“Applicants must meet the Pass criteria for propriety, protecting Participants’ interests and financial strength. The Commission will consider the entire Application in determining a Pass/Fail result. Applications must fulfil all Pass criteria in order to be included in the final ranking of Applications following Evaluation”. ii) Licensee’s proportion of surplus. This section was designed to evaluate the applicants’ proposed Licensee Proportion of Surplus (i.e. the percentage share of the Surplus that would cover the Licensee’s costs, subject to specific adjustments) relative to the lowest Licensee’s Proportion of Surplus proposed by any applicant using a relative scoring mechanism. The ITA explains that: “The Applicant proposing the lowest Licensee’s Proportion of Surplus will be awarded 100% in this area of evaluation (prior to application of the area weighting), with all other Applicants scored relative to this. This area of evaluation has a 15% weighting”. iii) Good Causes Contribution. This section was designed to evaluate applicants’ Good Causes Contribution relative to the highest Good Causes Contribution proposed by any applicant using a relative scoring mechanism in conjunction with the Business Plan evaluation. The ITA explains that: “The Applicant that proposes the highest Good Causes Contribution will be awarded 100% in this area of evaluation, with all other Applicants scored relative to this. This score is multiplied by the Business Plan Score to calculate the combined Business Plan and Good Causes Contribution Score, prior to application of the combined area weighting. The combined areas have a weighting of 85%”. iv) Business Plan. This section was designed to evaluate the credibility and deliverability of applicants’ responses in five identified Business Plan Areas, using a marking criteria of 0-15 for each Area (thus a total of 75 marks were available). ‘Credibility’ was to be evaluated “based on how likely the proposal for that Business Plan Area will meet the Proposed Good Causes Contribution”. ‘Deliverability’ was to be evaluated based on “how the proposal for that Business Plan Area will be achieved and successfully delivered”
“Applicants will be evaluated using a relative scoring mechanism whereby their Business Plan Mark (following application of a Solution Risk Factor) will be relatively scored against the highest of all Applicant’s Business Plan Marks. The Applicant that receives the highest Business Plan Mark, following application of the Solution Risk Factor, will be awarded 100% in this area of Evaluation, with all other Applicants scored relative to this. The score is then multiplied by the Good Causes Contribution Score to calculate the combined Business Plan and Good Causes Contribution Score, prior to application of the combined area weighting. The combined areas have a weighting of 85% relative to the Proposed Good Causes Contribution using a relative scoring mechanism in conjunction with the Good Causes Contribution evaluation.”
“CPR r 16.4 (1)(a) requires that a particulars of claim must include a concise statement of the facts on which the claimant relies. Thus, where the particulars of claim contain an allegation of breach of contract and/or negligence, it must be pleaded in such a way as to allow the defendant to know the case that it has to meet. The pleading needs to set out clearly what it is that the defendant failed to do that it should have done, and/or what the defendant did that it should not have done, what would have happened but for those acts or omissions, and the loss that eventuated. Those are ‘the facts’ relied on in support of the allegation, and are required in order that proper witness statements (and if necessary an expert’s report) can be obtained by both sides which address the specific allegations made.”
“[t]hese are the basic ingredients of any statement of case against any defendant”
"While it is good sense not to be pernickety about pleadings, the basic requirement that material facts should be pleaded is there for a good reason, so that the other side can respond to the pleaded case by way of admission or denial of facts, thereby defining the issues for decision for the benefit of the parties and the court. Proper pleading of the material facts is essential for the orderly progress of the case and for its sound determination. The definition of the issues has an impact on such important matters as disclosure of relevant documents and the relevant oral evidence to be adduced at trial. In my view, the fact that the nature of the grievance may be obvious to the respondent, or that the respondent can ask for further information to be supplied by the claimant are not normally valid excuses for a claimant's failure to formulate and serve a properly pleaded case setting out the material facts in support of the cause of action."
“MR SUTERWALLA: If, my Lady, evidence has been given in a witness statement and that evidence has been tested and evidence has come out from a witness's own mouth in respect of the evidence in a witness statement, that clearly is relevant evidence that can be relied upon. MRS JUSTICE JOANNA SMITH: Not if it doesn't go to a pleaded issue. MR SUTERWALLA: Well, my Lady, obviously it has to be relevant to an issue in the proceedings, which obviously is -- and the pleadings are the basis for that, and we would not seek to be relying upon something which has not been pleaded at all, of course. So we accept that, my Lady, yes.”
“…inadmissible; or at the very least, if not technically inadmissible, of such marginal relevance to the issues as to play an extraordinarily limited role in assisting resolution of this case…just because [a bidder’s] witness thinks that the evaluation of a particular question was too low for [the bidder’s] answer and/or too high for [the winning bidder’s] answer, does not advance the case appreciably.”
“A tenderer’s subjective understanding of the terms, meaning or effect of the ITT will not be legally relevant, given the concept of the RWIND tenderer. A claimant’s witnesses will have their own views on how its own bid should have been evaluated. These personnel are also likely to have personal qualitative views about their competitors’ bids too. However, these matters will not, usually, be of primary relevance.”
“Gestmin is not to be taken as laying down any general principle for the assessment of evidence. It is one of a line of distinguished judicial observations that emphasise the fallibility of human memory and the need to assess witness evidence in its proper place alongside contemporaneous documentary evidence and evidence upon which undoubted or probable reliance can be placed….But a proper awareness of the fallibility of memory does not relieve judges of the task of making findings of fact based upon all of the evidence. Heuristics or mental short cuts are no substitute for this essential judicial function.”
