MLS (Overseas) Ltd v The Secretary of State for Defence
| Jurisdiction | England & Wales |
| Judge | Mrs Justice O'Farrell |
| Judgment Date | 25 May 2018 |
| Neutral Citation | [2018] EWHC 1303 (TCC) |
| Court | Queen's Bench Division (Technology and Construction Court) |
| Docket Number | Case No: HT-2017-000035 |
| Date | 25 May 2018 |
[2018] EWHC 1303 (TCC)
IN THE HIGH COURT OF JUSTICE
BUSINESS AND PROPERTY COURTS
OF ENGLAND AND WALES
TECHNOLOGY AND CONSTRUCTION COURT (QBD)
Royal Courts of Justice
Strand, London, WC2A 2LL
Mrs Justice O'Farrell DBE
Case No: HT-2017-000035
and
Philip Moser QC and Daisy Mackersie (instructed by Pinsent Masons LLP) for the Claimant
Alan Bates and Michael Armitage (instructed by the Treasury Solicitor) for the Defendant
Joseph Barrett (instructed by Preiskel & Co LLP) for the Interested Party
Application dealt with on paper
Approved Judgment
I direct that pursuant to CPR PD 39A para 6.1 no official shorthand note shall be taken of this Judgment and that copies of this version as handed down may be treated as authentic.
Introduction
An expedited trial of the dispute in these proceedings, limited to liability, was heard on 23, 24, 25, 26 and 27 October 2017. On 21 December 2017 judgment was handed down, in which this Court made findings that: (i) the defendant (“the MoD”) acted unlawfully, in breach of its obligations of transparency and equal treatment in applying criteria that were arbitrary or not sufficiently clear from the Invitation to Tender (“the ITT”) and in rejecting the claimant's tender on that ground; (ii) there was no manifest error in the MoD's assessment and evaluation of the tender; and (iii) had the MoD discretion to reject a tender for a “fail” score on Question 6.3, it did not act in an irrational or disproportionate manner in exercising such discretion.
On 27 March 2018 the claimant (“MLS”) issued an application, seeking the following relief:
i) a declaration that the procurement was carried out unlawfully;
ii) an order setting aside the decision to award the contract to the interested party (“SCA”); and
iii) an order requiring the MoD to amend its award decision to award the contract to MLS.
The parties have submitted written submissions in respect of the order that should be made on disposal of these proceedings:
i) submissions of MLS dated 27 March 2018;
ii) submissions of the MoD dated 10 April 2018;
iii) submissions of SCA dated 16 April 2018;
iv) supplementary submissions of the MoD dated 18 April 2018;
v) supplementary submissions of MLS dated 23 April 2018;
vi) reply submissions of SCA dated 25 April 2018;
vii) further submissions by email from MLS dated 25 April 2018;
viii) further submissions by email from SCA dated 26 April 2018.
MLS and the MoD have indicated that they are content for the outstanding matters to be dealt with in writing. SCA has indicated that the court might be assisted by oral submissions. Having regard to the court time and costs already incurred, and the full written submissions produced by the parties, I have concluded that it is not necessary to have an oral hearing and this matter can be dealt with on paper.
The issue before the court is whether MLS is entitled to any, and if so, what remedy, following the finding of unlawfulness against the MoD in respect of its decision to reject MLS's tender.
Position of the parties
Upon making its procurement challenge, MLS continued to provide port agency services for the MoD under its pre-existing contract pending the determination of these proceedings. Following the judgment, the MoD and MLS have agreed in principle to an extension to that arrangement so as to meet the Royal Navy's operational requirements, subject to the Court's order.
MLS's submission is that the court has made a finding on liability in its favour. The logical consequence of the judgment is not only that the decision to award the contract to SCA cannot stand but also that the contract should now be awarded to MLS. As between MLS and the MoD, it is agreed that if the MLS bid had not been rejected for the “fail” score in respect of Question 6.3, which rejection has been found to be unlawful, MLS would have been awarded the contract as the highest scoring tenderer.
The MoD wishes to ensure that it acts lawfully and properly. It adopts a neutral position in respect of MLS's application for relief, save that it opposes a mandatory order requiring it to award the contract to MLS. In that regard, the MoD's position is that, if the Court agrees with MLS's argument that it would be lawful for the MoD now to award the contract to MLS, then the appropriate order for the Court to make to reflect that conclusion would be an order declaring this, rather than mandating that the MoD now award the contract to MLS.
