Letting International Ltd v London Borough of Newham

Any party who tenders for a contract will wish to know the basis on which the successful tender will be selected. The European Community (“the EC”) has decided the requirement of transparency means that parties proposing to tender for the kind of contract with which this claim is concerned have the right to be informed of the criteria to be used in selecting the successful tender and their respective significance. The main issue in this case is whether there was the appropriate degree of disclosure and, if not, whether a claim can be brought by the claimant whose tender had been unsuccessful. Another issue is whether the contracting authority applied its chosen criteria correctly.

Letting International Limited (“the claimant”) claims that the London Borough of Newham (“Newham”) has acted in breach of first the Public Contracts Regulations 2006 (SI 2006/5) (“the Regulations”), the relevant parts of which are set out in paragraph 8 below and which implement an EC Directive and second of an implied contract when conducting a recent tender procedure for contracts for procurement, maintenance and management of private sector leased accommodation (“the tender procedure”). As a result of the tender procedure, Newham announced its intention to enter into contracts with other tenderers but not to accept the tender of the claimant, which challenges that decision and the process leading up to it in this action. The claimant is currently providing services to Newham of the type covered by the proposed new contracts and so it stands to lose a substantial proportion of its business.

The claimant is a property management company, which carries out the business of procuring, updating, maintaining and managing properties leased to local authorities in order to enable them to meet their statutory housing obligations.

On 15 March 2007, Newham advertised, by means of a formal contract notice, its intention to enter into two types of framework contracts; one of which was for the procurement, management and maintenance of private sector leased properties while the other was simply for the management and maintenance of private sector leased properties. The contracts are described as “framework contracts” because they are intended to do no more than to establish the terms on which Newham would procure such services of the kinds described in the contracts from the successful tenderers if and when Newham requires them during the lifetime of the contracts, which will run for three years. Whether Newham will in fact require such services and, if so, to what extent, is at present unknown.

In Section IV.2.1, which was headed "Award Criteria", the contract notice identified the criterion by reference to which the contracts would be awarded and it was:

The claimant expressed an interest in tendering for the contracts and it duly received a form of Invitation to Tender (“ITT”) issued on 27 July 2007, which I will return to consider later. The claimant submitted its tender on 7 September 2007, which was well before the closing date for the submission of tenders, which was 10 September 2007. The tender was marked later in September and a report was prepared for a meeting of the appropriate decision-making body of Newham on 18 October 2007.

On 8 November 2007, the claimant was informed that its tender had not been successful. It immediately asked for an explanation to which it was entitled. Correspondence then followed between the claimant and Newham, in which the claimant sought, and eventually obtained, information which, it contends, shows that Newham had failed to act in a fair and transparent manner in handling the tender process. It is common ground that all the tendering parties were given equal treatment but the issue in this action is essentially whether the EC requirements of transparency have been satisfied. The claimant’s case is that Newham failed to comply with the requirements of the Regulations, which implement in domestic law the obligations of the United Kingdom under Directive 2004/18/EC of the European Parliament and the Council of 31 March 2004, which dealt with the coordination of contacts of the kind for which the ITT was prepared and for which the claimant tendered. As I will explain, the Directive and its predecessor have been the subject of decisions of the European Court of Justice (“the ECJ”) which have been at the forefront of the rival submissions of counsel. These decisions are based on different Directives but it is common ground that there are no material differences in any aspect relevant to this action.

The 2006 Regulations, which govern the procedures for awarding public contracts of the kind with which this claim is concerned, provide, so far as are material to this case, that:

A major issue in the case is whether Newham gave sufficient information to the claimant about the basis on which it would consider and determine which tenders to accept. So it is appropriate now to explain what the claimant and the other parties tendering were informed about what would be the criteria adopted by Newham in determining which tenders would be accepted.

The information given to prospective tenderers was set out in the ITT. Section 8 of the ITT, which was headed " Tender Response Requirements ," provided that:

Section 9 of the document, which was headed "Tender Evaluation Criteria" set out the criteria by reference to which tenders would be evaluated. It provided that:

Quality evaluation was to be based upon the Method Statements submitted (Schedule A of the ITT) while the Method Statements were to define how the Contractor will manage and deliver services throughout the contract (Paragraph 2.0.7 of the Specification).

After the claimant failed in its effort to become one of the successful tenderers, it corresponded with Newham in order to ascertain how the tenders had been marked. Three significant matters then came to light as Newham then disclosed that the assessment of compliance with the specification, which carried a 50% weighting, had been conducted by reference to the five aspects on which Method Statements had been required, to each of which there had been assigned a specific proportion of the mark allocated to that criterion as a whole.