“…in circumstances where (as here) so much depends on the particular evaluation by the contracting authority of the claimant’s bid – and sometimes (again as here) on the evaluation of the winning tenderer’s bid – a great amount of the documents speak for themselves. The most important areas are usually as follows. The terms of the competition contained in the ITT; the scoring methodology; the detailed contents of the bids themselves; the records of the evaluations and the way that the procurement was conducted.”
“[59]…it is necessary to start with how and why it is that the EU, and now the UK, have detailed rules relating to public procurement. They are designed to ensure healthy and effective competition (see Archus and Gama v Polskie Gornictwo Naftlowe SA EU:C:2017:358 (“ Archus ”) at [25]) and so that there is a proper evaluation of the tenders submitted (see R (Harrow Solicitors and Advocates) v Legal Services Commission[2011] EWHC 1087 (Admin) ; [2011] PTSR D 49 (“Harrow Solicitors”) at [31]). The rules are designed to avoid the kind of unfair and capricious decision-making such as occurred in one of the earliest domestic procurement cases, Harmon CFEM Facades (UK) Ltd v Corporate Officer of the House of Commons [1999] 10 WLUK 904” [60] The rules which have grown up around public procurement, such as the principle of equal treatment and the principle of transparency, exist to serve the purposes noted in the previous paragraph. They are not (and must never be allowed to become) an end in themselves, just as those rules should not be applied in a formulaic and unrealistic way”
“…it is settled caselaw that the principle of equal treatment requires that comparable situations must not be treated differently and that different situations must not be treated in the same way unless such treatment is objectively justified.”
“Stuart-Smith J (as he then was) explained in Stagecoach East Midlands Trains Ltd & Ors v SoS for Transport & Ors[2020] EWHC 1568 (TCC) ; 1919 Con LR 176…that the exercise of discretion at various stages in any public procurement was capable of engaging and infringing the principles of equal treatment and transparency (see [41]). The terms of any ItT may preclude the exercise of an independent discretion and mandate an outcome; if not the discretion was subject to principled limits and may not be exercised on an unlimited, capricious or arbitrary basis (see [44]).”
“Written feedback Each Applicant will be provided with feedback in the form of a single written document. Applicants will not be provided scores as part of this feedback and there will be no down select of Applicants. The Commission will provide feedback to Applicants on the Business Plan and Pass/Fail elements of their Application. The Commission may identify any weaknesses, omissions, ambiguities or risks relating to specific applications and will highlight where an aspect of any Applicant’s response might result in a ‘Fail’ at Phase Two. In all cases, feedback will be tied back to the formal evaluation criteria and will not provide any relative comparison to any other Application received by the Commission”
“The Commission has reviewed your Phase One Application and feedback has been provided based on the information provided in your Application. The quantity of feedback is reflective of the review we have completed and the level of content you have provided and should not necessarily be considered a negative view of your Application. It is for you to determine what you wish to amend or uplift to provide your response for Phase Two. In summary, your Phase One Application is missing detail and evidence in many areas. Your Application appears to be based on a solution in which many key components remain underdeveloped at this stage. If these areas are not addressed in your Phase Two Application, the resulting lack of certainty is likely to undermine confidence in your Application when it is considered afresh by evaluators at Phase Two. The Applicant's response relies heavily on the wholesale adoption of Third Licence systems, policies and procedures, at least in the early years of the Licence, but the Applicant does not address the differences between the Third and Fourth Licences. Systems, policies and procedures which are fit for purpose for the Third Licence may not be appropriate for, or meet the requirements of, the Fourth Licence”
“Q. Are you really suggesting that you didn't know for Phase 2 that you had to provide a joined up and cohesive strategy? A. We certainly knew that we had to provide a joined up and cohesive strategy and the fact that we had a lot of feedback on things that the Commission thought we had left out or not done enough detail didn't to my mind, and still doesn't to my mind, affect the proposition that we were joined up and cohesive, and I touched on that in my second witness statement. Q But you knew, didn't you, that you had to provide something joined up and cohesive? A. Our belief was that what we were providing was joined up and cohesive insofar as one can interpret those words.”
