was awarded despite F1 not being in existence when the tender was made. Additional information was sought to satisfy the LSC of the name of the persons who would provide the number of NMS; f) AAM1 and SC01 : mental health tender : these applicants successfully amended their TIFs after the deadline. The LSC asked for details of contract of employment, date of commencement and hours worked by caseworkers. AAM1 requested that a caseworker’s hours be reduced from 17.5 hours to 3.5 hours. SC01 requested that a caseworker’s hours be reduced from 3 days per week to 2.5 days per week. In each case the amendments were granted; g) Firms on Schedules 9A (immigration tender), 9B (mental health tender) and 9C (social welfare law and family tender) : the LSC decided to amend tenders using its own internal database without the applicants’ knowledge, having conducted internal checks which revealed that the disclosed peer rating was incorrect. The firms, including 3 in the mental health tender process, were then awarded contracts; h) Firms on Schedule 20G : social welfare and family tenders : the applicants failed to submit their PQQs before the deadline. In extending time the LSC observed that the “failure to submit the PQQ can be attributed to a simple oversight or other minor error on the part of the Applicant Organisation rather than a more fundamental failure to grasp the rules and instructions of the tender process.” i) PH and TVF1 : social welfare and family tenders : the applicants made a mistake in responding to a request on the PQQ. PH ticked “no” rather than “yes” when asked if it had a member of staff with at least one year’s experience at managerial level in the preceding five years. In the case of TVF1, the firm’s tender was initially rejected for answering “no” when asked if it provided legal advice. Both were subsequently awarded contracts; j) CGM1, HCM1, KR1 and NS1 : social welfare and family tenders : the applicants wrongly indicated on their PQQ forms that the firm or staff members had fraud convictions. All were permitted to make amendments.[41]AAR contends that in all the common theme of the above cases is that, post deadline, tenderers were allowed to improve their bids after an inadvertent error which affected the tender’s validity. In this sense, they should be seen as “like for like” with AAR. The difference in treatment for AAR was not objectively justified.[42]The LSC contends that there are only 2 comparators, namely CC and GN, alternatively that only participants in the mental health tender are appropriate comparators. The LSC denies that there has been any unequal treatment by reference to the narrower or broader group of participants. I. The Law General[43]The LSC’s decisions with regard to the award of legal aid contracts are justiciable – see for example R v Legal Aid Board ex parte Donn [1996] 3 All ER 1.[44]As an overarching principle, it is important to remember that when assessing potential errors of discretion or judgment by the LSC under the procurement regime (as opposed to a failure to comply with an obligation as to equality), there must be allowance for an appropriate margin of appreciation – see for example the judgment of Richards J (as he then was) in JB Leadbitter& Co Ltd v Devon County Council [2009] EWHC 930 (Ch) at para 55 :
“55. I conclude therefore that the principle of proportionality is capable of applying to the implementation of the terms of a procurement process. In considering its application in a particular case, there are obviously factors to be borne in mind. First,…the exercise of discretionary powers necessarily involves judgment on the part of the contracting authority. The court must respect this area for judgment and will not intervene unless the decision is unjustifiable. This, I would think, is the proper meaning of a manifest error in this context. It will be remembered that in paragraph 43 of the judgment in Tideland Signal, the court stated that the Commission’s decision to reject the tender without first seeking clarification “was clearly disprortionate and thus initiated by a manifest error of assessment”
. In Lion Apparel Systems Ltd v Firebuy Ltd [2007] EWHC 2179 (Ch)…Morgan J set out a number of principles applicable to procurement distilled from the decision of the Supreme Court of Ireland in SIAC Construction Ltd v Mayo County Councio [2002] IESC 39…and the decision of the court of First Instance in Case T-250/05 Evropaiki Dynamiki v Commission. He said at paras 36 – 38 : “36. If the Authority has not complied with its obligations as to equality, transparency or objectivity, then there is no scope for the Authority to have a “margin of appreciation” as to the extent to which it will, or will not, comply with its obligations. 37. In relation to matters of judgment or assessment, the Authority does have a margin of appreciation so that the court should only disturb the Authority’s decision where it has committed a “manifest error”. 38. When referring to “manifest error” the word “manifest” does not require any exaggerated description of obviousness. A case of “manifest error” is a case where an error has clearly been made.”” “36. If the Authority has not complied with its obligations as to equality, transparency or objectivity, then there is no scope for the Authority to have a “margin of appreciation” as to the extent to which it will, or will not, comply with its obligations.[45]The Court should therefore not intervene in the LSC’s assessment unless it is satisfied that there has been some manifest error or unjustifiable conduct, and the threshold is high. By way of example, considerations such as the scale of the operation in question, and the impact of opening or reviewing the bidding process on successful and unsuccessful tenderers, were all potentially legitimate matters for the LSC to bear in mind in exercising its judgment.