First, it then emerged that the proportions attributed to the subject matter of the Method Statements were not equal but instead they varied between 5% for procurement of accommodation to 17% for customer care with 12% being allotted to responding to service users, 6% to resource allocation and 10% to management and monitoring. These weightings had apparently been established after the tender document had been published but before any tenders had been received.

Second, the overall criterion of compliance with specification had been broken down into twenty-eight sub-criteria, each carrying its own proportion of the marks. Crucially according to the claimant this allocation of weightings was specified by Newham without that degree of transparency required by the Regulations as the weightings had not been disclosed to tenderers.

A third significant matter, which emerged from a letter written by Newham to the claimant on 6 December 2007 and from evidence subsequently adduced by Newham, was that when marking each of the sub-criteria, a system was adopted by those evaluating the tenders under which full compliance with the specification was awarded less than the full number of marks available because full compliance with the specification meant that only three marks out of the maximum of five would be awarded. The reason for that was that both the highest marks being five out of five and also the next highest mark of four out of five were reserved for those tenders which not merely met but which actually exceeded the specification.

The claimant also complained that the tender process involved a failure to administer the process fairly and transparently in breach of regulation 30, because bidders were entitled to assume that the specification represented the mark at which they had to aim and that full compliance with the specification would therefore be awarded full marks.

The present proceedings were commenced on 27 November 2007, when the claimant obtained an interim injunction from Openshaw J restraining Newham from entering into any contract or framework agreement pursuant to the tender arrangements which I have described. On 13 December 2007, Newham made a successful application to Royce J to discharge this injunction. The claimant appealed and on 21 December 2007, the Court of Appeal (Moore-Bick and Ward LJJ) allowed the appeal ([2007] EWCA Civ 1522) and it restored the order of Openshaw J, which still remains in force. I will refer to that judgment of the Court of Appeal but it must be appreciated that the issue for the court on that interim appeal was different from the issue with which I am concerned as the Court of Appeal had to decide whether there was “ a serious issue” to be resolved (see paragraph 12) although on some issues it expressed its views in an equivocal manner and it had as much material before it as I do.

On 24 April 2008, Newham was ordered by McCombe J to disclose to the claimant the tenders submitted by the successful bidders but subject to redaction and to restrictions upon further disclosure intended to ensure that neither the claimant nor any other party unconnected with Newham would discover the commercial secrets of those other tenderers disclosed in their tenders . in the light of those restrictions the parties agreed and I ordered that some of the evidence relating to those bids was heard in camera . In this judgment, I have therefore referred to those other tenderers by the initials by which they were identified in a schedule which set out the terms of these other tenders. The legal advisers of the claimant (but not the claimant nor anybody unconnected with Newham) knows the identity of those parties. Unfortunately, it was not possible to have counsel’s closing submissions until a month after the end of the hearing. I am grateful to all counsel for their admirable written and oral submissions. As they raise a number of novel points, I have felt obliged to deal with them in some detail which explains the length of this judgment.

The issues in dispute are:

whether Newham acted without the requisite degree of transparency required by regulation 30 in failing sufficiently to disclose contract award criteria and weightings in advance by not setting out in advance the detailed criteria and sub-criteria against which it actually marked the tenders, nor the way in which they were weighted relative to each other (Issue A) (see paragraphs 23 to 96 below);

whether Newham acted without the requisite degree of transparency required by regulation 30 in failing to apply those criteria which were disclosed and instead only awarding three marks out of five under each detailed criterion for compliance with the specification with the remaining two marks awarded for exceeding the contract specification (Issue B) (see paragraphs 97 to 109 below);

whether Newham made a number of manifest errors when marking the tenders which are both objectionable in themselves and demonstrate that Newham did not treat the claimant’s tender fairly and objectively (Issue C) (see paragraphs 110 to 130 below);

whether it is necessary for the claimant to establish loss or risk of loss as part of its cause of action and if so can it establish it? (Issue D) (see paragraphs 131 to 148 below);

whether the claimant can bring a claim for breach of an implied contract (Issue E) (see paragraph 21 below); and

what is the appropriate remedy if the claimant succeeds on liability on any head of its claim ( see paragraph 21 and 150 below) (Issue F).

It is common ground that consideration of Issue F should be deferred until after I have given judgment on the other issues. The claim for breach of an implied contract in Issue E only becomes relevant if I conclude first that there has been a breach of the Regulations, second that because of a decision adverse to the claimant on Issue D, it is necessary to establish loss or risk of loss and third that this cannot be proved. For reasons which I will explain, I do not reach those second and third conclusions and so I will not have to consider Issue E.

Both the claimant and Newham adduced oral evidence. The claimant called its Managing Director Mr. Rizwan Patel and Ms Henrietta van Deth, who is an independent consultant who was retained to play a crucial role in preparing the claimant’s tender. Newham adduced oral evidence principally from Mr. Frank MacCool, who in his capacity as Scrutiny and Project Manager of Newham was responsible for many aspects of the tendering process .

