Vodafone Ltd v Secretary of State for Foreign, Commonwealth and Development Affairs
| Jurisdiction | England & Wales |
| Judge | Mr Justice Kerr |
| Judgment Date | 20 October 2021 |
| Neutral Citation | [2021] EWHC 2793 (TCC) |
| Docket Number | Case No: HT-2021-000297 |
| Court | Queen's Bench Division (Technology and Construction Court) |
[2021] EWHC 2793 (TCC)
IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
BUSINESS AND PROPERTY COURTS
OF ENGLAND AND WALES
TECHNOLOGY AND CONSTRUCTION COURT
Royal Courts of Justice
7 Rolls Buildings, Holborn, London EC4A 1NL
Mr Justice Kerr
Case No: HT-2021-000297
Mr Ewan West (instructed by Osborne Clarke LLP) for the Claimant
Ms Sarah Hannaford QC and Mr Jonathan Lewis (instructed by Gowling WLG (UK) LLP) for the Defendants
Hearing date: 6 October 2021
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 and Summary
I will tread carefully in this judgment because the evidence includes sensitive material that is self-evidently confidential on both commercial and national security grounds. No application was made for the court to sit in private but certain evidence was identified as sensitive and confidential within CPR 39.2. I can give this judgment without revealing the content of that material, but without otherwise derogating from open justice.
There are two applications before me. Both arise out of a public procurement exercise carried out by the department headed by the first defendant, or her predecessor the Secretary of State for Foreign and Commonwealth Affairs (interchangeably the FCO or the FCDO save where the context requires otherwise). The FCDO emerged from an amalgamation of two government departments in September 2020.
The procurement exercise was for a framework agreement ( the ECHO 2 contract or the contract) for provision of “network integration services”, i.e. a system of secure electronic communications for the defendants. The ECHO 2 system involves provision of connectivity between 532 sites in more than 170 countries. The claimant ( Vodafone) is one of two unsuccessful tenderers in that exercise. The successful tenderer was Fujitsu Services Limited ( Fujitsu).
The first application is that of the FCDO seeking to lift the automatic suspension under regulation 95 of the Public Contracts Regulations 2015 ( the PCR 2015) of the power to award the relevant contract to Fujitsu. The second is Vodafone's application for a direction that there should instead be an expedited trial of a preliminary issue in a window starting on 24 January 2022.
The proposed preliminary issue is, essentially, whether the defendants acted unlawfully in abridging the timetable and awarding the contract on the basis of initial tenders only, without further negotiation. Vodafone's formulation of it (with minor immaterial editing) is:
“Assuming the outcome of the evaluation of tender responses was lawfully undertaken, were the Defendants lawfully entitled to proceed to and award the Framework to Fujitsu on the basis of the Defendants' evaluation of the Initial Tenders submitted?”
Vodafone accepts that if the court decides, on the assumption that “the evaluation of tender responses was lawfully undertaken”, that the defendants were “entitled to … award the Framework to Fujitsu on the basis of … evaluation of the Initial Tenders…”, the automatic stay should be lifted, leaving Vodafone to pursue, at large and without expedition, its claim for damages.
An Outline of the Facts
From about October 2010, Cable & Wireless Limited (subsequently acquired by Vodafone) provided secure communications services to the FCO. From October 2011, it began to provide such services to the second defendant ( the British Council) as well. The framework agreement under which those services were (and still are) provided, and the operating system, is called ECHO 1. The original end date for ECHO 1 was 13 September 2016, though certain call off contracts under the framework lasted longer.
The ECHO 1 contract was extended so as to terminate on 31 March 2018 for the FCO and 31 March 2019 for the British Council. In 2018, with the end of ECHO 1's time approaching, the FCO undertook a procurement exercise to award a framework agreement for a replacement system, ECHO 2. The incumbent, Vodafone, was evaluated as the winner but following a challenge from Fujitsu that procurement was abandoned.
A contract such as the ECHO 1 framework agreement cannot end abruptly. A transition to a successor communications system takes time. There is therefore provision for a “Termination Assistance Period” to smooth the path of the transition. That period was set to last until 13 September 2020 for the FCO and 13 September 2021 for the British Council. Pursuant to further extensions to which I am coming, the ECHO 1 system is still operating now.