“you had to explain what was in the codes of practice”
“[t]he processes, procedures and controls in place for each Key Subcontractor to ensure that they are sufficiently financially resilient in the event of supply chain disruptions…”
“The Applicant sets out highly ambitious growth forecasts across games including EuroMillions, Thunderball, EuroMillions Multiplier and Powerball, however it provides limited analysis of cannibalisation effects or how the Applicant will achieve such growth for all games in parallel”. ii) Objectively, this is quite clearly a general statement about growth forecasts “across games” (i.e. all games in the portfolio). Some examples of games are then given. The subsequent reference to “limited analysis of cannibalisation effects” and to how the applicant will “achieve such growth for all games in parallel” is clearly a reference back to the entire portfolio identified at the outset of the sentence. iii) This analysis is supported by the clear evidence of Mr Ellerbeck, an Evaluator for Question 13, Portfolio, which I accept, to the effect that this passage is “absolutely” concerned with cannibalisation across the entire portfolio: “Q. So this is referring obviously, Mr Ellerbeck, to cannibalisation effects, do you see that? A. Yes Q. And separately it’s referring to growth for all games in parallel. Do you see that? A. Well it’s a combination really; because one affects the other… Q. And this bullet here does not refer to a need for the applicants to carry out analysis of cannibalisation effects across the entire portfolio? A. Yes it does, yes, absolutely…”
“Q. You understood, Mr Mills, didn't you, that you had to set out detail -- from the Phase 1 feedback that you had to set out detail at Phase 2 about cannibalisation across your portfolio? A. We were cognisant of that phrase "limited analysis" of cannibalisation, which is repeated there, and so as soon as we saw that and just taken it on board, we set about tackling it and dealing with it in time for Phase 2…”
“[t]he Application has been assessed as a Fail on grounds including that it failed to adequately address the risks of “unaffordable levels of play”
“Whilst the Commission does not seek to provide a prescriptive definition of those whose interests are particularly at risk (and therefore are likely to be in particular need of protection), Applicants should note that they are likely to include (but are not limited to): Vulnerable Participants which is likely to include people who gamble more than they want to, people who gamble beyond their means and people who may not be able to make informed or balanced decisions about gambling due to, for example, mental health, a learning disability or substance abuse relating to alcohol or drugs. Vulnerability may be long-lasting or temporary. Problem gamblers, meaning gamblers who experience severe or serious levels of harm. Problem gambling occurs when someone gambles to a degree that compromises, disrupts or damages family, personal or recreational pursuits… However, Applicants should also note that Participants may experience harm from excessive play without meeting all the clinical criteria to diagnose problem gambling. Gambling may have an adverse impact on the health and wellbeing of individuals, families, communities and society. Effects can include loss of employment, debt, crime, breakdown of relationships and deterioration of physical and mental health”
“Q. …So you knew from that that you needed to consider protection of those who gambled beyond their means? A. We took account of what is said here because it was said really very clearly. Q. And it was perfectly clear, wasn't it, that that was a need to address unaffordable levels of play? A. That's one aspect of it. Q. You agree with me? A. Of course”
“Please detail how you will implement, manage, monitor and adapt your Participant Protection Strategy to continuously uphold the Statutory Duties in a changing environment Your response should be no more than 10 pages. As a minimum, your response should include the following key elements: • Appropriate allocation of responsibility (named individual and role) for the Participant Protection Strategy and compliance with the Licensee’s obligation to protect Participants’ interests. • A plan to implement new participant protection tools, methods or procedures, covering timelines, resource requirements and mitigations against any risks related to implementation. • Processes you will adopt to monitor, evaluate, and improve the effectiveness of the Participant Protection Strategy… • Methods to maintain compliance with Condition 8 of the Fourth Licence (Protecting Participants’ Interests)…”
“Q. So you knew from that, didn’t you, that you had to provide resource requirements? A. We did provide resource requirements.”
“The Defendant has based its decision regarding the Application on the basis of assessments made by reference to an undefined, undisclosed and vague concept of “Best Practice”
“The Applicant places reliance on existing arrangements under the Third Licence, potentially as an interim solution, without the Applicant having demonstrated how these arrangements satisfy the terms of the Fourth Licence. The Applicant does not adequately demonstrate how it proposes to mitigate the risk that existing arrangements under the Third Licence may not be suitable to protect the interests of every Participant under the Fourth Licence.”
“During the Implementation Period, we will review all of the policies and procedures of the Outgoing Licensee (OL) which we propose to carry over into the initial part of the Fourth Licence Period and will assess them for both (a) fitness for purpose under the Fourth Licence (recognising the differences between the Third and Fourth Licences) and (b) suitability to meet our own KPIs as referenced above. Where necessary, we will make adaptations ahead of the Start Date”
“were “the Do all you can” requirement, the outcomes approach, and the requirement to adhere to best practice which was defined in the licence”
“[a]s to the criticism that TNLC’s strategy did not adequately demonstrate how its proposals in relation to underage or excessive play would work in practice, the [Moderation Rationale] evidences that the PPI evaluators considered this was inter-related to their conclusion that TNLC had not adequately demonstrated how its proposals would align with Best Practice…Ms Sheldon confirmed this in her oral evidence”
“A. I'm saying that I recollect the process -- Q. Yes. A. -- for going through those in turn, and that those were considered as part of moderation, so they were raised in the room and discussed. I cannot remember the specifics of all the conversation about them, just that they were considered. I take your point that they are not reflected verbatim [in the Moderation Rationale].”
“considered, determined to not be a risk to PPI”
“As part of protecting Participants’ interests, Participants’ funds must be effectively managed and protected to adequately address the risk that Participants will not be paid amounts to which they are entitled. One way in which this will be achieved is through the implementation of the 4NL Trust including through the operation by the Licensee of Funds Protection Policies and the maintenance of a Final Reserve Balance which would be available to the Trustee to discharge obligations to Participants in circumstances where the Licensee was unable to do so.”
“Overriding Duty 16.1 The Licensee must do everything it can to ensure that at all times, the Funds Protection Outcome is achieved. The ‘Funds Protection Outcome’ is that at all times, and notwithstanding any insolvency or dissolution of the Licensee, or any revocation of this Licence: a) funds are available to enable Protected Obligations to be promptly discharged; b) all Protected Obligations are promptly discharged; and c) Lottery Monies are received, held and applied in accordance with this Licence. This Condition sets out some of the ways in which the Licensee must do this.”