Proportionality

[46]By virtue of Regulation 47A of the Regulations, the LSC was under an obligation to comply with any enforceable Community obligation in respect of a contract. That carried with it the legal principles of proportionality and good administration.[47]Proportionality requires that measures adopted by the contracting authority do not exceed the limits of what is appropriate and necessary in to attain the objectives pursued and that, where there is a choice between several appropriate measures, recourse must be had to the least onerous – see Tideland Signal Ltd v European Commission [2002] ECR II – 3781.[48]In R (on the application of Harrow Solicitors and Advocates) v LSC [2011] EWHC 1087 (Admin) His Honour Judge Waksman QC sitting as Judge of the High Court reviewed the authorities, including Antwerpse Boukewerken v European Commission [T-195/2008], and discerned the following principles (at paragraph 30) :
“1) All tenderers must be treated equally; 2) It would violate that principle and the principle of good administration in the tendering process if any tenderer were permitted to change its bid after bidding had closed; 3) If the awarding authority had a discretion to seek clarification about a bid from the tenderer, the court would not normally interfere with the exercise of that discretion unless a) it was exercised unequally or unfairly across the relevant bidders or b) it was not exercised, yet it appeared to the awarding authority that there was an ambiguity or obvious error which probably had a simple explanation and could be easily resolved; seeking clarification in the latter case was required in order that consideration of what might be an advantageous bid should not be excluded; it would be for the awarding authority to determine whether the clarification exercise would be simple or not. 4) But any purported clarification must not amount to a change in the bid.”
[49]It is clear that in appropriate circumstances proportionality may require the acceptance of late submissions of a tender : see Leadbitter (supra) and Azam Co v LSC [2010] EWCA Civ 1194 (although in neither of those cases was disproportionality found on the facts). But it is also clear from Tideland Signal (supra) that clarification or correction of bids is only permissible if there are obvious slips which can readily and easily be put right without improvement to the bid or a disadvantage to others. This was re-affirmed in SAG ELV Slovensko AS and others v Urad re verejne obstaravanie (Case C-599-10) at paragraph 40 (cited with approval by the Court of Appeal in R (on the application of Hossacks (a firm of solicitors) v LSC [2012] EWCA Civ 1203at paragraph 18) :
“40. Nonetheless, Article 2 of that directive does not preclude, in particular, the correction or amplification of details of a tender where appropriate, on an exceptional basis, particularly when it is clear that they require mere clarification, or to correct obvious material errors, provided that such amendment does not in reality lead to the submission of a new tender….”
[50]These principles were approved again most recently in Ministeriet for Forskning, Innovation og iderergaende Uddannelser v Manova A/S (C-336/12) at paragraphs 30 to 40, where the court also indicated that it was for the contracting authority to comply strictly with the tender criteria laid down.[51]The courts have also recognised the risk of abuse if mistakes were allowed to be corrected, with tenderers having second thoughts – see JR Jones v Legal Services Commission [2010] EWHC 3671 at paragraph 67 - and the administrative burden and un-workability of allowing for multiple occasions for the correction of bids – see SECAP v Commune de Torino [2008] 2CMLR 1558 at paragraph 32.[52]Finally on the law, I was referred to chapter 7 of The Law of Public and Utilites Procurement (2005) by Professor Sue Arrowsmith. I have not found it of any material assistance on the facts of this case. No clear conclusion is expressed as to the principles of proportionality to be applied. More importantly, the work was published in 2005 and so well before the more recent jurisprudence referred to above.

Equality

[53]Regulation 4(3) a) of the Regulations provides that :
“A contracting authority shall (in accordance with Article 2 of the Public Sector Directive Article 2 of the Directive adds nothing to the scope of the regulation. ) a) treat economic operators equally and in a non-discriminatory way; and b) act in a transparent way.”
It is common ground that the LSC was a “contracting authority” and AAR an “economic operator” within the meaning of the Regulations.[54]The principle enshrined in regulation 4(3) lies at the heart of the Public Contracts Directive – see SIAC Construction Ltd v County Council of the County of May (Case C-19/00). The principle requires that comparable situations must not be treated differently, and that different situations must not treated in the same way unless such treatment is objectively justified – see Fabricom SA v Belgium (Joined Cases 21/03 and C34/03).[55]There is therefore a two stage test, namely to identify : a) who is in a comparable position and who is not, and b) if two bidders are in a comparable position, whether there are objective grounds for different treatment.[56]In identifying appropriate comparators, useful guidance can be found in the judgment of Stanley Burton LJ in Hossacks (supra) at paragraph 23 :
“In my judgment, in order to succeed on this issue, the Appellant must first point to one or more instances in which an applicant whose application was as fundamentally flawed as were here was permitted to change its application or applications was or were then accepted as complaint with the tender rules. It is only if the Appellant can show that there were such instances that the question can arise whether the Commission acted in breach of its duty to treat applicants equally and consistently when it rejected the Appellant’s applications.”

