MLS (Overseas) Limited ("MLS") brought a challenge against the Ministry of Defence's ("MOD") decision to award a contract worth circa £385 million to a rival tenderer, Shipping Consultants Associated Ltd ("SCA") in respect of various support services to the Royal Navy – including its new aircraft carrier, the Queen Elizabeth. The procurement process was subject to the Defence and Security Public Contracts Regulations 2011, as amended ("DSPCR").

MLS's tender had been commercially compliant, offered the lowest price and was awarded the highest score in the technical evaluation. However, it received a "fail" in respect of its response to a question on how it would ensure a safe working culture throughout its supply chain ("Question 6.3"). Consequently, MLS's tender was deemed by the MOD to be non-compliant and was rejected in favour of the next highest scoring tender (being SCA's tender).

  • The first five questions in the ITT explained clearly, in bold type, that failing to meet a certain level would result in disqualification;
  • The ITT set out in detail the process by which the most economically advantageous tenderer would be identified, which did not include reference to Question 6.3; and
  • The ITT did not indicate that a "pass" score for Question 6.3 was a minimum standard that had to be met to make a tender technically compliant.

MLS challenged the decision on a number of grounds, including on the basis that the ITT had not made it clear that a "fail" on Question 6.3 would result in disqualification. The Court agreed that the consequence of a "fail" of Question 6.3 was not spelled out, and so it was not possible for tenderers to understand the importance of that criterion – most notably that it would lead to disqualification. The criterion therefore became arbitrary, and its application was unlawful in breach of the MOD's obligations of transparency and equal treatment under the DSPCR.

This case should act as a reminder and stark warning to contracting authorities procuring under the DSPCR (and, by extension, any of the other public procurement regimes) that tender documents must be absolutely clear and unambiguous, to avoid the risk of challenge by a bidder. In all cases where a failure to meet a mandatory requirement may lead to disqualification, such requirements, and their consequences, need to be clearly identifiable within the tender documentation.