Hossacks (A Firm of Solicitors) v The Legal Services Commission

This is the hearing of the claimant’s application for judicial review of a decision of the defendant Commission rejecting the claimant’s tender for the provision of legal services in the field of community care following a competitive tendering exercise in 2010. Permission was granted on limited grounds by the Court of Appeal on the 8 July, 2011 and a succinct statement of the background to the case is contained in the judgement of that court to which the curious observer is referred see [2011] EWCA Civ 788.

The essential facts that underlie this claim are as follows:-

124 out of the claimant’s 125 bids were rejected by the defendant because the claimant had not provided the information necessary to establish eligibility for award of a contract. In fact, the claimant was offered a contract for Wiltshire on the basis of the inaccurate statement that a part-time office would be maintained there, but this was subsequently cancelled when the true facts were realised and no issue arises in these proceedings relating to the cancellation of that contract.

These proceedings were originally directed to all the defendant’s decisions in respect all the claimant’s bids, on the basis that the defendant’s bid criteria did not take account of the claimant unique business model that was Northampton based but delivered specialist services to clients in need throughout the jurisdiction. This claim was rejected by both the Administrative Court and on renewal to the Court of Appeal because it was essentially a challenge to the bid criteria themselves which should have been made, if at all, promptly when the criteria were published. Nevertheless, permission was granted in respect of the failed bid for Northamptonshire, on the basis that on of the information actually supplied, the defendant should not have rejected the bid. Lord Justice Richards giving the judgement of the Court recognised that there were real difficulties in the claimant succeeding on such a basis but could not castigate the application as hopeless.

Another factor in the grant of permission was emerging information about the extent to which the defendant in similar competitions for legal services contracts had been prepared to contact bidders pointing out errors, omissions and ambiguities in their bid application forms. The question whether the defendant had been and or should have been willing to use any powers it had to clarify ambiguities had been the subject in part of debate in at least four previous decisions of the High Court namely JR Jones v LSC [2010] EWHC 3671 (Ch), Hoole and Co v LSC [2011] EWHC 886 (Admin), Harrow v LSC [2010] EWHC1087 (Admin), R (All About Rights) v LSC [2010] EWHC 964 (Admin). What has emerged since the judgments in these cases is recognition that some of the evidence previously relied on by the defendant was inaccurate and incomplete when describing its practices and the extent to which clarification had been sought were inaccurate and a complete audit of all such occasions was being undertaken. One case has been remitted to the Administrative Court is AAR v LSC for re-hearing. An appeal in the case of Harrow was due to be heard in the Court of Appeal in the first week of October 2011 and some permission applications in other cases have been listed to follow on. Lord Justice Richards anticipated that the outcome of that audit would be known before the substantive hearing was determined.

Shortly before the hearing of this claim a large volume of material was served upon the claimant by the defendant with a number of witness statements and supporting documentary exhibits. Similar material was served on the appellant in the case of Harrow (above) and it led the Court of Appeal to adjourn the hearing of the at appeal. The claimant declined the defendant’s invitation to adjourn the present application and no one has suggested that this court should await the decision in Harrow before giving judgment in this matter.

It is common ground that the judgement of the Court of Appeal granting permission identifies three issues for resolution in this claim. These are:-

Before the competition was opened on the 26 February, 2010 the defendant published a 62 page document called Information for Applicants (IFA) that set out the detail of the invitation to tender to deliver publicly funded services in this field. This document is of central significance in explaining how applicants could bid for such tenders; what electronic tender forms they need to complete in order to apply, what a completed tender consisted of and other material provisions that set out the terms of the bid.

The overview of this document indicated that any applicant might submit a tender whether a current contract holder with the LSC or not. There were 135 separate invitations to tender (ITT) each covering a separate procurement area in England and Wales. Successful tenderers automatically had a passport to undertake licensed work if they obtained Matter starts. Applicants would be tendering for allocation of cases known as matter starts and, if applicable a licence to represent clients, in separate geographic areas in England and Wales. 135 ITT’s would be published on the defendants’ e-tendering system and for tenders to be complete a response to the pre-qualification questionnaire (PQQ) must also have been submitted. A completed tender consists of a completed PQQ and a response to the ITT including the mandatory form.