Introduction

The case for the claimant is that Newham without the requisite transparency and contrary to the Regulations failed sufficiently to disclose in advance to it as a party submitting a tender the contract award criteria and the weightings to be applied. In particular, the case for the claimant is that Newham did not disclose to it before it submitted its tender all the features that it was going to take into account in considering its tenders or the relative weightings of each of those features. The thrust of the claimant’s case is that Newham merely set out in advance in clause 9.0.2 which is set out in paragraph 11 above, the three very broad headings (compliance with specification, premises and price) under which it would consider tenders, and the proportion of marks which would be available under each head. The claimant’s case is that Newham’s approach plainly did not comply with its obligations under the regulations as interpreted by the ECJ.

Newham disputes this contention and it submits that it acted in accordance with various ECJ decisions on the construction of the Directive with the consequence that it complied with its obligations. In particular, it is argued that it was sufficient that it identified criteria of the kind envisaged by regulation 30(2) by reference to which tenders were to be assessed and the weighting to be attached to them. It also contends that it was not then obliged to provide precise details of how it would go about assessing compliance with each of the criteria. The case for Newham was that the contents of the Method Statements were not to be regarded as criteria as they were nothing more than the means by which tenderers were expected to describe the ways in which they proposed to meet the requirements of the specification. In other words, it was submitted that a distinction has to be drawn between the criteria themselves and the aspects of the specification. Newham also contends first that what the claimant contend are criteria are sub-criteria; second what the claimant contends are sub-criteria are sub-sub criteria; third that the claimant ought to have known the matters which Newham would use as criteria; fourth that if the claimant had known all the criteria and sub-criteria relied on by Newham, the claimant’s tender would still not have been successful and fifth, that the claimant was not prevented from adducing any information in its tender on which it wished to rely. Both Mr. Nigel Giffin QC for the claimant and Mr. Rupert Anderson QC for Newham contended that their submissions were supported by or were not inconsistent with three judgments of the ECJ to which I now turn in order that the submissions can be understood.

In Universale Bau the contracting authority had disclosed a list of factors which it stated that it would take into account when selecting companies, who would be invited to tender for a contract but it had not disclosed the method by which those factors would be applied. The detailed methodology had instead been deposited with a notary.

The fourth question submitted to the ECJ by the Austrian Court sought to resolve a dispute between a contracting authority and a disappointed economic operator, who had not been invited to tender. The issue for the ECJ was whether:

In that case, the ECJ was concerned with the general principles of transparency and equality in relation to the provision of criteria. The disappointed operator had argued that in accordance with those principles the full criteria/mechanism used by the contracting authority ought to have been disclosed in advance. In response, the contracting authority submitted that depositing criteria/mechanism with a notary was a sufficient guarantee of tenderers’ rights and that it could not complain about this procedure.

The Advocate General agreed with the contracting authority explaining that it was sufficient that “the previously unpublished evaluation criteria” could be reviewed ex post facto by a court (paragraph 89). Nevertheless, the ECJ took the contrary view deciding that the detailed criteria should have been disclosed in advance. It is necessary to set out its reasoning in some detail and in particular it explained (with emphasis added) that:

The ECJ then stated that:

The conclusions of the ECJ were (with my emphasis added) that:

Therefore the ECJ decided that where detailed criteria for selecting tenderers have been laid down in advance, they should be disclosed in advance on account of the principle of transparency so as to ensure that each tenderer would have the fullest opportunity to participate in the tender process on a fair basis by putting forward a bid tailored to the criteria determined by the selecting authority. The claimant submits that in the present case the same principle must apply to the detailed criteria for choosing between tenders on account of the reasoning of the ECJ, which expressly refers to criteria for choosing between tenders.

In paragraph 94 of its judgment, the ECJ referred to the principle of transparency as being necessary to give tenderers equality of opportunity in formulating their applications to take part and their tenders. This point is developed so that the conclusion in paragraph 100 of the judgment is that where a contracting authority has laid down in advance the rules for weighting the criteria for selecting those who will be invited to tender there is a mandatory obligation on the contracting party as “it is obliged to state them in the contract notice or tender documents”.

In this case, the facts were slightly different as the contracting authority had disclosed contract award criteria and, in the case of the third criterion, five headings under which descriptions should be provided (the claimant in the present case contends that this is equivalent to the Method Statements required by Newham in this case): paragraph 8 of the judgment. In the ATI case, the third criterion had been attributed in advance a weighting of 25 points but after tenders had been received, the evaluation jury decided upon a weighting scheme as between the five headings under the third criterion (paragraph 9). The Italian Court referred to the ECJ the issue of whether it had been lawful to supplement the third criterion with an additional weighting scheme which had been introduced after the tenders had been received.