“Please explain the methodology (providing supporting analysis) you used to calculate your Final Reserve Balance, in order to ensure this is sufficient to cover all liabilities to beneficiaries if enforcement action is taken.”
“does not adequately demonstrate that its Final Reserve Balance methodology will be sufficient to discharge Participant Obligations, for example, there is a risk that funds to be returned from EuroMillions may not be received until six months after the Enforcement event starts and the deposit may not be returned in full.”
“A. I don't think -- I think that's not the case. This£49 million was about -- and this response was about its availability to be used to fund trust reserves at the start of the licence. Q. Yes. A. The issue with the 8.3 would only arise when enforcement action was taken which could be at any point during the licence term. Q. Okay. A. And therefore we did not know how much of that money would be left, it would be used for other purposes, so we did not assume it would be used for that and there was no reference in this response to any of that money being used for the final reserve balance.”
“So what I'm saying, my Lady, is that, in terms of this particular aspect, as evaluators we had been presented with three or four different solutions. A transfer of funds from the third licence, which we were told would not happen, a concept of prize insurance, which was not detailed, not defined, and therefore we just didn't have enough information to deal with it, a reference in a risk register to changing the start date of games, which was another mitigation action, and then the possibility of the money available through this [a reference in context to the Clarification response], both a risk that it might not be the case due to -- due to implementation overrun. So we were looking for as much certainty as possible that that balance could be funded and what we were presented with were options which were either not detailed or had risks associated with them which concerned us.”
“The financial strength of the Proposed Licensee will be tested against a range of scenarios specified by the Commission that might reasonably occur and that could raise concerns regarding the financial strength of the Proposed Licensee. These scenarios are set out in Section 23.7 (Financial Response). Applicants’ responses will be evaluated holistically, based on their narrative responses to qualitative questions, the financial information Applicants provide about the Proposed Licensee and its proposed Key Subcontractors…and supporting evidence detailing equity and debt funding to be provided to the Proposed Licensee… Applicants’ responses under this section will receive either a ‘Pass’ or a ‘Fail’, based on the Evaluation criteria outlined below and the outcome of the Financial Strength Scenarios. Please note that, as described in Section 8.7 (Financial Response), the Commission will carry out a separate assessment of each Applicant’s Financial Response to support an assessment of the credibility and deliverability of the Applicant’s proposals in the Business Plan and the Applicant’s Proposed Good Causes Contribution.”
“Q8: Please describe your proposed financing structure and explain how it will support transition, transformation and ongoing operations and minimise any material risk, on financial grounds, that may lead to a failure to meet the obligations under the Fourth Licence, Enabling Agreement and/or Cooperation Agreement under the Base Case and/or Financial Strength Scenarios”; and “Q9: Please demonstrate the financial standing of your supply chain and describe how you will ensure that supply chain disruption risks are minimised during the Fourth Licence Term.”
“working capital inflows aren’t certain, in terms of when they arise”
“In addition, the conditionality attached to funding access is significant, with in particular: no ‘certain funds’ period; broad change of control provisions; ‘hair trigger’ Licence compliance undertakings; and Material Adverse Change provisions (Q8, Supporting Evidence, Appendix 2). On this basis, there is a risk that funding may not be available to the Licensee when required or that early repayments might be triggered during the term of the loan.”
“[r]egarding the funding of opening Trust balances, [the Commission] applied in error a bid assumption that the prize reserve balances from the Third Licence Trust would not transfer to the new licensee in order to form the opening balances for the Fourth Licence Trust”
“…if you had to fund the opening trust balances and use the£25 million for that, you could still have portfolio volatility after…and you wouldn’t have the funding to manage that, and you could still have a problem with the working capital cash flows”
“However, the Applicant’s dividend policy assumes all the available retained profits are declared as dividends (subject to certain criteria), sets a minimum cash balance at zero (unless unused facilities are available) and a 12-month look forward (shorter than the period required by Condition 18 of the Licence) to demonstrate affordability before dividends are paid (Q8, p. 4, Section 8.2.7) (the concept of sufficiency of cash is not defined in the response). Given that dividends are, in the first instance, paid into a blocked account in the parent company (TNLCH) during the term of the loan, where they must be held for 12 months at the discretion of the lenders (Q8, Supporting Evidence, Appendix 2, Condition 22.21), this suggests there is a risk to the ability of the Licensee in practice to adjust dividends and/or remediate liquidity pinch points.”
“Not fails but practically points that the Commission may wish to consider if this applicant is successful. • It is not clear on the order which the guarantees could be called or will be reduced as the amounts under the Equity Commitment Letter are satisfied by SASKA Group s.a.”