Other aspects of the IFA material to the present challenge include the following:-

Section 15 of the IFA set out the terms and condition of tender the following provisions are of relevance to the present application:-

By contrast with the terms and conditions of similar competitions, section 15 of the IFA made no reference to the defendant seeking clarification of ambiguities. The applicant was solely responsible for submitting the information for the tender. The defendant reserved the right to check the accuracy of information submitted.

It is apparent from the learning set out in the case law cited above that this exercise is governed by the European Union Rules for Public Contract Regulations 2006 that require both transparency and consistency between applicants. Ms Scolding submits that I accurately summarised the law in my judgement in Hoole v LSE at paragraph 30 where I said:-

“viewed entirely from the point of view of a public law duty to act fairly, it may well be that the exercise of a discretion to grant a benefit should be based on all matters that could or should be known to the authority, and that fairness may well include a reasonable opportunity to correct obvious errors without changing the fundamental nature of bid submitted… However, any such duty is severely circumscribed when there a competitive tender and a over-riding duty to treat all tenderers equally. Here for reasons that were not the responsibility of the defendant, the claimant failed to supply the information that would have led them to being rank in priority were there was competition for the award of NMS. Any general duty to give an applicant an opportunity to correct errors in the absence of fault by the defendant, yields to the duty to apply the rules of the competition consistently and fairly between all applicants, and not afford individual applicant an opportunity to amend the bid and improve his prospects of success in the competition after the submission date has passed”.

Mrs Hossack did not suggest that this observation was wrong. Nevertheless, I would accept that if in fact the defendant chose to contact tenderers to clarify and amend bids outside the terms of the conditions of contract, a public law challenge could be made if a similar facility was not extended to all other tenderers in the same circumstances.

It is also convenient to set out here a number of issues which had previously been ventilated in this litigation but which now are recognised not to be relevant to the decision that I have to make:-

The claimant submits that the error in the ITT was both and trivial and obvious and could have been corrected without prejudice to other bidders and without the need to restructure the application. Admittedly, the ITT was headed Wiltshire when it was intended for Northamptonshire; it did not contain the address and post code of the claimant’s office in Northamptonshire, and it inaccurately stated that the tender bid would be serviced by a part-time office to be established there. The claimant relies on 15.15 of the IFA that in the event of any conflict of information the conflict would be resolved by accepting the information favourable to the applicant organisation. On that basis the claimant could have been awarded matter starts appropriate to a part-time office even though it maintained a full-time office there.

The defendant submits that the error with the claimant’s ITT was fundamental rather then marginal. In particular, the ITT for Northamptonshire cannot be read in isolation from the other ITTs’ for the other areas bid for. The defendant makes an assessment of the ratio of new matter starts to staff employed based upon the information supplied by the tenderer as a whole. Taking the bids as a whole the claimant was bidding for far too many matter starts than they have staff to service. If alternatively, the number of staff that the claimant proposed to employ (four), was used as the minimum basis for the calculation of the maximum number of new matter starts that could be taken on, then on the basis of the claimant’s application in 125 areas, there would be insufficient new matter starts at each of the regions bid for to qualify for a tender. There was no ambiguity or inconsistency in the application in the tender bid made by the claimant but even ignoring the misleading header Wiltshire on their face and read as a whole the application was incomplete and the information provided insufficient for the claimant to be eligible for a contract under the tender terms. As the Court of Appeal had recognised the defendant could not use information it had about the claimant firm extraneous to the tender itself to benefit them in assessing the bid.

In my judgement there is no answer to the submissions of the defendant. The defendant’s approach to accessing eligibility of bids accords with what it said it would do in the IFA. It means that Northamptonshire cannot be separated from the other bids on a stand alone basis. To do so would not be to cure an ambiguity in the application or correct an obvious unintended error but fundamentally to reconstruct the tender bids that the claimant made.

It is common ground and if it were not it is in any event clear on the authorities, that making a fresh application after closure of the tender period in April, 2010 is not permitted under the applicable legal principles. Equally, whatever else the defendant may be able to do without offending the principle of equality and transparency in the tender terms, it is not permitted to give a tenderer an opportunity to improve a bid by supplying information in the ITT that it had previously completely omitted.

Deleting Wiltshire and substituting Northamptonshire would not have cured the defect in the claimant’s application and rendered it eligible for a contract. It is undoubtedly the case that the claimant failed to provide an office address in Northamptonshire and that part of the ITT was deliberately left blank because she was adopting the same approach for all the areas in which the firm was bidding. The IFA makes plain that information must be supplied even if it is already known to be LSC extraneously. Having premises in the relevant contract area is clearly an important part of the criteria for award of a contract at all. On either of these bases and both of them, therefore, the defendant was entitled and indeed bound to reject the application.