The ECJ explained (with my underlining added) that :

The ECJ then laid down the following rules, which were that:

The ECJ concluded (with my emphasis added) that:

Mr. Giffin submits correctly in my view that the ECJ concluded that if, but only if, each of the three conditions set out in paragraphs 26 to 32 of ATI EAC are satisfied, then a contracting authority is entitled to keep back, or not to determine in advance of tenders being received, the weightings for the application of sub-criteria. It is also worth stressing that the contracting authority is obliged to disclose any criteria which not merely did affect the preparation of the tender document but which “could have affected that preparation”.

This case was decided after the decision in the present case of the Court of Appeal to which I referred in paragraph 18 above. It was concerned with the issues of whether a contracting authority is entitled to rely upon award criteria or sub-criteria, which have not been disclosed to tenderers in advance in order to assist them in preparing their tenders. According to the claimant, any doubts about the legal position which may have persisted about the disclosure of sub-criteria following the earlier ECJ decisions discussed by the Court of Appeal, have now been resolved in favour of the tendering party and against the contracting authority by the subsequent ECJ ruling in Lianakis. The issue of whether or not a failure to disclose weightings for sub-criteria gives rise to a breach of the Regulations is determined by the three conditions set out in paragraph 32 of ATI which I have set out in paragraph 37 above.

In Lianakis, a Greek local authority had sought tenders for a development contract which referred to three award criteria in order of priority. They were first the proven experience of the contractor on projects carried out over the last three years; second the firm’s manpower and equipment; and third the ability to complete the project by the anticipated deadline, together with the firm’s commitments and its professional potential (paragraph 10). After tenders had been submitted, the authority defined the weighting factors and sub-criteria in respect of the award criteria which had been listed in the contract notice (paragraph 11). The weightings were 60%, 20% and 20% respectively (paragraph 13).

What the ECJ referred to as sub-criteria were fixed in the following way (paragraph 14-16):

The Greek Court sought the guidance of the ECJ on the issue of whether the stipulation of weighting factors and sub-criteria to be applied to the award stated in the contract documents or contract notice was consistent with Article 36(2) of Directive 92/50/EC, which it is common ground in this case was the materially identical predecessor provision to Article 53 of Directive 2004/36/EC which regulation 30 is intended to implement. The ECJ accepted an argument raised by the EC Commission that the contract award criteria themselves, which had been disclosed, were illegitimate because they focused upon the characteristics of the tenderers rather than upon the relative merits of their tenders (paragraphs 25- 32).

The ECJ then proceeded to consider the issue of stipulation of weightings and sub-criteria after tenders had been submitted and it explained (with my underlining added) that:

Later in its judgment, the ECJ said again with my emphasis added that:

The significance of this reasoning is that this was a case in which the criteria were fixed after the publication of the ITT and the ECJ held that a contracting authority is prohibited from laying down award sub-criteria, weightings and sub criteria only after publication of details of a contract in a contract notice or ITT or at least those “which if they had been known at the time the tenders were prepared, could have affected that preparation”.

These matters according to the ECJ must be disclosed to tenderers in advance in order to aid preparation of their tenders. Whether or not weightings for sub-criteria have to be disclosed in advance will depend upon the three conditions in paragraph 32 of ATI EAC which I set out in paragraph 36 above. It is noteworthy that the matters which the ECJ held were sub-criteria that should have been disclosed in Lianakis included not merely elaboration of the award criteria (experience meant completed projects, manpower and equipment meant size of project team etc) but they also included the detailed scheme which would be applied in order to allocate marks for each award criterion.

In a helpful case-note written on the Lianakis case by Professor Sue Arrowsmith which has been published on the Themis procurement Law Portal, she explained that “entities that wish to use sub criteria must state them in the notice or documents – otherwise they must simply apply the award criteria in a general discretionary manner with out using the specific sub criteria at all”. As I will explain, this was the same approach adopted by the Court of Appeal in the present case when deciding that there was a serious issue to be tried on this point.

It is submitted by Mr. Giffin that even if it was not clear before Lianakis what the law was, then the decision in Lianakis has put beyond doubt, that in the present case Newham acted unlawfully, in breach of Regulations 30(3) and 4(3)(b) in failing in the ITT to inform the claimant:

that procurement of accommodation, customer care, responding to service users, resource allocation and management and monitoring were in fact contract award criteria;

of the percentage weightings which would be attached to each of those award criteria; and

of the 28 sub-criteria which were to be applied to the award criteria and their weight.

The claimant submits that the law, in particular EU law, must be concerned with substance rather than with form and that means that it is of crucial importance that these matters were used as award criteria in the sense that tenders were marked against the five headings with each having a weighting attached to it.