J. Findings on issue 1 : proportionality

[57]AAR contends that the LSC’s inflexible approach of treating its application as incomplete and rejecting the bid without further consideration was disproportionate and/or irrational. This was a classic case of an “obvious error”. AAR’s fault was limited, the error was quick and easy to remedy, the adverse consequences for AAR would be significant and there would be only limited unfairness to others. The LSC’s treatment of others (in seeking clarification and allowing amendments) was also relevant to the issue of proportionality. Reliance was also placed on the fact that the PQQ was an essential document and even, so it was said, “the most important” part of a tender. At least one other firm in the mental health tender process had been allowed to submit a new PQQ after the relevant deadline.[58]AAR emphasises that a tenderer in the mental health process was guaranteed a contract. This was a non-competitive tender. The TIF did not contain essential information for the bid. The majority of the information missing could have been identified by the LSC from other material submitted by the AAR. Thus, the submission of a completed TIF would not amount to a new bid.[59]In my judgment, however, the LSC’s decision to reject AAR’s bid because of the submission of a blank TIF was not disproportionate : a) this was a non-responsive tender by AAR; b) the IFA made it abundantly clear completion of the TIF was mandatory (for example in section 4 and paragraphs 9.3, 9.4, 9.16 and 9.37) and that it was AAR’s responsibility to complete the tender fully and accurately (for example in paragraph 11.11) and that tenderers could not amend or alter any part after the closing deadline (in paragraph 9.56); c) the TIF was of fundamental importance – it was the heart of the bid, setting out amongst other things the number of NMS sought, in what area and using what staff the services were to be provided; d) even if there were other necessary documents, including the PQQ, the TIF was singled out in the IFA as being the only “mandatory form” that had to be completed and submitted (see paragraph 9.4); e) to have allowed submission of a completed form would have been effectively to allow submission of a new bid. This was not a situation of clarification of ambiguity or an obvious error arising out of information provided. The TIF had been submitted completely blank; f) moreover that new bid would have improved AAR’s position and disadvantaged that of others (by reducing the pool of NMS available to other bidders); g) contrary to AAR’s contention, the necessary information could not have been obtained (reasonably or at all) from other material submitted by AAR, specifically as to the number of NMS being bid for and also the address(es) from which the legal services were to be provided. As to the size of the bid, the LSC had no knowledge. As to address, whilst the LSC could have identified the address of AAR, it could not have identified whether or not any other addresses might be used. And here Mr Radnajarah did indeed wish to practise from another address, namely his home in London. Moreover, to the extent that other information was available from other documents, such documents were non-voluntary. There is at least a question mark over whether or not information from such documents could properly have been used (see paragraph 36 of R (on the application of Hossacks) v LSC [2011] EWCA Civ 788); h) following on from g), it was not clear that remedy would be “quick and easy”. The LSC did not know if AAR had in fact completed the TIF and just failed to submit it, or whether the TIF had been completely overlooked. Before me, Mr Nadarajah could not say whether the completed TIF put in evidence had been completed before or after submission of his bid; i) the mistake could not be attributed to any fault on the part of the LSC (or indeed to any outside factor). The fact that there may have been only limited fault on the part of AAR is irrelevant – see paragraph 40 of Ministeriet for Forskning, Innovation og iderergaende Uddannelser (supra); j) to have allowed further submission would have jeopardised implementation and increased the administrative burden in a high volume process, as well as give rise to the risk of abuse; k) the potentially “harsh economic consequences” for AAR (to adopt the words of Richards J in Leadbitter (supra)) should not induce the court to accommodate a failure by AAR to comply with an obviously mandatory requirement of the bid.