In R (on the application of the Law Society) v The Legal Services Commission and others [2010] EWHC 2550 (Admin), the High Court held that, by failing clearly to indicate the criteria that providers would be required to meet in order to be awarded contracts, the Legal Services Commission's tendering process for family legal aid contracts had been unfair, arbitrary and irrational.

Key points

  • Where public bodies have statutory objectives that are to be met by procuring the services of appropriately-qualified service providers, selection criteria that unfairly and arbitrarily reduce the number of applicants that are able to share in the award of contracts may serve to impede those statutory objectives and can therefore be deemed to be irrational.
  • Public bodies awarding contracts by way of tender must be aware, when setting criteria against which to judge applicants, that a material departure from criteria previously set out in consultation documentation may give rise to a successful challenge on grounds of irrationality if the effect of that departure is to arbitrarily distinguish between applicants.
  • In the circumstances, the Court was willing to extend the usual 3 month time limit applicable in judicial review proceedings due to the general importance of the issues at stake, the strength of the claim, and the fact that, with rationality in issue, a challenge at the time of the decision (but before the consequences of the decision were known) might have been premature.

The facts

The Legal Services Commission ("LSC") was established by statute for the purpose of promoting the availability to individuals of legal aid services that effectively meet their needs. Between 2007 and 2010 publicly-funded family law services have been provided by solicitors pursuant to contracts awarded by the LSC. In order to award new contracts the LSC conducted a competitive procurement process, with the aim of identifying those best able to provide the family law services in question.

In October 2008 the LSC published a consultation document (together with an initial impact assessment) setting out its intended approach to procurement. The document contained a variety of statements regarding the manner in which those tendering for contracts might be required to demonstrate a specialism, and how the LSC intended to differentiate between rival bidders within a given specialism.

In June 2009 the LSC published a response to the consultation process, which demonstrated that as regards the precise nature of the family law selection criteria, a number of options were still being considered. It was stated that full details would be published at the start of the period for accepting tenders.

In February 2010, following the consultation process, the LSC announced the criteria and scoring system by which bids would be assessed. The scoring system was such that in order to achieve maximum points it was necessary for the applicant to have at least one caseworker accredited, at the time of the bid, under two different panel accreditation schemes (relating to domestic abuse and public law children work respectively). The importance of scoring maximum points arose from the fact that one particular category of contracts were to be awarded on a "winner takes all" basis, with contracts awarded pro rata between "winners" if there were multiple firms ranked first equal.

Importantly, there was insufficient time, in the eight-week period from the announcement of the scoring system until the deadline for submitting a bid, for further accreditations to be obtained. Therefore, short of employing new accredited staff specifically for the purpose of including their accreditations in the tender documentation, there was no way for providers to take steps to improve this aspect of their tender in the time available.

The Law Society's application for judicial review

The Law Society did not challenge the selection criteria adopted by the LSC, nor their decision regarding the scores attaching to those criteria, nor the principle of "winner takes all" pro-rata allocation of contracts. Rather, the Law Society sought to impugn the process adopted by the LSC in view of its allegedly irrational consequences.

The Law Society's application for judicial review rested on its assertion that the LSC failed to give clear notice of its selection criteria and scoring system sufficiently far in advance to allow tenderers to have applied for and acquired accreditation under the relevant panels. This, they argued, was irrational, and therefore unlawful, as it frustrated the stated aim of the tender process - to identify those who demonstrated they were best equipped in knowledge, commitment and experience to provide family law services.

The LSC did not dispute that the criterion of accreditation to both panels frequently proved decisive as to whether a particular applicant shared in the pro rata awarding of those contracts. Nor did it dispute that a substantial number of those who failed could have acquired accreditation had they appreciated that success might depend upon it. The LSC's position was that it was sufficiently clear from October 2008, when it produced its consultation document, that such dual accreditation was necessary to ensure the best chance of success.

The judgment

The Court disagreed strongly with the LSC's contention that the criteria eventually published in February 2010 were clear from the consultation document published in October 2008. Moreover, the consultation documentation repeatedly indicated that existing providers would be able to "adapt", which statement was adjudged to carry with it the clear implication that they would be given the opportunity to adapt (which opportunity was not available within the parameters of the tender process used).

The Court held that, since accreditation formed a central element of the selection criteria, and since the purpose of the selection criteria was to rank bids in order of merit, providers should be given a fair opportunity to acquire the necessary accreditation. Depriving providers of the opportunity of achieving accreditation was held to be irrational because it unfairly and arbitrarily reduced the number of those able to participate in the pro-rata award of contracts, thus impeding the LSC's prospects of achieving its statutory objectives.

The LSC's arguments regarding delay were rejected. The Court was content to rule on delay by assuming that time ran from the announcement, on 26 February 2010, of the selection criteria. Proceedings were commenced on 27 August 2010, 3 months outside the normal judicial review deadline (being promptly, or in any event within 3 months from the date of the decision being challenged).

The Court was prepared to grant an extension of time on the basis that this was an exceptional case of general importance; it was also a strong claim brought on the grounds of public rather than private interest. Also relevant to the question of extension of time was the fact that a challenge made before the results were known would have been premature as the evidence supporting the main ground of challenge was not available until the results were known.

Comment

Although this decision does not constitute a departure from the law as previously understood, it helps to frame the parameters within which public bodies are required to operate their tender processes.

The focus for the public body should be on giving clear and consistent indications regarding the basis upon which applicants will be assessed and contracts awarded. Subsequent departures by public bodies from indications given in consultation documents may be subject to successful judicial review challenge and so should be made in sufficient time, and with sufficient publicity to avoid prejudice to applicants.

From the perspective of those that tender for public contracts, the judgment provides encouragement regarding the legal redress that can be obtained to ensure that a fair competitive process is carried out. However, the judgment should not be read too widely. On these facts the public body was held to have acted irrationally. It does not follow that it will always be irrational for departures to be made from previously-stated selection criteria. As regards timing, an extension of time was granted on the particular facts of this case, but assumptions should be avoided as regards the willingness of the Court to adopt a similar approach in future.