Mr. Anderson on behalf of Newham makes a number of points in response to the claimant‘s case that award criteria, weightings for award criteria and sub-criteria were not disclosed.

His principal point is that what the claimant describes as “award criteria” – namely procurement of accommodation, customer care, responding to service users, resource allocation and management and monitoring – were not criteria at all. The case for Newham is that each of these factors were on the contrary simply an aspect of the services to be provided. Mr. Anderson submits that there is a sharp difference between, on the one hand, the criteria evaluation points which are those set out in the boxed categories which I set out in paragraph 11 above and, on the other hand, the other matters such as the contents of the Method Statements and their 28 sub-headings which are not the criteria but which were merely the machinery for evaluating the claims. Mr. Anderson points out that Ms Van Deth accepted that the Method Statements were a description of how each tenderer would go about delivering the services specified in the specification.

Mr. Anderson also contends as I will explain in paragraph 69 that sub-criteria were in fact sub-sub-criteria on the basis that the contents of the Method Statements were actually the sub-criteria. He also seeks to derive assistance from regulation 30(2) which I set out in paragraph 8 above as showing what the criteria are but he says that those criteria are significantly different from those specified in the Method Statements. That provision sets out a series of examples which the contracting authority should use “to determine that an offer is the most economically advantageous”. As I have explained in paragraph 24 above, Newham also makes a number of other wide-ranging submissions.

My starting point is to be found in the two clear statements of the ECJ which show that the requirement of transparency means that all criteria used to enable a contracting party to determine which tender will be accepted have to be disclosed. They are (with my emphasis added):-

The ECJ in Lianakis drew a distinction between, on the one hand, criteria which are aimed at identifying the tender that is the most economically advantageous and, on the other hand, those “instead essentially linked to the evaluation of the tenderers’ ability to perform the contract in question”.

It is only the former which are permitted award criteria under the Directive (paragraph 30). In my opinion, the matters set out in the Method Statements fall into the former category as they relate to the issue of determining which tender was most economically advantageous as the Method Statements refer to matters such as procurement of accommodation, resource allocation and management and monitoring which clearly fall into that category. It must not be forgotten that Regulation 30(3) (which is set out in paragraph 8 above) requires disclosure of the “weighting which [the contracting authority gives to each of the criteria” and the word “criterion” is defined in the New Shorter Oxford English Dictionary as meaning “principle, standard, or test by which a thing is judged, assessed or identified”. Indeed the evidence of Mr. MacCool of Newham and in particular the mark sheets for all the tenders satisfy me that these matters in the Method Statements were not merely taken into account but they were crucial matters in determining which tender would be successful.

I am fortified in coming to that conclusion by the wording of regulation 30 (2) which lists as examples of criteria to be adopted by the contracting authority in determining which offer is the most economically advantageous matters such as “quality,.. technical merit…after sales service, technical assistance”. The matters in the Method Statement fall within those categories and so under regulation 30(3) Newham was obliged to explain to those tendering “the weighting which is given to each of the criteria chosen in the contract notice or in the contract documents”.

If (which is not the case), I had been in any doubt about this conclusion, it is interesting to note that the authors of the report to the Mayor of Newham on the procurement process (including Mr MacCool himself) expressly referred to the headings as “award criteria” . This statement is not of crucial importance but it was clearly a correct description of the Method Statements headings.

A second reason why I consider that the weighting of the criteria described by Newham as Method Statements should have been disclosed is that in Lianakis, the ECJ held that similar factors (such as manpower and equipment) had to be disclosed but no cogent reason has been put forward as to why a different result should be given in this case.

A third reason why I cannot accept Mr. Anderson’s submissions is that which commended itself to Ward LJ on the appeal in this case when he said of the five matters set out in the Method Statements that:

What seems to have been treated by the council as "predetermined criteria" was the breakdown of the criteria and compliance with specification into an assessment of the five Method Statements, each of which was given a diff erent percentage mark, not (as might otherwise have been expected) equal marks.”

Although this statement was made when the Court of Appeal was deciding if an interim injunction should be discharged because of the absence of a “seriously arguable” case, it is noteworthy that unequivocal language was used by Ward LJ and he had the same material before him as I had in this case. I would respectfully wish to adopt Ward LJ’s reasoning and the approach of Moore- Bick LJ which is set out in paragraph 25.

Fourth, if Newham’s case was correct, it would have alarming consequences as it would mean that all a contracting authority need do is to disclose as little as was done in the boxed entries in paragraph 9 of the ITT and then it would be entitled to divide up the marks however it liked at a later stage and the tendering party would have no remedy. Thus, it would mean if a contracting party issued the same ITT and the same Method Statements as Newham did, then if Mr. Anderson is right, there would be no breach of regulation 30 if unbeknown to the tendering parties, it decided to award 96% of the available marks for the matters covered by one Method Statement and 1% for the matters covered by each of the remaining four Method Statements. I put this example to Mr. Anderson and he was unable to give an acceptable explanation as to how that result could be avoided if his submission was correct.