In addition, I consider there is substance in the defendant’s further point that as the application form for Northamptonshire contained no ambiguity as to whether a part-time or a full-time office was intended there, it would be wrong for the claimant to be awarded a contract on a fundamentally false premise. It was for the claimant to warrant the accuracy of the information provided, and although it is apparent that the means by which this error came about was an unintended consequence of the claimant’s approach to bidding for all areas by the same form, it is nevertheless unrealistic for the defendant to award a contract on a false basis. I therefore conclude it was reasonable and proportionate for the defendant to reject the claimant’s tender for Northamptonshire made as it was as part of a great many other bids containing in fact the same information.

The answer to this question has been foreshadowed by the discussion of the first. The problems with the claimant’s tenders were not ambiguities or inconsistencies between two sets of data. The clarification that the claimant submits should have been made goes beyond clarification of an ambiguity and extends to reconstructing the essence of the application made.

In any event if the claimant had been contacted to ask to clarify whether it was indeed bidding for 125 areas the answer would have been yes with the consequence that the application would have been considered ineligible. If the claimant was seeking an opportunity to withdraw the 124 applications apart from Northamptonshire on the basis of an indication to what the fate of the application would be without withdrawal, this would be something different from clarification of ambiguity.

I accordingly conclude that it was not unreasonable or disproportionate for the defendant not to seek to clarify the claimants tender given the nature of the mistake made.

It was this head of the claim that was the focus of Ms Hossack’s submissions at the Oral Hearing. On the 23 September, 2011 Melena Ward the Project Manager in the Central Commissioning Team of the defendant Legal Services Commission prepared a third statement in the remitted litigation in All About Rights v Legal Services Commission. In paragraphs 37 to 106 of this witness statement she explains in considerable detail the approach taken by the defendant other tenders and present tender to clarification and documentation. Attached to the statements were a considerable number of exhibits demonstrating the points made. Five bundles of material were served on the claimant, shortly before the hearing of the present application containing all three witness statements of Miss Ward in the other litigation and statements by others.

The Court was referred to material parts of that witness statement in the course of argument but it was unclear how far the claimant had been able to review all the exhibits before commencing her submission. Given the constrictions of time before and during the hearing, I was anxious that the claimant had full opportunity to deploy any material that she considered appropriate that related to a legitimate comparison with her circumstances. Given the problems that had arisen in other cases the Court was also concerned that Counsel for the defendant should be satisfied that the claimant had been given data relevant to that head of her challenge. This was not a judicial order that the defendant make disclosure of further unspecified documents. It was simply an endeavour to give the claimant and the Court some further assurance that through inadvertence or pressure of time relevant material was not found by the Claimant or lay unanalysed in some file. In the event the Court understands that the defendant had identified no further material and has commented on the approach set out in the witness statements in a note of 7 October 2011. The claimant has made post-hearing submissions about the effect of the Miss Ward’s statement and the exhibits contained therein upon representations previously made by the defendant in other cases. However, that is not what the Court is concerned with in the present case.

Under this limb of the challenge, the claimant avers that it has not been treated equally with other tenderers in similar competitions where flawed or ambiguous submissions were made. It is trite law that the application of the principal of equal treatment or a claim not to have been fairly treated by reason of discriminatory conduct depends upon a comparison between the claimant and the treatment of another who is in the same relevant circumstances. The claimant in her submissions intimates that the relevant comparator is any tenderer who has been previously contacted by the LSC with a view to clarification of their bid. From the materials provided to her by the defendant, Mrs Hossack selected a number of extracts that she submitted made good her case of unequal treatment.

She pointed out the following:-

Of these specific examples the closest to the present problem was the letter of the 21 May, 2010 referred to above. However, the bundle of material supplied to the claimant revealed that the answer to the query was that the firm concerned had started to complete a form with a view to tender in Community Care but then decided not to but found that the electronic form did not omit deletion of the number of matter starts. Accordingly this was not a case where the defendant permitted a firm to tender for a Community Care contract when they had failed to provide details of case workers that were necessary to sustain the contract in the tender information form. Whether the fact that the omission had resulted in an enquiry rather than a rejection demonstrates some lack of precision in the answers previously given in other cases about the limits of the use made to clarify ambiguities is not the issue in the present case. The question is whether advantageous treatment permitting correction of an errors in a bid had been afforded to others but denied to the claimant.