[60]The fact that a tenderer who submitted all the necessary information would be guaranteed a contract does not tip the balance in favour of disproportionality. As already indicated, there was still always competition between tenderers - in the sense that the greater the number of applicants, the smaller the number of cases available to those in the pool of tenderers. Other tenderers would thus be disadvantaged by submission of a new TIF.[61]Nor do I accept that the fact that the LSC took a more flexible approach to the correction or clarification of PQQ responses means that a failure to take such an approach in relation to TIFs was disproportionate. A PQQ merely allowed a bidder to be considered for a contract and enter the bidding process at all. It may have been part of the overall tender, and a necessary part, but it was not the substantive bid itself. Rather it was a precursor to that bid. It was fundamentally a very different part of the exercise. The answers could not have provided an advantage over other bidders, as the PQQ merely allowed a bidder to be considered for a contract. By contrast, as set out above, the TIF was the substantive bid itself, and providing completed information could (indeed) would have adversely affected other bidders, by reducing the pool of NMS available to those other bidders. This difference is reflected in the fact that the IFA only expressly provided for the possibility of clarification in relation to PQQs, not TIFs (see paragraph 9.27).[62]I do not consider that it can be said the LSC’s approach in this regard can be said to be “irrational” in any way, based for example on the argument that PQQs were more important than TIFs. The TIF was of paramount importance for assessment of the bid and in ensuring that the bidding process was fair. As to the suggestion that the LSC’s approach to PQQs and TIFs was flawed because the PQQ contained in excess of 80 questions, far more than those in the TIF, that is to miss the point. It is not a reason for justifying less flexibility for PQQs. It is the purpose, not the size, of the document which should determine whether a difference in approach could objectively be justified.[63]This approach is consistent with the remarks of Blake J in R (on the application of Hoole & Co ) v LSC [2011] EWHC 886 (Admin) at paragraph 31 : “It is for similar reasons that I cannot accept the Claimant’s final head of submission that it had been treated unequally by comparison with others. I am satisfied that the examples of more favourable treatment relied upon by the claimant are not treating like with like. Some were separate competitions such as the criminal tender where the rules were different and where there was no competition between tenderers at all. All those eligible to provide services were afforded NMS. In other cases, any opportunity granted to correct errors was in respect of the PQQ part of the application as to whether a firm was qualified at all. This was not a competitive issue and the Defendant was entitled to give greater assistance to applicants whose claims could be seen to unintentionally defective on their face. For this reason, also, the Defendants could lawfully assess the bid of another competitor in this competition (Immigration Advisory Services) in a way that both rendered it eligible for the competition at all and improved its points score marginally from information already held….” and to similar effect in R (on the application of Hossacks v LSC [2011] EWHC 2700 (Admin) at first instance, again at paragraph 31. Although in each case the Judge in both those cases was dealing with mistakes in PQQs, as opposed to blanks, it does not seem to me that this distinction undermines the essential principle that, objectively, greater flexibility where PQQs are concerned is justified.[64]Finally, I should record my agreement with the fall-back submission made by Miss Scolding for the LSC namely that, if all the above is wrong, then the logical result is that the LSC erred in permitting late submission of completed PQQs. Two wrongs do not make a right. Thus, the experience on PQQs would still not lead to the conclusion that the treatment of AAR’s TIF was disproportionate.