A fifth reason for rejecting Newham’s case on this point is that the language of the ITT distinguishes between actual award criteria and guidance for tenderers as to the contents of their Method Statements but not everything that the ITT required contractors to submit in fact formed part of the marking system. Thus those submitting tenders could not know which matters in the Method Statements would be taken into account by the contracting authority and also (if they were to be) very importantly precisely what weight would be attributed to them.

Finally, it is well-established that regulation 30 requires that “the applicable criteria must be disclosed (in whatever detail is required) in a clear and accessible manner.. it is not sufficient to ask tenderers for information relevant to applying the intended criteria; entities must make it clear that the matters in question are relevant as award criteria” (Arrowsmith, The Law of Public and Utilities Procurement,2^nd edition paragraph 7.125 with the emphasis as in the original). There will be some material which tenderers have to supply which will not be taken into account and in any event even if such matters are to be taken into account, then the weight to be given to each of them has to be disclosed.

In reaching the conclusion that the marks allocated to each head of the Method Statements had to be disclosed before the tenders were submitted, I considered (but rejected) Mr. Anderson’s submission that I should follow the reasoning in the Scottish case of Clyde Solway Consortium v Scottish Ministers [2001] SC 553 in which it was held first that the criteria adopted by a contracting authority for making a decision has to be distinguished from the machinery or the ways in which the criteria are to be taken account and second that the latter category comprises matters which the Regulations do not require the contracting party to disclose to a prospective tenderer. This classification does not assist Newham because:

The alternative submission of Newham is that what was stated in the Method Statements were sub-criteria and so have to be considered in the light of the ECJ’s approach in paragraph 32 of the ATI case, which was with my underlining added that:

If, contrary to my conclusion, the matters specified in the Method Statements were sub-criteria, then even so the weightings given to different ingredients of them should have been disclosed because the weightings could have affected the tenders in the light of the evidence of Ms Van Deth which I unreservedly accept. I stress that a critical factor is not whether the disclosure of the weightings would have affected weightings but whether they could have affected the weightings.

Ms Van Deth was unaware when producing the tender documents submitted by the claimant of the weightings to be given to each factor in the Method Statements by Newham. I accept that she assumed that as first there were five headings under which Method Statements were required and second that there was nothing in the tender documentation to indicate that some of those headings were more important to Newham than others, this would mean that each heading would then have an equal weighting of one-fifth of the 50% attributed to them (i.e. 10%). In fact Newham treated the matter very differently as they gave 5% to procurement, 17% to customer care, 12 % to responding to service users, 6% to resource allocation and 10% to management and monitoring.

I accept Ms Van Deth’s evidence first that if she had known of the true position, it would then have affected the way in which the claimant tendered and second that if she had known of the fact that the two headings of customer care and responding to service users accounted for 29 % of the marks, then she would have spent much more time talking to the claimant’s staff in order to obtain more detail on these matters and she would thereby have strengthened the claimant’s bid. The critical factor is that it could and would then have affected the way in which the claimant tendered.

In my view, Ms Van Deth made a good point, which I accept, which was that if a tender meets and focuses on the sub-criteria considered important by the contracting authority, it is much more likely to obtain higher marks than one which deals not only with those issues but also with matters which fall outside the sub-criteria, which have been selected by the contracting authority. The stark fact is that if the sub-criteria and the marking allocation had been disclosed to the claimant, the tender drafted by Ms Van Deth and submitted on the claimant’s behalf would clearly have been more focussed on the requirements of Newham and significantly such a tender would in her words in her witness statement have fared “rather better than one which is of equal quality overall but which focuses on different issues”. This point answers Mr. Anderson’s submission that the claimant’s expert Ms Van Deth accepted that the matters, which the claimant contends should have been but were not disclosed by Newham, were for the most part set out in the specification and were an aspect of the Method Statements. The critical point is that if the sub-criteria and the marking allocation had been disclosed to the claimant, its tender could and would have been different.

It is also appropriate to deal now with Mr. Anderson’s further point that what the claimant contends are sub-criteria were in fact sub-sub-criteria on the basis that the contents of the Method Statements were actually the sub-criteria. I do not accept this analysis because I consider that the matters in the Method Statements were in fact criteria, but in case Mr. Anderson is correct in that analysis, then it does not assist him because if the claimant had been told of these matters, I am quite sure that it would then have focussed on them and this could have and would have affected the content and nature of its tender.