“The Applicant provides information for its proposed twenty-nine Subcontractors as part of its response (Q9, p.5, Section 4). Eleven of its proposed Subcontractors meet the Licence definition for a Key Subcontractor. The Applicant demonstrates that nine of its eleven proposed Key Subcontractors have either a prime credit rating or equivalent level of Shadow Credit Rating. (Q9, Key Subcontractor Financial Strength Template, summary tab). With the exception of IGT UK Limited, all of the Applicant's proposed Key Subcontractors have a low-risk rating in the Annual Contract Value (ACV) to Turnover ratio test (Q9, Key Subcontractor Financial Strength Template, summary tab). IGT UK has a high-risk rating in the Annual Contract Value (ACV) to Turnover ratio test i.e. (82%). This is considered further in the weaknesses identified below. The Applicant provides up to date Financial Statements and evidence of the credit ratings issued by external rating agencies for its proposed Key Subcontractors. Based on the above, as well as mitigations in relation to IGT UK (for example, a written pledge of support from IGT plc, dual supply arrangements), the Applicant has demonstrated how the eleven Key Subcontractors are of sufficient financial standing so as to not cause a material threat to the Proposed Licensee's ability to deliver its contractual obligations under the Licence. The Applicant demonstrates how it proposes to put in place processes and procedures to identify, monitor and address material Key Subcontractors' risks during the Licence Term. It sets out its approach to Sourcing, Supply Chain Risk Management (SCRAM) and Supplier Performance Relationship Management (SPRM) processes (Q9, p.3,7-9, Section 5). The Applicant provides specific examples where risks have been identified that would be supported by the SPRM processes. The risks set out by the Applicant are substantive in number and relevance. Although the mitigations it provides are brief, the Applicant does include some relevant examples (Q9, p.9, Section 6).”
“HSNL did not meet the Commission's requirements for a prime credit rating. HSNL is a profitable company with a non-prime shadow credit rating (Q9, Key Subcontractor Financial Strength Template, KS10 tab, E70). This is due to the quantum of its intercompany creditors. HNSL has an intercompany receivable larger than the creditor and so it has a net intercompany receivable, but the relevant receivable has been not included in the Shadow Credit Rating calculation. At an aggregate level, there is a net lending and net interest income position in 2019. Were this to be reflected in the shadow credit rating template, the rating would move to a prime rating in the Key Subcontractor Financial Strength Template. In addition, based on the 2020 published audited accounts obtained from Companies House for Hughes Network Systems Ltd, the auditors consider the company to be a going concern, indicating its ability to trade through COVID. Populating the Key Subcontractor Financial Strength Template, without adjusting for intercompany loans, gives a credit rating of non-prime (Ca). Adjusting for this, as outlined above, gives a shadow prime credit rating (Baa). The Experian Credit Report rating 100 out of 100 indicating it is very low risk. HSNL has a low-risk rating in the Annual Contract Value (ACV) to Turnover ratio test i.e. 20% (Q9, Key Subcontractor Financial Strength Template, KS10 tab, F25)”
“The Applicant identifies key services that it considers to be critical and for these it considers the availability of alternative suppliers or dual supply which mitigates the risk of disruption… The Applicant demonstrates the historic use of its sourcing and SCRM process as a mitigation against some of the other financial risks, for example pandemics and Brexit (Q9, p.7, Section 5.1.2) …”
“Q. Okay. So all three of you, the evaluators, had independently identified the same factor which ought to have resulted in a fail for Camelot? A. No. Q. Now, can we turn -- A. Unless you can corroborate what you mean by: ought to have resulted in a fail, my Lady. A fail for this particular criteria, a fail for this particular subcontractor relationship, but not in aggregate a fail overall”
“Q…And that's unfair, it's simply inconsistent standards; yes? A. No. Q. Okay. And would you like to explain why you say "no"? A. I say "no" because the fact is that those items had been provided, I agree with that, but the assumption is that there was a pass or a failure which was directly relating to that fact, and my point is that the moderations were done in aggregate and many different aspects were taken into consideration. So whilst there may have been one criteria which was satisfied identically for two of the applicants, it does not mean or presuppose that the way in which they were treated was not fair…”
“The Commission will need to expressly consent to any deviation from the Code (in accordance with Condition 22.3). This consent can not be provided by the Commission as part of the evaluation of the Application. The Applicant will, therefore, need to provide a separate additional letter addressed to the Commission setting out this information”
“It doesn’t say that. It doesn’t say that we needed to make that assessment, it just says that it would be irrational to fail someone if there was a realistic chance”. iii) This is consistent with Ms Pugh-Stanley’s evidence that “we were told it wasn’t up to us to grant those code waivers. We were looking for risks. We weren’t assessing whether there was a realistic chance that they would be granted”
“The Commission will consider the merits of any request for consent when it is made and will have regard to the relevant considerations and information at that time”. v) The Claimants sought to suggest that it was odd that Mr Smart made no reference to the guidance referred to by Ms Pugh-Stanley in his evidence and suggested that “if the guidance Ms Pugh-Stanley now refers to was clearly given to and understood by all evaluators at the time, it is surprising that Mr Smart has no recollection of it”
“[w]e didn’t know that but the applicant was saying that they would comply with the Code”
“the Code…allows for departures, the licence allows for departures, the ITA allows for departures, so it’s not irrational for us to pass someone and for there still to be departures”
“Q…let's look at it today, having now been taken through the Allwyn bid, having been reminded of the terms particularly of question 2-4.3, is there any basis on which you consider you should have failed Allwyn? A. No.”
“[44] Thus, if the unsuccessful tenderer presents objective evidence calling into question the impartiality of one of the contracting authority’s experts, it is for that contracting authority to examine all the relevant circumstances having led to the adoption of the decision relating to the award of the contract in order to prevent and detect conflicts of interests and remedy them, including, where appropriate, requesting the parties to provide certain information and evidence.”