Ms Scolding for the defendant submits that the closest comparison between the claimant situation and others where the treatment of five other applicant organisations that submitted tender forms that did not correspond with the ITT for which they submitted a tender. The evidence is that no clarification was sought from any of these organisations and all five had their tenders rejected on the basis that they were incomplete. It is therefore submitted that the defendant has acted consistently in treating all those organisations that submitted the wrong tender form in the same way. The claimant points out that these firms are still conducting legal services in the field of Family Law, but that is because for different reasons the whole tendering processes was quashed and had to start again with the consequence that the existing arrangements had been extended until new arrangements had come into place (The Family Law contract is still being operated under the old system.

The claimant also submits that the defendant’s instruction manual makes provision for clarification of ambiguities and missing data from tender forms and that is some indication of how her firm should have been treated.

Clearly there is evidence of the defendant seeking clarification of matters on a great many occasions in the civil contract tenders. It does seem some greater flexibility has been afforded in respect of ambiguities or apparently erroneous answers in the PQQ form where the tenderer had to give information indicating that they were eligible to complete the tender. By contrast, failure to give any mandatory information in the tender information form itself or use of the wrong form or non supply of a completed form at all, have been treated as rejections. Ms Ward’s statement also gives examples in the immigration tender process, one of the first in the sequence of e-tenders were firms were contacted to see whether there were technical faults with the defendant’s equipment that had led to non-receipt of completed forms.

None of these classes of enquiry is, in my judgement, comparable to the problem with the claimant’s bid described above. There was no ambiguity in the bid. It was an incomplete bid on the wrong form that also happened to contain wrong information. Moreover the bid could not be assessed in isolation from the other bids being made by the claimant and that in itself rendered them ineligible in terms of proportion staff to new matter starts. This was not a case of a simple mistake that could have been perceived as such on the face of the application form.

In the light of the claimant’s representation on review and the original ambit of claim in the present case, I see no reason to anticipate that she would have withdrawn all the other bids in the other areas if she had been asked for clarification as to her intention. She was indeed intending to bid for those other areas to rather than having had a mistake in submitting the same bid inadvertently to the other areas. This inevitably means that even if fairness or the defendants then practice required to make contact with the claimant’s firm any response that would have put claimant’s bid back into compliance with the eligibility criteria. It would have been a fundamental reframing of the application and affording an opportunity to improve it on the basis of information not submitted or intended to have been submitted at the original tender date. There is no evidence that the defendant organisation ever approached other tenderers for that purpose or awarded them contracts following such a contact. The evidence as a whole suggests it did not.

I therefore conclude that whatever the information contained in the witness statement supplied in the All About Rights litigation may say for the accuracy of previous witness statements in other litigation, it does not provide material upon which the claimant can found a submission that the firm has not been treated equally by comparison with others in like situations. On this ground also this claim fails.

It is apparent from the way in which the claimant has marshalled the evidence it relies upon and the way that Mrs Hossack has advanced the claimant’s case orally, in writing and in the subsequent communication that she made to the Court, is passionately committed to her client base and believes she provides a unique and highly valued service. There is nothing in the present application to contradict those propositions, but that does not of itself found any basis for relief.

Tempting as it may be in this, or other cases, where experienced litigators have not been awarded LSC contracts to continue to do that which they have done in the past with the consequent loss of their future services to a client base, it is simply not the function of the court to interfere in an essentially objective and transparent commercial bidding operation. Although fairness plays some role in the judicial assessment of the legality of the defendant’s decision making, whether on a judicial review, or normally given the subject matter by way of appeal in the Chancery Division provided for by the regulations, that role is constrained by the terms of the contract bid that must be adhered to. The problems with the claimant’s bid were fundamental. They were not caused by any error by the defendants whether as respect for technology they required the tenderers to use, or the terms of the bid they stipulated in the information for applicants.

Whilst there remains some role for the defendant to both enquire into and permit clarification by way of amendment, in my judgement the present case falls outside anything that the defendant is either entitled to do under the terms of the Regulations or the IFA or required to do by application of the principle of equality and non-discrimination and proportionality. I therefore dismiss this application for judicial review.