I accept the evidence of Ms Van Deth that if she had known of the sub –criteria to be applied by Newham, she would have focussed on those activities covered by the sub-criteria and she would then in consequence have ensured that those matters were put forward at the expense of matters which were not in the sub-criteria. She explained that as she was unaware of what Newham had selected as sub-criteria, she had included in the claimant’s tender document matters which were not in the sub-criteria such as staff recruitment, training, development and management which she would have then omitted. In her witness statement adopted as part of her evidence-in chief, Ms Van Deth gives other examples which show the cogency of her point and she explains that she would have included matters which were sub-criteria such as more information on data-collection. I have no hesitation that Ms Van Deth whose task was to produce a tender most likely to succeed would have carefully sought to show how the claimant could satisfy each of the requirements in the sub-criteria.

An additional reason why the Regulations were not complied with was that, as Ms Van Deth explains cogently, the meaning of certain sub-criteria is unclear with the consequence that if they had been disclosed in the ITT, she would then have sought (and would have obtained) clarification from Newham on what they meant. She gave as examples the sub-criteria of “ease of upkeep” and whether complaint handling referred to complaints from tenants or from Newham. I am satisfied that if these sub-criteria had been disclosed, Ms Van Deth would have sought and would have obtained clarification with the result that the tender of the claimant would have been more focused and more attractive to Newham. So applying the test in paragraph 32 of the ATI case, the provision by Newham to the claimant before its tender was submitted of the details of first the sub-criteria (even if they had been sub-sub criteria), second their weighting and third their precise meaning undoubtedly “could have affected the preparation of the tender” with the consequence that they should have been disclosed to the claimant before it submitted its tender.

Mr. Anderson’s next point is that any failure by Newham to disclose the weightings for the award criteria did not matter because if the criteria had been given equal weighting, it would have made no difference to the outcome. It is pointed out that Ms Van Deth accepted that the claimant’s tender had contained all information on the matters specified in the Method Statements.

I am unable to accept that submission for four reasons, which individually and cumulatively lead to me rejecting that submission. First, Regulation 30 does not prescribe that claims can only be made for failing to disclose the weight to be attributed by the awarding authority to certain factors if there would have been a different result if proper disclosure had occurred. As I will explain in paragraph 136ff below, the claimant could bring a claim if as a result of a failure to disclose the relevant criteria, there was in the words of Moore- Bick LJ when giving judgment on the interlocutory appeal “20…the loss of a significant chance of obtaining the contract”.

A second reason why I must reject Mr. Anderson’s submission is that it entails writing words into the Regulations and also it runs contrary to regulation 47(6) to which I refer in greater detail in paragraph 136ff below. A third reason is that the claimant’s point is not that the tenders submitted in ignorance of the weightings would have been ranked in the same way if no weightings were applied, but rather that the tenders would have been presented in a different way if the weightings had been disclosed; the reason for that is that the tenderers would then have focussed their bids accordingly and in a different and in much more focussed way.

The fourth reason is that regulation 30(3) contains an express and, save for regulation 30(5), an unqualified obligation to disclose the weightings for award criteria. This obligation is not dependent upon whether the application of weightings would have made a difference to the outcome, and the ECJ makes no reference to any such consideration in the decided cases. Regulation 30(5) provides that criteria weightings need not be disclosed where it is not possible on objective grounds to do so (see reg. 30(5)) but it has not been suggested that it was “not possible” in this case.

Mr Anderson’s third point is that tenderers should in any event have appreciated that customer care and responding to service users would have been given higher priority with the consequence that its failure to disclose weightings had no significant impact. This submission seems to suggest that some form of constructive knowledge on the claimant’s part would suffice as an alternative to actual disclosure. In support, reliance is placed by Mr. Anderson on the evidence of Ms Van Deth who assisted the claimant in preparing their tender and who, so it is contended by Newham, ought to have appreciated these matters

I am unable to accept this submission. First, it means rewriting regulation 30(3) so that a tendering authority is excused from disclosing weightings and criteria if the tenderer ought to have known them. In other words, this is an implied exception to this regulation. Second, there is no basis in ECJ jurisprudence for such an approach and it is surprising at least that this point was not raised in any of the three ECJ cases which I have considered and in particular the last two. Indeed none of the ECJ case-law on the disclosure of weightings, (notably Universale Bau which preceded the enactment of the express obligation to disclose weightings in Article 53(2) of the Directive) contains any suggestion that the disclosure obligation should be limited in the manner suggested by Newham. I agree with Mr. Giffin that the case-law is quite clear that the prize of a contract must not simply go to the tenderer which is the most experienced or the most successful at guessing the relative priorities of the contracting authority.