SCA opposes MLS's application and submits that no remedy can, or should, be ordered by the Court because (i) MLS has failed to establish that its response to Question 6.3 would have been different, and that it would have been the successful bidder if the ITT had stated the consequence of a “fail” to that question; and (ii) the claim is subject to a statutory time bar. SCA invites the Court to amend paragraph 78 of the Judgment accordingly. Alternatively, SCA invites the Court to exercise its remedial discretion in a manner that does not disturb the MoD's decision that SCA should be awarded the contract. In any event, SCA submits that the Court should decline to make any mandatory order that MLS should be awarded the contract.
Statutory Time Bar
SCA submits that the relevant breach of the Defence and Security Public Contracts Regulations 2011, as amended, (“the 2011 Regulations”) was the MoD's publication of the ITT without specifying what would be the consequences of a “fail” score for Question 6.3. Regulation 53(3) provides that proceedings must be started within 30 days beginning with the date when the economic operator first knew or ought to have known the grounds for starting the proceedings had arisen. Time started to run from the date of the breach and not from the later date when MLS was excluded from the tender process. MLS did not start proceedings within 30 days of the publication of the ITT. Therefore, the claim is statute-barred.
SCA relies on the case of Jobsin Co UK plc v Department of Health [2001] EWCA Civ 1241 per Dyson LJ at paragraph [26]:
“[26] … It is clear that, as soon as the Briefing Document was issued without identifying the criteria by which the most economically advantageous bid was to be assessed, there was a breach of [the regulations] … Moreover, it was a breach in consequence of which Jobsin, and indeed all other tenderers too, were then and there at risk of suffering loss and damage. It is true that it was no more than a risk at that stage, but that was enough to complete the cause of action. Without knowing what the criteria were, the bidders were to some extent having to compose their tenders in the dark. That feature of the tender process inevitably carried with it the seeds of potential unfairness and the possibility that it would damage to prospects of a successful tender.
“[27] … it is sufficient to found a claim for breach of the Regulations that there has been a breach and that the service provider may suffer damage as a result of the breach. It is implicit in this that the right of action may and usually will arise before the tender process has been completed.”
Reliance is also placed on subsequent authorities that have affirmed and applied Jobsin: R (Nash) v Barnet LBC [2013] EWCA Civ 1004; Parker Rhodes Hickmotts Solicitors v Legal Services Commission [2011] EWHC 1323; Matrix SCM v Newham LBC [2011] EWHC 2414; Allan Rutherford LLP v Legal Services Commission [2010] EWHC 3068; Hereward & Foster Ltd v Legal Services Commission [2010] EWHC 3370; Irish Waste Services Ltd v Northern Ireland Water Ltd [2010] NIQB 13.
SCA invites the Court to amend the liability judgment to make a finding that the procurement challenge was made out of time and submits that, as a result, no remedy should be granted.
MLS and the MoD do not accept that they overlooked the possible limitation argument. The parties were aware of the issue and the MoD addressed it in its submissions to the Court. There is no application by the MoD for permission to appeal the liability judgment and SCA has no standing to seek to re-open the Court's findings.
SCA was not a party to the liability trial and does not have standing to challenge the Court's findings. However, I have considered the points raised as they have been argued fully in submissions and could have a bearing on the jurisdiction to grant a remedy or the appropriate disposal of this matter by the Court.
The issue that arose at trial can be summarised below:
i) MLS's case, as pleaded and argued at trial, was that the MoD was not entitled to reject its tender based on a “fail” score against Question 6.3 because (a) the MoD determined that MLS's tender was the most economically advantageous tender (“MEAT”) using the criteria set out in the ITT; and (b) the ITT did not identify a “pass” against Question 6.3 as necessary to render the tender compliant.
ii) It was common ground that the ITT did not state expressly that a “pass” against Question 6.3 was a threshold criterion as part of the MEAT determination.
iii) It was also common ground that the ITT did not state expressly that a “pass” on Question 6.3 was required to render the tender compliant.
iv) The MoD clearly articulated its case that any challenge by MLS to the lawfulness of the ITT in respect of a defect that was identifiable on the face of that document would have had to have been brought within 30 days (pursuant to Regulation 53(2)). Therefore, any allegation of a breach of transparency in the procurement process by reason of a lacuna in the ITT, in terms of its failure to state expressly the consequences of a “fail” score, would be out of time.
v)...
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