We have all seen it before. There hidden in the small print deep in the tender submission is a list of caveats and assumptions that underpin the tenderer’s price. Often these assumptions are a reasonable and necessary part of the process. However sometimes technical and pricing assumptions can be a devious mechanism used by the tenderer to artificially lower their bid price. How should a contracting authority deal with this?
On 10 February 2023 judgement was handed down in the case of Capita Business Services Limited v the Common Services Agency for the Scottish Health Service. The background summary to this case is that NHS National Services Scotland (“NSS”) who was conducting the procurement exercise rejected Capita’s final bid as it included an assumption that resulted in an incomplete pricing submission. Capita challenged on the basis that its final tender was fully compliant with NSS’s Instructions to Bidders. In this case, it wasn’t that there was a pricing assumption that caused the tender to be disqualified as non-compliant but rather there was an assumption in the technical submission which impacted on price and meant the pricing was incomplete.
In coming to the final judgement the importance of equal treatment and transparency was discussed. Equal treatment implies an obligation of transparency. The principle of transparency also requires clarity. This is judged against what would be understood by the reasonably well informed and normally diligent (“RWIND”) tenderer. In an ITT for a public contract, the formulation of the award criteria must be such as to allow all RWIND tenderers to interpret them in the same way. The question is not whether all tenderers have in fact interpreted them in the same way, but whether the court considers that the criteria were sufficiently clear to permit a uniform interpretation by all RWIND tenderers and therefore ensuring equality of treatment. Where disqualification of a bid is an option open to a Contracting Authority, the principles of fairness and equality of treatment demand particular transparency and clarity. If failure to meet a particular criterion or to comply with a particular requirement of the process is to result in disqualification of the tenderer, the tender documentation must clearly and transparently set this out. Whether such transparency and clarity exists, is to be determined by having regard to what the RWIND tenderer would have understood the documentation to mean.
The Judge found that:
· The tender documentation had the requisite degree of clarity and transparency to permit uniform interpretation by all RWIND tenderers – there was no ambiguity, it could not have been clearer.
· A RWIND tenderer could have been in no doubt that their final bid must not contain assumptions as to the price and the requirement to submit a fully priced final bid.
· The judge concluded that the claimants bid did include a pricing assumption and therefore was not a fully compliant bid.
· The judge considered that the very reason the claimant made the assumption was to lower the cost of its bid.
· The judge found NSS was entitled to disqualify a materially incomplete bid. The claimant’s bid was not only incomplete, it omitted costs. NSS’s decision to disqualify the claimant’s Final Bid was neither irrational nor disproportionate.
In this case NSS won the day with clear, unambiguous tender documentation, and followed through with a correct application of these rules. Key lesson for us all is that ITTs must clearly set out what is required and the consequences of not fully complying with those requirements.
In2 the bargain 