Background
Optima submitted a mini-tender for a call-off contract with DWP for occupational health and employee assistance programmes under a Crown Commercial Service framework. The Invitation to Tender (ITT) required a pricing schedule to be completed by the bidders. The ITT explained that any bids for a service line that exceeded the "Framework Maximum Prices" would be "discounted". When evaluating Optima's bid, DWP discovered that Optima had exceeded their Framework Maximum Prices in respect of 3 out of 133 service lines due to not spotting some changes in a revised pricing schedule issued by DWP and by making some "cut and paste errors". The errors at issue had negligible impact on the overall pricing score such that if Optima had not been excluded from the mini competition, it would have been awarded the contract as it had otherwise submitted the best bid. The Court clearly considered this to be a notable element of the case.
Was there a mandatory exclusion provision in the ITT?
The Court applied the well-known "RWIND tenderer" (reasonably well-informed and normally diligent tenderer) test when interpreting the ITT and noted that "the issue is not what the ITT meant, but whether its meaning would be clear to any RWIND tenderer". If part of an ITT was being relied on to disqualify a tender, the ITT “must clearly and transparently set that out". The Court concluded that the relevant section of the ITT did not contain a mandatory exclusion provision, and that no RWIND tenderer would have come to any such conclusion. A holistic interpretation of the ITT indicated that the obvious meaning of “discounted” was “reduced”, not “excluded” or “disqualified” and the obvious discount, or reduction, was a reduction down to the Framework Maximum Price.
Was there a proper exercise of discretion in respect of the obvious errors/ambiguities?
Notwithstanding the Court's conclusion above that should have led to the line items being reduced to the Framework Maximum Prices and the call-off contract awarded to Optima, it proceeded to consider the circumstances where the relevant section in the ITT could be said to be unclear and in which case whether DWP had a discretion/duty to seek clarification. The Court reviewed the considerable amount of case law on this point and identified three stages to consider when addressing whether, in any given case, a contracting authority has the discretion to seek clarification, when that discretion becomes a duty, and what the permissible limits are to any response to a request for clarification:
Stage One - The first stage arises only where the error or ambiguity is obvious to the contracting authority and is material to the outcome of the competition. It was considered that this is a rare situation, which explains why any duty to seek clarification will only arise in exceptional cases. If the error or ambiguity is immaterial or irrelevant to the final outcome of the competition, no further action is necessary.
Stage Two - The contracting authority must then consider whether clarification should or must be sought. The Public Contracts Regulations 2015 which governed this procurement expressly set out a discretion to seek clarifications. The Court considered that only the factual circumstances of any given case can turn that discretion into an obligation. It endorsed a broad approach here holding that a contracting authority must choose the least onerous option, which will usually be to seek clarification rather than to exclude the tender. A contracting authority should not spend too much time second guessing what the answer to any request for clarification might be although the contracting authority should have a pretty good idea of what the answer is.
Stage Three - The third stage is concerned with the limited room for manoeuvre that a bidder has when answering any request for clarification. A bidder cannot use clarification to put in a new bid or make substantial amendments to the existing bid. Much will depend on the nature, scope and extent of the obvious material error or ambiguity that is being corrected. Clarification cannot be used to allow the bidder to ‘have another go’ but the Court considered that common sense should be applied to ensure a healthy and fair competition and the proper evaluation of tenders. A strict and over-literal approach should therefore be avoided.
The Court also considered the decision to disqualify Optima to be irrational and disproportionate and that DWP's argument that it could not go back to Optima to seek clarification was plainly wrong. It considered that DWP was obliged to seek clarification of the obvious and material errors/ambiguities and could have done so without a breach of the duty of equal treatment. It concluded that the most probable answer to the request for clarification was that the erroneous prices should be reduced back to the Framework Maximum Prices, and that this would have been a permissible answer which would not have amounted to a new bid or a substantial amendment to the existing bid.
Will the same considerations apply under the Procurement Act 2023?
This case concerned the application of the Public Contracts Regulations 2015 which expressly include a right for contracting authorities to request bidders to clarify their tenders providing the principles of equal treatment and transparency are complied with [2]. However, it is likely that similar considerations will apply when carrying out a fully regulated procurement under the Procurement Act 2023, in force for new procurements from 24 February 2025. This is particularly because the Act includes a similar obligation of equal treatment to that which the Court applied in this case. The Act provides that when assessing tenders, a contracting authority may disregard any tender which breaches a procedural requirement set out in the tender notice or associated tender documents [3]. When making any such decision, contracting authorities will need to have regard to the importance of the procurement objectives as set out in Section 12 and the National Procurement Policy Statement. The objectives of delivering value for money, sharing information for the purpose of allowing suppliers and others to understand the authority’s procurement policies and decisions and acting and being seen to act with integrity are important considerations in this regard. These objectives will need to be balanced with a contracting authority's duty to treat suppliers the same unless a difference between the suppliers justifies different treatment.
