In the recent case of MLS (Overseas) Limited v. The Secretary of State for Defence  EWHC 3389 (TCC), the Ministry of Defence (“MoD”) was found to have acted unlawfully for not making it sufficiently clear in tender documentation that a failure to pass a specific question would result in a tenderer being disqualified. The judgment is a useful reminder of the importance of careful consideration and drafting of tender documentation.
In 2015, the MoD published an OJEU Contract Notice for a new contract for global port, maritime and logistical support services for the Royal Navy. The new contract had an estimated value of between £350-£385m and was for a term of six years, with two optional extensions each of two years. MLS was the existing provider, having been providing logistical support to the MoD since 2009.
The procurement was conducted under the Defence and Security Public Contracts Regulations 2011 (the “Regulations”).
MLS (Overseas) Limited (“MLS”) achieved the highest score in the technical evaluation and also offered the lowest price. It was accordingly ranked first in terms of the evaluation criteria as having submitted the most economically advantageous tender (“MEAT”). However, despite these overall scores MLS had failed a quality question on safety and quality management in the supply chain (“Question 6.3”). The MoD therefore determined the MLS tender was non-compliant and the second-ranked tenderer (Shipping Consultants Associated Ltd “SCA”) was awarded the contract.
MLS argued that the invitation to tender (“ITT”) was ambiguous. It said the ITT did not clearly set out the consequence of a “fail” score in relation to Question 6.3. The ITT had set out in bold type where responses to certain questions would lead to rejection, but there was no clear statement in bold that a “fail” score in response to Question 6.3 would lead to rejection. It was argued that the MoD was not entitled to reject MLS for a single “fail” score and that the MoD had acted unlawfully in breach of its obligations of transparency and equal treatment in the procurement process. MLS also submitted that the MoD had acted unlawfully in failing to award them the contract even though they had submitted the MEAT in accordance with the ITT evaluation criteria. MLS argued that rejection of its tender was a manifest error of assessment having regard to the content of the tender and the scoring criteria.
The MoD, on the other hand, acknowledged that by reason of “administrative error” (i.e. a drafting mistake) it had omitted to include an express statement in the ITT that the consequence of achieving a “fail” score for Question 6.3 would lead to rejection of the tender. However, it argued that notwithstanding that error, the “reasonably well-informed and normally diligent tenderer” (the “RWIND Tenderer”) would still have known from the ITT that a “fail” for Question 6.3 would lead to exclusion.
The Court held that the MoD had acted unlawfully, in breach of its obligations of transparency and equal treatment, by applying criteria that were not sufficiently clear from the ITT and in rejecting the MLS tender on that ground. The ITT did not make clear to the RWIND Tenderer, expressly or implicitly, that a fail score against Question 6.3 would or could result in disqualification of its tender. MLS did, however, fail to establish that there was any manifest error in the MoD’s evaluation of MLS’s response to Question 6.3, a higher test which allowed for a margin of appreciation (unlike a breach of the transparency and equal treatment for which there is no margin of appreciation).
The full judgment can be found here.