K. Findings on issue 2 : equal treatment

[65]The starting point is to determine who is to be treated as a true comparator for AAR for the purpose of Regulation 4(3).[66]For AAR reliance is placed on the decision of McCloskey J in Clinton t/a Oreil Trading v Department for Employment and Learning [2012] NIQB 2 at paragraph 44 to the effect that any distinctions should be viewed “broadly and roundly, rather than narrowly and technically”. It is submitted that it is clear from the evidence of Ms Ward (see for example paragraphs 5 and 17 of her third witness statement) that this was a single national tender exercise, a unified central exercise. The LSC was not concerned with individual procurement exercises. There was a single contracting authority for the purpose of the Regulations, namely the LSC, and the tenderers were all providing the same (legal) services. Thus all participants in all of the tender exercises (whatever the field of law in question) are to be treated as comparators for the purpose of Regulation 4(3).[67]I do not accept this submission. Whilst there may have a single overarching exercise, each tender process was separate and distinct. The tenders were carried out at different times, even if some overlapped in time. They covered different types of legal services. The tender documentation and information required were different in each case. Each contract may have included standard terms and conditions but would have been tailored (by way of schedule) to the specific relevant area of legal service/service provider. This is consistent with the approach of Blake J in Hoole (supra) at paragraph 31 as cited above.[68]I do not consider that Clinton (supra) assists AAR. The first instance judgment relied on was considered by the Court of Appeal in Northern Ireland [2012] No NIC 48. The Court of Appeal endorsed an “austere” approach as set out in the English authorities, an approach which did not appear to have commended itself to McCloskey J. But in any event, even the adoption of a broad approach would not in my judgment go so far as to encompass bidders outside the mental health process as comparators.[69]There is, however, an argument as to whether the appropriate comparators are all those tendering within the mental health tender or just those who tendered with a blank TIF.[70]Bearing in mind the authorities referred to above, including Hossacks (supra), I have come to the conclusion that the LSC is right when it submits that the only true comparators are CC and GN. They are the only identified alleged comparators in the same, or materially the same, position as was AAR. Tenderers submitting an incomplete PQQ were not submitting an application that was as “fundamentally flawed”, for the reasons set out above, in particular at paragraph 61, or in the same, or materially the same, situation. On that basis, on the evidence there is no question of any inequality of treatment, since each practice was dealt with in exactly the same way.[71]If I am wrong about that, and the true comparator pool extends to all participants in the mental health tender process, I remain unpersuaded that there has been unequal treatment : a) as to NM1, the bid did not get off the ground since the PQQ gateway was not passed. This was a different stage of the process to that reached by AAR. For the same reasons as those set out in paragraph 61 above, I do not accept that inequality of treatment has been established. There was a valid and lawful distinction to be drawn between the respective situations; b) as to AM 1, the applicant’s appeal was allowed because the amendments in question did not improve the bid. The staff member was already named within the TIF submitted. This was a clear case of ambiguity arising from information provided in the TIF and in answers to the essential criteria, as opposed to submission of a blank form; c) as to SB1, OM1, JDS1 and PE1, these are not comparable situations. Ms Ward addresses them in paragraphs 84 to 86 of her third witness statement. The LSC accepts that SB1 should not have been awarded a contract because the terms of the tender were not met; the LSC made a mistake in granting the contract. But this does not affect the question of whether AAR was treated fairly. It was appropriate for the LSC to seek clarification in circumstances where SB1 had completed a TIF. It had set out the information as to staff and hours – unlike AAR which had not provided any information. OM1 had fully completed its tender and only a reduction in bid was allowed. Similar positions arose with JDS1 and PE1 where information had been provided and a reduced bid was allowed as a result of clarification; d) as to F1, it was entirely permissible for the tendering organisation not to have staff at the time of the bid or even to exist at the time of the bid – see the essential criteria set out in Annex A of the IFA – although the organisation did have to exist at least 8 weeks before 14th October 2010. This was to create a level playing field between existing contractors and new entrants. The clarification sought resulted in the bid being reduced, a member of staff was removed to create a vacancy, as set out in paragraphs 79 and 80 of Ms Ward’s third witness statement; e) as to AAM1 and SC01, the situation is similar to that with F1. There was staff duplication. Clarification was sought of existing information that led to a reduction in award; f) as to the 3 firms on Schedule 9B, a situation quite different to that with AAR arose. The LSC had the relevant peer review rating records with which to make the corrections in question, because the peer review system was operated by the LSC. The relevant information was uniquely within the knowledge of the LSC. It would have been wrong for the LSC to disqualify tenderers for information which the LSC knew to be wrong and where the errors were obvious. The amendments by the LSC were legitimate, as reflected in paragraph 58 of the judgment in Harrow (supra). The situation was not comparable to the failure to by AAR to provide any information within the TIF and where the central missing information from AAR was not within the LSC’s knowledge.[72]For the sake of completeness, I would add that, for the same or similar reasoning as that applied in the context of the mental health tender, the comparators relied on from the immigration, social welfare and family tenders would also not have assisted AAR.[73]In my judgment, therefore, no inequality of treatment has been established. Those firms who made the same mistake as AAR in the mental health tender process were treated in exactly the same way. Where late amendments or submissions were allowed in other (non-identical) situations, there was always a valid, objectively justifiable basis for treating the tenderer differently.

L. Conclusions

[74]There is no doubt that this claim has an unhappy procedural history from AAR’s point of view. But in the event, given my findings, the irony is that AAR has in fact benefited from the LSC’s shortcomings before Davis J. Those shortcomings led to the granting of interim relief over what has turned out to be a period of some 2 ½ years in circumstances where, even on the new material now available, AAR was not unlawfully deprived by the LSC of a contract in 2010.[75]For the reasons set out above, I find that the LSC’s rejection of AAR’s bid was not disproportionate, nor did it amount to unequal treatment for the purpose of Regulation 4(3) of the Regulations.

Cited in 1 later judgment