Roche Diagnostics Ltd v The Mid Yorkshire Hospitals NHS Trust
| Jurisdiction | England & Wales |
| Judge | The Hon. Mr Justice Coulson |
| Judgment Date | 19 April 2013 |
| Neutral Citation | [2013] EWHC 933 (TCC) |
| Date | 19 April 2013 |
| Docket Number | Case No: HT-1342 |
| Court | Queen's Bench Division (Technology and Construction Court) |
[2013] EWHC 933 (TCC)
IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
TECHNOLOGY AND CONSTRUCTION COURT
Royal Courts of Justice
Strand, London, WC2A 2LL
The Honourable Mr. Justice Coulson
Case No: HT-1342
Miss Fionnuala McCredie (instructed by Eversheds LLP) for the Claimant/Applicant
Mr Nigel Giffin QC (instructed by DAC Beachcroft LLP) for the Defendant/Respondent
Hearing date: 26 March 2013
INTRODUCTION
This is a public procurement dispute. At the CMC on 26 March 2013, the claimant made applications for both specific disclosure and pre-action disclosure. Having heard the arguments, I gave a short oral ruling in which I ordered that some, but not all, of the documents sought by the claimant should be provided by the defendant. I told the parties that I would provide them with full written reasons for my decision at a later date. This Judgment contains those reasons.
The defendant is responsible for a number of hospitals in West Yorkshire. It is currently seeking to let a Managed Service Contracts ("MSC") for the provision of laboratory services at three main centres, in Wakefield, Dewsbury and Pontefract. The MSC is intended to last for 10 years. Although, in recent years, an unhappy combination of the political imperative to privatise services of this kind that used to be performed by public authorities, and the need to comply with the complexities of the Public Contract Regulations 2006 (as amended), has led to a major increase in procurement disputes, the tender exercise in this case has been particularly protracted: I am told that this is the fifth attempt to let this MSC. The claimant has been successful in at least one of the earlier, abandoned exercises, but was not the successful tenderer in the most recent evaluation.
The relevant contract notice was published on 22 February 2012 and an Invitation to Tender ("ITT") was issued on 23 April. The claimant submitted its bid on 15 June. On 2 November, the claimant was told that it had been unsuccessful and that the successful bidder was Abbott Diagnostics Ltd ("Abbott"). The claimant now seeks to challenge the fairness of this procurement exercise.
The ITT set out the relevant evaluation criteria and other detailed instructions for tenderers. In particular, in respect of fixed costs, bidders were required to complete the relevant spreadsheet for year 1 only. They were told that the defendant would then use that data to complete years 2–10 using the principles described in the ITT. They were told that "this approach will also prevent any anomalies occurring where fixed costs are diluted as activity increases."
In addition, in respect of the costs of certain laboratory tests which were identified as optional, the bidders were told that, if they did not provide a price themselves as part of their tender bid, then "the current cost [to the defendant] of sending away that test will be added to the overall price offered." This is referred to by the claimant as the 'additional assays' issue.
On 5 November 2012, having discovered that its bid had been unsuccessful, the claimant asked for further information relating to the evaluation process. The defendant provided certain spreadsheets on 7 November. These were secondary documents; in other words, they had been created after the evaluation process, as an ex post facto means of explaining how that evaluation process had been carried out. It seems to be common ground that the spreadsheets of 7 November themselves contained errors, and they led the claimant to conclude that the fixed costs had not been dealt with in the way in which, on the claimant's case, they had been led to believe by the ITT.
When these points were made to the defendant's solicitors, on 15 November, they sent through a further spreadsheet endeavouring to explain what had happened. It contained different information to the previous spreadsheets but again seemed to contain (different) errors. Not unnaturally, the claimant's concerns about the latest evaluation process were increased.
On 21 November, the defendant's solicitors sent through another new spreadsheet which suggested that the defendant had adopted different approaches in evaluating the fixed costs for years 1–5 and 7–10 on the one hand, and year 6 on the other. By this stage, the claimant had, perhaps not unreasonably, lost confidence in the evaluation performed by the defendant. However, none of the primary documents — that is to say, the documents demonstrating the evaluation that had actually been carried out by the defendant — had yet been disclosed.