“As set out in Virdi v Law Society[2010] EWCA Civ 100 ,[2010] 3 All ER 653 ,[2010] 1 WLR 2840 at [38]: ‘… The ultimate question is whether the proceedings in question were and were seen to be fair. If on examination of all the relevant facts, there was no unfairness or any appearance of unfairness, there is no good reason for the imaginary observer to be used to reach a different conclusion.’”
“Any conflict of interest or potential or perceived conflict of interest that may arise in connection with the Competition (whether in relation to an Applicant, the Commission or otherwise) and including, without limitation, any issue that may result in a distortion of competition or the unequal treatment of participants in the Competition, that arises or becomes apparent at any time must be fully disclosed to the Commission through the portal as soon as such conflict or potential conflict arises or becomes apparent, accompanied by the Applicant’s proposed mitigating steps”
“he understands very well how does this transaction work, and I found it appropriate to call him because I knew that he will pass the message and explain it, and there will be nothing lost in the translation in terms of the description of the transaction”
“Well I’m not entirely sure that I would, because what I can see here is Mr Dlouhý contacting Mr Duckett with a view to giving the Commission some information. Now that seems to me perfectly legitimate”
“take appropriate steps to ensure that neither the Supplier nor the Supplier Personnel are placed in a position where (in the reasonable opinion of the Supplier) there is or may be an actual conflict, or a potential conflict, between the pecuniary or personal interests of the Supplier or the Supplier Personnel and the duties owed to the Authority under the provisions of this Framework Agreement”. ii) Clause 41.2 of the CCS Agreement required Rothschild promptly to notify and provide reasonable particulars to the Authority of any conflict arising or that “may reasonably [have] been foreseen as arising”. iii) In a response dated10 May 2019 to the Commission’s original invitation to tender, Rothschild confirmed that: “in respect of the financial advisory services Rothschild & Co will provide to the Gambling Commission relating to the transaction, it has, as of the date of this response to the invitation to tender, no contractual arrangements with other companies that would in the reasonable opinion of Rothschild & Co, acting in good faith, represent a conflict of interest in relation to the transaction”. iv) It also stated that it maintained a “robust process of evaluating conflicts of interest with respect to potential and existing mandates” and that at the point of engagement it would satisfy itself that “there are no apparent conflicts of interest as a consequence of accepting the mandate”
“65…In ROL Testing Ltd v Northern Ireland Water [2015] NIQB 10 Horner J derived assistance in determining that standard from the conclusion of the Supreme Court in Healthcare at Home Ltd v The Common Services Agency (Scotland)[2014] UKSC 49 ,[2014] PTSR 1081 . In that case the Supreme Court had said that a test of reasonableness was the application of a legal standard by the court. It held that in the procurement context the standard to be applied when interpreting tender documents and considering their clarity or lack of clarity was that of the notional reasonably well-informed and normally diligent tenderer. Horner J concluded that similarly constructive knowledge for the purpose of challenges to procurement decisions was to be determined by reference to the knowledge which the RWIND tenderer would have possessed in the particular circumstances (see at [12]). I agree. As Lord Reed explained in Healthcare at Home, at [12], “the yardstick of the RWIND tenderer is an objective standard applied by the court”
“…the fact that an advantage may be conferred upon an existing contractor by a running‑in phase is not the consequence of any conduct on the part of the contracting authority. Unless such a contractor were automatically excluded from any new call for tenders or, indeed, were forbidden from having part of the contract subcontracted to it, it is inevitable that an advantage will be conferred upon the existing contractor or the tenderer connected to that party by virtue of a subcontract, since it is inherent in any situation in which a contracting authority decides to initiate a tendering procedure for the award of a contract which has been performed, up to that point, by a single contractor. That fact constitutes, in effect, an ‘inherent de facto advantage’.”
“…in order to protect as far as possible the principle of equal treatment as between tenderers and to avoid consequences that are contrary to the interests of the service of the contracting institution, the potential advantages of the existing contractor or a tenderer connected to that party by virtue of a subcontract must none the less be neutralised, but only to the extent that it is technically easy to effect such neutralisation, where it is economically acceptable and where it does not infringe the rights of the existing contractor or the said tenderer.”
