July’s case digest includes a Supreme Court judgment dismissing Edenred’s appeal against a government decision not to tender for the administration of a new tax free childcare scheme, and two High Court decisions finding error in a local authority’s tender evaluation and considering remedies following this finding.
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Supreme Court dismisses appeal against government decision not to tender for administration of new scheme (Edenred (UK Group) Ltd and another v HM Treasury and others)
The Supreme Court has dismissed an appeal by Edenred (UK Group) Limited against HM Treasury’s decision (upheld by the High Court and Court of Appeal) that the government’s new tax free childcare (TFC) scheme will be administered by National Savings and Investments (NS&I) via its existing outsourced services contract with a private company (Atos). This will require amendment of NS&I’s existing contract with Atos to include services to enable NS&I to run the TFC scheme. Edenred’s main argument was that this constituted such a material variation to the contract that there should have been a new procurement.
The Supreme Court applied Regulation 72 of the Public Contracts Regulations 2015 (which sets out circumstances in which a public contract can be modified without a new procurement). It concluded that the proposed amendments to the contract with Atos would not considerably extend the scope of that contract such as to involve substantial modifications (under Regulation 72(1)(e) and Regulation 72(8)). The tender process and the contract provided for the expansion of the services to be provided by NS&I to public bodies. Further, the essential nature of the operational services was not changed and the contract contained restrictions on the scope of such expansions.
The Supreme Court also agreed with the Court of Appeal that review clauses in the original contract were sufficiently “clear, precise and unequivocal” (for the purposes of Regulation 72(1)(a))). Finally, the Supreme Court rejected Edenred’s alternative argument that there was in substance a new public service contract between HMRC and Atos. In particular, the memorandum of understanding between HMRC and NS&I and the contract between NS&I and Atos are legally distinct. The memorandum of understanding was not legally binding and merely reflected the arrangements for the supply of services by one public body to another.
High Court finds manifest errors by local authority in tender evaluation (Woods Building Services v Milton Keynes Council)
The High Court has handed down a judgment on an action brought by an unsuccessful tenderer to challenge a public procurement exercise conducted by Milton Keynes Council. The High Court found that the Council had made various manifest errors in its evaluation of the tenders of the claimant and the successful tenderer. In addition, in certain instances there were breaches of the principles of equality and transparency.
The High Court commented that the Council’s case had been made more difficult due to the absence of contemporaneous reports setting out the reasons for the evaluation conclusions. The High Court reassessed the scores awarded in relation to the quality criteria, commenting that this would be likely to lead to a different result of the tender procedure.
High Court ruling on remedy following finding that local authority made errors in tender evaluation (Woods Building Services v Milton Keynes Council [No 2: Remedy])
The High Court has refused to order Milton Keynes Council to award a contract to a company that successfully challenged a procurement procedure. The High Court set aside the Council’s original decision and declared that the claimant’s tender was the most economically advantageous tender provided to the Council. However, the High Court did not consider that it would be appropriate to make a mandatory injunction in relation to the award of the contract. While it did not rule out that a mandatory injunction could be granted in a procurement case, this would only be in exceptional circumstances.
The High Court has decided that the claimant is entitled to damages, which will be assessed at an appropriate time. It noted that the assessment of damages will have to await the re-run of the procurement exercise as it is perfectly possible that this could affect the quantum of any claim for loss of profit.
General Court dismisses appeal by European Dynamics against ranking of bids for computer services contracts (European Dynamics Luxembourg SA, European Dynamics Belgium SA and Evropaïki Dynamiki – Proigmena Systimata Tilepikoinonion Pliroforikis kai Tilematikis AE)
The General Court has dismissed an appeal by European Dynamics Luxembourg SA, European Dynamics Belgium SA and Europaii Dynamiki (together European Dynamics) against decisions of the Publications Office of the European Union in ranking bids for contracts for the provision of computing services. The General Court concluded that the contracting authority did not make any manifest errors in the assessment of European Dynamics’ tenders, or those of the more successful tenderers. Further, it had given sufficient reasons for its decisions and had not erred in its interpretation or application of award criteria.
European Ombudsman finds maladministration in Commission’s evaluation of tender and rejection of recommendation (Decision of the European Ombudsman closing the inquiry into complaint 2400/2012/ANA against the European Commission)
The European Ombudsman has published a decision on a complaint in relation to the evaluation of a tender by the European Commission. The Ombudsman upheld the complainant’s submission that the Commission awarded the contract to a tenderer who offered a solution for the recovery of data in the event of a disaster that was inferior to what was required by the contract. The Ombudsman found that, by considering that the winning tender was in conformity with the tendering specifications, the Commission committed maladministration.
The Ombudsman recommended to the Commission that it acknowledge its maladministration, and address the complainant’s claim for compensation. The Commission, however, rejected the Ombudsman’s recommendations, failing to provide convincing reasons for its refusal. This, too, constituted maladministration. Therefore, the Ombudsman has closed the case by addressing two critical remarks, noting both instances of maladministration, to the Commission.