In procurement litigation, there is often a requirement for the successful tenderer to make discovery of their tender documents – sometimes containing very sensitive and valuable technical and pricing data – which their competitors would love to see.
One option to militate against the risk of disclosing confidential information to a potential competitor is by establishing a ‘confidentiality ring.’ These confidentiality rings can take many forms but often, they will first contain only the lawyers of the unhappy tenderer. This may be sufficient to allow the case to proceed, but sometimes, there is a need for the lawyers to have their clients review the documents; maybe they contain specialised technical data, or the lawyers may need their clients to review the documents so that they can take instructions on them.
Two recent UK cases have provided some additional clarity as to when and how confidentiality rings in public procurement litigation can and should be used.
SRCL v National Health Service Commissioning Board  EWHC 1985 (TCC) 
This case necessitated the establishment of three ’confidentiality rings’ whereby only certain persons were permitted to view (by way of discovery) confidential information of the bidders. SRCL was the incumbent provider in a mini competition arising from a framework. The service being procured was specialist medical waste disposal. SRCL was unsuccessful and in fact pulled out of the competition (which was a reverse auction) prior to the winner being determined. SRCL then alleged that the successful tender was abnormally low.
In the proceedings, there were three confidentiality rings established; one for the confidential information of SRCL, one for the confidential information of Sharpsmart (the second placed bidder) and one for the confidential information held by the Authority. SRCL’s solicitor was the only person in all three confidentiality rings and thus she had to be called to give evidence. The Court was highly critical of this decision to have only the solicitor in all three confidentially rings on behalf of SRCL and so examined when and how to use a confidentiality ring.
The Eight SRCL principles
This case required Fraser J to examine the principles underpinning confidentiality rings, particularly in procurement cases. Fraser J referred to eight key factors in determining whether a party providing documents for discovery can prevent its opponent from reviewing documentation :
- The court’s assessment of the degree or severity of the identified risk and the threat posed by the inclusion or exclusion of particular individuals within the confidentiality ring;
- The inherent desirability of including at least one representative from each party;
- The importance of the confidential information to the issues in the case;
- The nature of the confidential information and whether it needs to be reviewed by people with specialist knowledge or skill;
- Practical considerations, such as the disruption that will occur if only part of the legal team is allowed to review the documents;
- No order for discovery should be made against the contracting authority for third party (i.e. other tenderers’) confidential information without the third party having the opportunity to address the Court;
- As part of the balancing exercise, there are a range of different options available to the Court that can both preserve the confidentiality of the information and be consistent with the dissatisfied bidder’s rights and the administration of justice. These issues can usually be resolved by consent; and
- If consent is not possible, the Court can then rule on the identity of who can see the information and may wish to give evidence in respect of it: it is not a solution to assume that a party’s solicitor should and could be called to give evidence.
Fraser J stated that “if the only personnel who see such information are simply the barristers and solicitors instructed on the case, then the party itself is deprived of knowing the relevant information,” and thus giving evidence. He said that such a situation would have to be justified by “extraordinary facts” which were not present in this case. Therefore, the approval of merely more legal representatives being able to review the information may not be the most appropriate course of action.
Marston Holdings Limited v Ministry of Justice (HM Courts & Tribunal Service) & Jacobs and Excel Civil Enforcement Limited (Notice Parties)  EWHC 3168 (TCC) 6 November 2018
This case involved the procurement by HM Courts and Tribunal Service of certain enforcement services. The process was separated into 8 lots; lots 1-7 represented individual area lots while lot 8 was for the country at large. Marston challenged the process, citing issues with the evaluation procedure that resulted in the contracting authority issuing contracts for lots 1-7 rather than for the ‘country at large’ (lot 8) for which Marston had received the highest quality score.
This was an interlocutory (pre-trial) application to allow Marston to review the entire tender submission of Excel Civil Enforcement (“Excel”), one of the winning tenderers. O’Farrell J noted that the Court has wide discretionary powers in discovery applications and emphasised that the fact that something being confidential is not an automatic defence to an application for discovery.
Endorsing the decision in SRCL above, the Judge said that she was satisfied that disclosure of the requested documents was necessary and proportionate; the claimant had established a prima facie case for challenge as it was awarded a top quality score for lot 8 yet not awarded any of the sub lots 1-7, and that the authority had made a decision not to award lot 8. For Marston to make its case, it would need to review the tender documents of the successful tenderers. The Court itself would then need to review all of the tender documents side by side in order to fairly determine the case.
Interestingly, the Court was complimentary of the procedures and confidentiality rings set up by the parties set out below:
- The documents initially went into the first confidentiality ring so that they could be reviewed by the legal teams on both sides;
- Following that initial review, if the claimant’s legal team believed that the documents should be reviewed by a client representative, a request in writing was to be made to the defendant (the contracting authority) and any party from whom the document emanated with an explanation as to why the client should review it – this request was granted so the need arose for the second confidentiality ring (which comprised of all of the people in the first confidentiality ring plus the nominated representative from the claimant);
- Redactions may be made to the documents that are progressing to the second confidentiality ring;
- The claimant nominated one representative to view the documents in the second confidentiality ring – the documents could only be viewed by the nominated representative in hard copy at the offices of the claimant’s solicitors and could not be removed, copied or used for any other purpose;
- The production of further copies of the documents would be limited to use in the proceedings as set out in the claimant representative’s undertaking; and
- The claimant representative confirmed that he would not participate in any way in any procurement processes relating to enforcement matters for twelve months following the determination of the proceedings (including any re-run of the present competition).
These cases post-date the Irish Court of Appeal’s decision in Word Perfect Translation Services Limited v The Minister for Public Expenditure and Reform (No 2)  IECA 87 where Hogan J, while accepting that confidentiality is not an automatic defence to an application for discovery, emphasised that there is an important public policy argument for keeping matters such as pricing confidential, particularly in the context of a framework mini-tender, so that authorities can obtain the best price by allowing participants to advance their very best case. He concluded in that case that in procurement matters, the normal test for discovery (being relevant and necessary) is not sufficient and it otherwise must be “indispensable for the fair disposal of the procurement challenge.”
In relation to maintaining confidentiality, Hogan J tersely stipulated that the relevant documents should be discovered only to the named solicitors and counsel of Word Perfect with a provision that any further application could be made to Court.
In some tender processes, the difference between being successful and losing can be a matter of mere fractions of a percent. Access to a competitor’s tender documents including their proposed technical solutions and pricing structure can be an incredibly valuable tool, which could negatively affect future tender competitions. Framework mini-tenders are extremely sensitive to this sort of intelligence gathering by competitors, particularly if the next mini-competition is imminent.
However, courts must balance confidentiality of tenders with the interests of ensuring that justice is done. Procurement disputes often involve highly technical industry-specific documents: lawyers will need to get instructions from their respective clients, and that may not be possible without providing the documents to their clients.
The body of principles relating to establishing a confidentiality ring in these recent cases is helpful and informative for future procurement challenges. However, the restrictive covenant placed upon the client representative in Marston (i.e. not participating in any related tender processes for 12 months) may not be practical for small businesses given their more limited resources.