“Q. And you would agree, wouldn't you, that if it was appropriate to exclude Camelot from 4NL because of these data breaches and the headstart that they'd had, then market considerations ought not to come into play at all; do you agree? A. Yes, I don't think they should have come into play if that would have been the decision”
“We have previously asked them to confirm that they are not using and will not use any of the data passed over or the products of that going forward. Although they have now, so far as we can see, confirmed that only a subset of VDR data (and potential VDR data - which we have yet to receive and will need to assess) has been shared with the bid team, I think we need to reach a more balanced view on this. We have previously sought to ensure that these requests were not interpreted as a requirement for them to stand down or reform their bid team, not least because we think that could (in advance of competition start despite the requests to sign the documents outlined above) result in the Commission facing a challenge that we are, in effect, barring them from competition”
“No, I don't think that is the case because what I'm saying in that bullet point as well is that we need to take a balanced view, not that we need to act in one particular way or another, that we need to view this in the round. It was clearly very complex in terms of the nature and volume of the data, and we were trying to assess all of that and, indeed, to assess it quite quickly. As you can see, there's a very intense period of activity in this third week in April”
“working towards the launch of the selection questionnaire date as the point at which we were envisaging putting material into the VDR and at that point having it available to everyone”. iii) Camelot declared the data it had used to the Commission in the documents to which I have referred above and, although it did not initially provide a complete declaration, the Commission continued to insist that it be provided with complete information, both as to the documents that had been used and what they had been used for. As a consequence of the Commission’s insistence, this was ultimately provided by Camelot. iv) The Commission may in retrospect have acted differently (for example Mr Tanner very frankly accepted that it might have been better to tell Camelot to stop its use of data in January 2020 when that use became clear, and that earlier use of the VDR “might” have mitigated Camelot’s headstart), but it is often possible in hindsight to identify how actions might have differed, particularly when those actions are the subject of a forensic process of cross-examination. That does not mean that the action taken at the time was irrational. This was quite plainly a complex situation involving a degree of resistance from Camelot. What is abundantly clear from an analysis of the chronological contemporaneous documents is that the Commission was at all times very conscious of the need to balance the interests of potential bidders with those of Camelot. Very properly, it did not simply dismiss Camelot’s points about the infringement of its rights out of hand, but instead the Commission sought to engage with Camelot, robustly insisting that it provide information so that the Commission could take “a balanced view” (as Mr Tanner said in his email of23 April 2020 ). This was an approach that it was entitled to adopt. v) This goes a long way towards addressing the Claimants’ submission that there was significant inaction and delay on the part of the Commission, in particular between December 2019 and March 2020. The Commission was entitled to take time to decide how best to deal with Camelot’s conduct and in any event I reject the suggestion that it was “inactive” for 3 months. This does not reflect reality, as the documents show. vi) Furthermore, it is plain that the Commission was at all times conscious of the need to take steps to address Camelot’s incumbency advantage. Mr Tanner’s evidence was that he considered that the Commission took steps “to mitigate [the First Data Breach] and re-level the playing field”
“I believed then and I believe now that in uploading the data to the VDR at the time that we did, there was enough time for all applicants to complete their applications and to use that data” and; “…that was the decision that we took at the time that we were satisfied that against the competition timeline people would have time to deliver robust applications against the ITA with the data in the time available”
“It is worth noting that the language used by the CJEU in Pressetext is “would have allowed for” not “might have allowed for”
“…in my judgment the examples of material variation given by the CJEU have to be interpreted as examples of scenarios in which, in substance, a new contract has been concluded, unfairly conferring a competitive advantage on the existing contractor over someone else who would have participated in the process. There would be no such unfairness, and no distortion of competition, if no-one else would have bid or if the complainant’s putative bid would never have got off the ground, which is the case here”
“Looked at overall, it is quite impossible for me to conclude on the balance of probabilities…that there is a real prospect that AC would have won this putative counterfactual procurement”. iv) Fourth, I am not persuaded that the fact that a determination as to what would have happened in the counterfactual may be difficult, or may impose “too high a burden” is a reason to depart from the clear wording of the Regulation. v) Fifth, I am inclined to disagree with Waksman J over the significance of the observations of Andrews J in Edenred. Although I accept that strictly her observations at [119] and [123] were obiter, they appear to me to make crystal clear her views as to the importance of the language that had been used by the Court in Pressetext (language now replicated in Regulation 43 CCR 2016), namely “would have allowed for” not “might have allowed for”
“Concessions are usually long-term, complex arrangements where the concessionaire assumes responsibilities and risks traditionally borne by the contracting authorities and contracting entities and normally falling within their remit. For that reason, subject to compliance with this Directive and with the principles of transparency and equal treatment, contracting authorities and contracting entities should be allowed considerable flexibility to define and organise the procedure leading to the choice of concessionaire”. ii) This flexibility is reflected in Regulation 30 CCR 2016 which provides that: “The contracting authority or utility shall have the freedom to organise the procedure leading to the choice of concessionaire subject to compliance with these Regulations”
“[t]he changes made by HS2 in this instant case to the Contract Data, including the changed dates, and the consequent changes to the MRS, did not. They are changes to details that simply refine matters, and for the most part, simply arise as a result of the passage of time. It took longer to award and conclude the contract than anticipated when the ITT was drafted, and so changes to the Contract Data were necessary”
“Further, if the original contractual mechanism could have been used without more, but is altered in some way (again, the case here with the guaranteed minimum mileage), I do not accept that without more, this must mean that the economic balance question is to be resolved against the authority. There must surely be a consideration of whether the change is itself justified, and again, a useful yardstick would be reasonable compensation. That is pertinent, especially where, as here, one is not talking about an amount to permeate throughout the original contract but rather a very short- term and a very small “one off” addition, to the original contract”
