In a judgment handed down on 5 April 2024, the Technology and Construction Court ("TCC") held in Working on Wellbeing Ltd Trading as Optima Health v Secretary of State for Work and Pensions and another [2024] EWHC 766 (TCC) that it was lawful for the Department for Work and Pensions ("DWP") to exclude a non-compliant bid from a procurement.
We consider the material impact of this significant judgment below.
Facts
The case concerned a procurement conducted by the DWP for a call-off contract under a framework agreement for occupational health and employee assistance programme services (the "Procurement"). It was a requirement of the framework agreement that suppliers would not charge in excess of maximum unit prices. Within the invitation to tender ("ITT") documents, the DWP indicated that bids containing prices in excess of the framework prices would be "discounted" from the Procurement.
Notwithstanding such, Working on Wellbeing Ltd trading as Optima Health ("Optima") submitted a pricing schedule alongside its bid in which a number of items exceeded the framework prices. The DWP therefore rejected Optima's bid on the basis that it was non-compliant. Consequently, Optima was excluded from the Procurement, despite having the highest score on quality and the fact that but for the disqualification as a result of the non-compliance, it would have been the winning bidder.
Interestingly, of the five invited bidders who submitted bids, only one bid was deemed compliant such that the DWP awarded the contract to that particular bidder.
Issues at Trial
Optima contested the decision to exclude its bid. Specifically, Optima alleged that (i) the pricing schedule contained obvious "clerical errors", and (ii) its exclusion from the Procurement breached the principles of transparency, proportionality and equal treatment pursuant to the Public Contracts Regulations 2015 ("PCR 2015").
In an expedited trial, the TCC had to consider:
- Whether the tender documents clearly and transparently detailed the consequences of exceeding the framework prices; and
- If the tender documents were clear, whether the DWP acted unlawfully by rejecting Optima's bid rather than taking alternative action (such as reducing the framework prices or seeking clarification).
Optima submitted that the consequences of exceeding the framework pricing (i.e. that its bid would be rendered non-compliant and excluded from the Procurement) was not made clear in the ITT. Optima also argued that the DWP should have considered alternative action, such as allowing Optima to clarify its bid and therefore the DWP's decision to disqualify its bid was disproportionate, particularly in light of the contrast between the significance of non-compliance against the value of the contract. Optima claimed the impact of the non-compliance was in the region of £600.
The DWP disputed Optima's allegations and referred the TCC to specific instances in the ITT which indicated that non-compliant bids were liable to be excluded. The DWP submitted that it had exercised its discretion pursuant to the PCR 2015 and whilst it had considered alternative actions such as inviting clarification, a compliant bid had been submitted and therefore in the DWP's view, to take any action other than awarding the one compliant bidder the contract would breach the principles of transparency and equal treatment.
Judgment
The TCC found in favour of the DWP on both grounds. Specifically, Mr Justice Freedman concluded that:
- The tender documentation would clearly allow a reasonably well-informed and normally diligent ("RWIND") tenderer to understand that bids containing prices in excess of the maximum framework prices could or would be excluded from the Procurement; and
- The DWP had lawfully exercised its discretion to reject Optima's bid in alignment with the principles of transparency and equal treatment, in particular it:
- Clearly considered alternative actions but concluded that these may infringe equal treatment and transparency principles, particularly as there was already a compliant bid;
- Was entitled to conclude there was no ambiguity or obvious error that could be easily resolved with a simple explanation; and
- Reasonably concluded there was a real risk of litigation from the compliant or other non-compliant bidders if the DWP took action other than awarding the contract to the compliant bidder.
Mr Justice Freedman considered both parties submissions and came to the opinion that "the tender was clear, transparent and providing equal treatment to the bidders". He also rejected Optima's argument that it should have been allowed to clarify its bid as doing so was likely to have been to the detriment of the compliant bidder and also possibly to the other non-compliant bidders if they were not given equal opportunities to clarify their respective positions, which would be in breach of the principle of equal treatment.
The TCC therefore rejected Optima's challenge and held that the DWP had acted lawfully.
Comment
This is a significant decision for bidders and contracting authorities alike, demonstrating the TCC taking a firm approach to procurement challenges arising out of non-compliant bids.
For bidders, the judgment highlights the importance of adhering to all requirements in order avoid the risk of disqualification. For authorities, the judgment reinforces the importance of transparency and equal treatment when conducting a procurement and being abundantly clear in the procurement documents of the consequences of non-compliance. Where a decision to exclude a bid could affect the result of a tender, authorities ought to remain alive to any steps that could be taken to prevent a challenge arising and ensure that meticulous records of decisions (including the consideration of alternative actions) are kept.
A copy of the judgment can be found here: Working on Wellbeing Ltd (t/a Optima Health) v Secretary of State for Work and Pensions & Ors [2024] EWHC 766 (TCC) (05 April 2024) (bailii.org).