The FCO, on behalf of itself and the British Council, proposed to undertake a further tendering exercise to procure secure communications services under a fresh framework agreement to introduce the new ECHO 2 system. The detailed ECHO 2 specification is confidential as it could be useful to persons wishing harm to this country. It is more up to date and state of the art than ECHO 1 in various ways, as you would expect. The parties did not agree on the extent to which its performance would outstrip that of ECHO 1.
In early 2020, the FCO engaged with the market to identify potential bidders. In early March 2020, it published a “Prior Information Notice” about the intended procurement. Vodafone objected to its contents, contending that they indicated an intention to replace Vodafone and not give it a fair chance of staying on as provider of the ECHO 2 services. The FCO then withdrew that notice and issued a substitute version which met Vodafone's objections.
On 3 June 2020, the FCO's tender exercise was formally commenced by publication in the Official Journal of the European Union of a notice ( the OJEU notice). It stated in outline the nature of the services to be provided, in the usual way. The procurement would be governed by the PCR 2015. The competitive procedure with negotiation would be used, under regulation 29. The estimated value of the contract was stated to be £184 million.
The FCO was undertaking the procurement on behalf of itself and the British Council. The latter was therefore also a “contracting authority” under the PCR 2015, which is why it is also a defendant. Then on 2 September 2020, the FCO merged with the Department for International Development to form the FCDO, which took over the procurement and issued an “Invitation to Submit Initial Tenders” ( the ISIT) on 3 September 2020.
The ISIT gave an outline of the process in section 6. One of the “key features” of the regulation 29 procedure (competitive procedure with negotiation) was that the authority “reserves the right to award the Framework Agreement following Initial Tenders without further negotiation (in accordance with Regulation 29(15)…” (paragraph 6.2). That is indeed what regulation 29(15) provides.
This point was developed further in paragraph 6.6:
“6.6. Stage 3 (Award on Initial Tender) (Optional)
6.6.1. As per the Competitive Procedure with Negotiation, the Authority reserves the right to award a Framework Agreement to a highest scoring Tenderer at the conclusion of evaluation of the Initial Tenders (based on the Award Criteria specified within the ISIT).
6.6.2. The Authority may determine that it is able to award the Framework Agreement on the basis of an Initial Tender without further negotiation where the following conditions are met:
6.6.2.1. The Initial Tender is complete in all respects, has been reviewed for compliance and is capable of assessment;
6.6.2.2. The Initial Tender meets the Minimum Requirements;
6.6.2.3. The Initial Tender has been evaluated by the Authority in accordance with the published Award Criteria resulting in a clear winner. There are no outstanding queries, errors and omissions that require further clarification and there are no issues that would warrant disqualification from the Process; and
6.6.2.4. The Draft Contract is capable of being awarded without negotiation.”
Section 8 stated an “indicative timetable”, which the FCDO reserved the right to change, with changes being notified “through the Portal” (8.3). Initial tenders were to be submitted by 26 October 2020. Evaluation would be complete by 24 November 2020. Any invitation to negotiate would be issued by 18 December 2020.
There were then indicative dates for negotiations, if any, based on either one or two rounds of negotiations; and for subsequent and final tenders, which were optional. With one round of negotiations, 28 July 2021 was the envisaged date for the provisional announcement of the winner. With two rounds, the date was 25 October 2021. The proposed contract award and signature date was 8 September 2021 if there was one round or 2 December 2021 if there were two.
Section 13 contained “Instructions for Completion of Tenders”. It included at 13.6:
“In the event that there are insufficient Tenders deemed satisfactory (and without prejudice to any other rights to terminate the Procurement), the Authority reserves the right to terminate the Procurement and where appropriate to re-advertise the procurement.”
In section 18 there was an “Evaluation Overview”. The evaluation process would identify the most economically advantageous tender, or “MEAT”, on the basis of quality and price (paragraphs 18.1 and 18.2). The evaluation process comprised four steps: compliance, evaluation, moderation and ranking (paragraphs 18.6 to...
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...less to be drawn into conducting a mini-trial (for a very recent case making exactly this point, see Vodafone Limited v Secretary of State for Foreign Commonwealth and Development Affairs [2021] EWHC 2793 (TCC) per Kerr J at [60]). Accordingly I do not intend to take the merits of this cas......