On 30 November 2012, the claimant commenced these proceedings (action HT-12–405). This focused on the alleged errors in respect of the fixed costs. Subsequently, on 14 February 2013, in action HT-13–42, the claimant issued further proceedings in respect of the evaluation of the additional assays. It has now been agreed that these two claims should be consolidated. On 11 March 2013, having been unable to obtain the contemporaneous documents generated by and relating to the tender evaluation process, the claimant issued an application for specific disclosure. They had already proposed a Confidentiality Ring (common in cases of this kind), into which the documents could be disclosed.
On 15 March, the defendant offered to make available into the Confidentiality Ring what they described as "the corrected spreadsheet". It was said that this spreadsheet finally identified and corrected all the previous errors and that it demonstrated that, even taking them into account, the claimant's bid would still have been unsuccessful. The claimant agreed that this further material could be disclosed into the Confidentiality Ring but, for reasons which remain obscure, the defendant was not in a position to disclose the relevant material until after close of business on 20 March 2013.
The belated disclosure of this further information caused a good deal of last-minute work on the part of the claimant prior to the hearing of the application for specific disclosure. In summary, it is the claimant's case that, although this latest attempt to explain what had happened obviated the need for one or two of the categories of specific disclosure originally sought, the basic problems remains the same: those latest spreadsheets were not contemporaneous, so they were not the spreadsheets that revealed what had actually happened during the evaluation. I saw nothing in the hearing to suggest that the claimant's conclusion about the 20 March spreadsheets was incorrect.
THE PROCUREMENT DISPUTE
The procurement dispute that exists between the parties is financial, and relates to the defendant's evaluation of the financial information with which they were provided. It does not relate to any other elements of the tenders or the evaluation process, such as the quality of the work proposed by the claimant.
One of the essential disputes concerns the treatment of fixed costs. That dispute can perhaps best be summarised by reference to the earlier correspondence. On 21 November 2012, the defendant's solicitors said:
"To calculate the amount payable in Year 6, Schedule 8 paragraph 1.1.1 [of the ITT] states clearly that the amount payable per test will be the relevant Unit Price up to and including the Assumed Volume. The Unit Price remains the same unit price that Roche provided in its spreadsheet. The same fixed costs per test apply and the same marginal costs per test apply. However the effect of the increase in the Assumed Volume means the total fixed costs increases as the number of tests within the Assumed Volume envelope has increased."
In the claimant's solicitors response of 30 November, there was an attachment prepared by Mr Monster, the claimant's Finance Director. In dealing with this change of position at year 6 he said:
"As the two critical foundations for the re-baseline of Year 6 are the actual volume and the actual total cost of year 5 and as the actual volume of year 5 has been transposed correctly to year 6, it follows naturally that the actual costs for year 5 should have been transposed as well. Any other outcome is not only contrary to the ITT and a financial failure, but also a failure of logic."
In addition, there is a dispute about the additional assays. It is the claimant's case that, whether the defendant took into account the figures provided by the bidder, or the actual costs that they themselves were incurring in respect of those tests, figures for these additional tests should have been included in the evaluation. That is what the ITT indicated (paragraph 5 above). Whilst the defendant's position on this has shifted, it appears to be their principal submission now that the point is irrelevant because, even if there had been an error, it would not have affected who won or lost the tender evaluation process.
THE APPLICATION FOR SPECIFIC DISCLOSURE
The Law
CPR 31.12 provides:
"31.12(1)
(1) The court may make an order for specific disclosure or specific inspection.
(2) An order for specific disclosure is an order that a party must do one or more of the following things –
(a) disclose documents or classes of documents specified in the order;
(b) carry out a search to the extent stated in the order;
(c) disclose any documents located as a result of that search."
An order for specific disclosure can be made in advance of the standard disclosure of documents, if the court is persuaded that the documents sought are important and should be provided early on in the proceedings. That is often necessary in procurement disputes. In Alstom Transport v Eurostar International Limited [2010] EWHC B32 (Ch), Vos J made an order for specific...
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