“But the question is whether in reasonable commercial terms it can be justified”
“I do not accept that one should read the prohibition from modifying a contract to encompass services not initially covered as banning the modification of a public contract which extends the contracted services beyond the level of services provided at the time of the initial contract if the advertised initial contract and related procurement documents envisaged such expansion of services, committed the economic operator to undertake them and required it to have the resources to do so. The court must look to the OJEU notice and the other procurement documents, including the contract contained in the ITT, to ascertain the nature, scale and scope of the operational services that the Atos contract was set up to provide. In short, the question is whether the services were covered by the contract resulting from the procurement between 2011 and 2013, including its provisions for amendment of the contract. Were it otherwise, it is difficult to see how a Government department or other public body could outsource services that were essential to support its own operations and accommodate the occurrence of events and the changes of policy that are part of public life…the focus must be on the particular contract”
“3.7 The Commission will consider whether to extend the Term (an “Extension Review”): (a) in the six months prior to the end of Licence Year 6; or (b) earlier during Licence Year 5 or Licence Year 6, if requested to do so by the Licensee. 3.8 Following the Extension Review, provided that the Commission is satisfied that the existence and period of such an extension would not be inconsistent with the Commission’s statutory duties and legal obligations, having taken into account all relevant factors including the extent to which: (a) the Licensee has complied with the Enabling Agreement from25 September 2023 and Full Implementation has been achieved in accordance with the Enabling Agreement on or before1 February 2026 ; (b) the Licensee’s obligations under this Licence are being met, and the Licensee is, and has been, in compliance with this Licence; and (c) in running the National Lottery under this Licence, the Licensee has done everything it can to maximise Good Causes Contributions, the Term of the Licence shall be extended by a period of two years or such lesser period as the Commission may determine”. ii) Extension of Implementation Period and Initial Functionality: Pursuant to clause 3.1 of the original Enabling Agreement, the Incoming Licensee was required to comply with its Application (i.e. achieve Fully Implemented Commencement) by the Start Date of the Fourth Licence (i.e.1 February 2024 ). The 2023 Modifications introduced a new clause 4 entitled “Implementation of the Application”
“as part of Implementation, as required by clause 3.1, must adopt and implement all strategies, processes, policies and procedures in sufficient time to ensure that it will run the National Lottery on and from the Start Date in compliance with the New Licence (subject to any waivers or dispensations which may be granted by the Commission), including, where required by the New Licence, by reference to the Commission’s Regulatory Handbook and any applicable guidance or codes of practice published by the Commission….”
“In its sole discretion, the Commission is satisfied that: (a) the Incoming Licensee has fully implemented its Incoming Transition Plan; (b) all obligations under this Agreement which are required to be fulfilled or complied with by the Incoming Licensee before the Start Date have been fulfilled or complied with; (c) the Incoming Licensee is otherwise ready to Start, as contemplated by the Application and the New Licence, on and from the Start Date; and (d) allowing the Incoming Licensee to Start on and from the Start Date will not damage any Matter to be Protected.”
“32.5 Without prejudice to clauses 32.1 to 32.4, if the Incoming Licensee is, or appears to be, in breach of this Agreement, the Commission may, in its absolute discretion take any or all of the following steps where it considers that to be appropriate: (a) grant the Incoming Licensee relief from any or all of its obligations under this Agreement, including by extending deadlines provided under this Agreement or the Incoming Transition Plan; and (b) make an adjustment to the Estimated Implementation Costs in order to enable the Incoming Licensee to recover additional costs under Schedule 5 of the New Licence. 32.6 In considering how to enforce its remedies under this Agreement, or whether to take any steps pursuant to clause 32.5, the Commission shall: (a) wherever reasonably practicable and appropriate ensure that the matter at issue is considered by the Incoming Transition Governance Board, which shall be required to consider whether any alternative resolution of the issue may be appropriate, before the Commission enforces any remedies; (b) consider any representations or evidence provided by the Incoming Licensee to the Commission regarding the cause, materiality and effect of any breach or apparent breach of this Agreement; and (c) take account of the cause of any actual or apparent breach by the Incoming Licensee of this Agreement and, in particular, whether that breach has been caused or contributed to by the Outgoing Licensee or a matter, fact or circumstance outside the control of the Incoming Licensee.”
“Recognises it is now impossible for Allwyn to implement Full Functionality by 01.02.24. Given the delays to date, September 2024 may now be impossible and it is possible IGT acting unreasonably might cause extended delay, but commits Allwyn to deliver in full as soon as possible and by a backstop. The backstop is fixed on the basis of the maximum extension of subcontracts under 3NL (i.e. two years from 3NL expiry).”
“No, I don’t agree…the amended provision in the Licence which makes a breach of the EA a breach of the Licence if they fail to deliver those games by the date [mean that] the Commission is able to take enforcement action under the licence against them”
“Q. All right. Considering that to be so, wasn't it, in a sense, obvious that there was a risk that a subcontractor like IGT might bring a legal challenge, whether by judicial review or by any other option, given that the outcome could have business implications for them as well? A. I think -- well, yes but…”
“Q…so just during the competition you know that you're dealing with a bidder who requires this more ambitious shift from IGT to Scientific Games, you know that they haven't told you that they've already got everything in place vis-à-vis a commercial agreement, so if you were thinking about what would have to happen to get such a commercial agreement in place between IGT and Allwyn in the context of a transition, and bearing in mind that IGT would be in a situation where it was losing what had been its role in relation to the National Lottery, my suggestion to you is that it was eminently predictable that any negotiation between IGT and Allwyn would be a difficult and challenging negotiation. A. Yes, I think that's a reasonable scenario to map out, although, as I say, at various points Allwyn referenced their wider commercial relationships with IGT, which would have been commercial relationships which were in place throughout all of this period, and that being a strength and a factor which gave them confidence in their ability to reach an agreement”
“the additional time granted to Allwyn by the Challenged Modifications, both in terms of a permitted delay in implementation, and the potential for a two year extension to the Licence (as summarised at paragraph 22(b)(i)-(ii) above) substantially impacts the economic balance in allowing Allwyn to delay expenditure on key costs and to recoup the considerable up-front sunk costs over a longer period and thereby improve its IRR;…”