Third, in any event even if Newham was correct, it has not come close to establishing that the relative weightings of the award criteria was in fact predictable to tenderers or ought to have been known to the claimant. No evidence was adduced by Newham on this issue. [After I circulated a draft of this judgment in order to obtain corrections, counsel for Newham contended that this statement was incorrect in the light of paragraphs 13 and 14 of Mr. MacCool’ second witness statement of 23 April 2008. I am unable to agree as his witness statement does not state how the relative weighting of the award criteria were predictable or ought to have been known to the claimant] The fact that – as Ms Van Deth accepted - it was possible to predict that customer service would be of considerable importance to Newham is immaterial. Predicting that some criterion might be used is not the same as predicting the precise weighting and if need be the relative importance or the precise nature of it. It was plainly a matter of judgment for a particular local authority as to what relative weight it would give to these different matters. After all, perfectly sensible arguments could have been adduced for attaching more or less weight to particular matters than Newham actually did.

Finally, the rationale of requiring a contracting authority to state its award criteria in advance is to ensure that tenderers will not have to second-guess what the award criteria are and how they will be weighted. As it was, Ms Van Deth assumed that each Method Statement heading was worth 10% of the marks for compliance with specification. She was not challenged on the truthfulness of that statement which I accept, and (were it relevant), then it was a fair and reasonable assumption for her to make. As she pointed out, it was fair to assume that the importance of customer service was reflected in the fact that two of the five Method Statements headings, customer care and responding to service users, representing what she thought was 20% of the marks and 40% of the total for compliance with specification, were directed to customer service issues. The true position was that they represented 30% of the total marks or 60% of the marks for compliance with the specification.

Moreover, I am not sure how Ms Van Deth could have predicted with any degree of confidence that “procurement of accommodation”, to give another example, would be of so little importance to Newham as to merit only 5% of the total marks. No expert or other evidence was adduced by Newham on this issue. [After I circulated a draft of this judgment in order to obtain corrections, counsel for Newham contended that this statement was incorrect in the light of paragraph 14 of Mr. MacCool’ second witness statement of 23 April 2008. I am unable to agree as his witness statement does not state how Ms Van Deth could have predicted with any degree of confidence that “procurement of accommodation to give an example would have only merited 5% of the total marks”] In my view, the more heavily that criteria are weighted away from all being of equal value, the more important it is that the precise weightings should be disclosed.

Fourth, Newham argues that what the claimant refers to as sub-criteria in fact constituted mere scoring machinery or scoring methodology rather than sub-criteria as such, and did not fall to be disclosed, principally on the authority of the Clyde Solway case. I have already explained in paragraph 63 above that the Clyde Solway case, which was decided in January 2001, preceded the trilogy of ECJ cases which now represent the settled law in this area. This Court is bound to follow the decisions of the ECJ, not that of the Scottish court. To the extent that Clyde Solway suggests an approach different to what the ECJ authorities now require, I must follow the ECJ cases. By the same token, Devilbiss Medequip Limited v NHS Purchasing and Supply Agency [2005] EWHC 1757, which was another case relied upon by Newham in this context, preceded and is now subject to the later ECJ decisions in ATI EAC and Lianakis.

In determining what a contracting authority must disclose, the focus of a court must be on substance and not on labels or on form. The five quality award criteria, plus premises, were broken down into 28 separate elements, and tenders were marked against them. They were clearly in the nature of sub-headings which was the term used in ATI or sub-criteria as explained in Lianakis as they were exactly what sub criteria are. After all, they were sub-divisions of criteria. Contrary to the defendant’s criticism, Newham used the term “sub-criteria” in its letter dated 22 November 2007.

The overriding principle expressed by the ECJ , which is that contracting authorities must disclose “all the elements to be taken into account by the contracting authority in identifying the economically most advantageous offer, and their relative importance” (Lianakis, paragraph 36, citing Universale Bau and ATI EAC – emphasis supplied) applies regardless of the label attached to the 28 sub-headings. These sub-headings were elements to be taken into account by Newham. Another way of reaching that conclusion is t rely on the New Shorter Oxford English Dictionary definition of “criterion” which is a “principle, standard or test by which a thing is judged, assessed or identified” and it is quite clear from the evidence of Newham and the mark sheets that the 28 sub-heading were all used to judge and assess the tender. So they were award criteria which should have been disclosed under regulation 30.

In any event, even if the 28 sub-criteria are described as an evaluation methodology, Universale Bau is clear authority for the proposition that an evaluation methodology falls to be disclosed pursuant to the principle of transparency. They were matters which in the words of the ECJ in paragraph 32 of ATI “if they had been known at the time the tenders were prepared could have affected that preparation”.

Mr. Anderson’s next point is that Newham’s failure to disclose award criteria, weightings and sub-criteria was not unlawful because the claimant has failed to establish if these elements had been disclosed either that the claimant would have formulated its tender any differently or that there would have been any difference in the outcome of the tender procedure. I am unable to accept this submission as the ECJ case-law could have indicated – but significantly does not indicate- that a failure to disclose criteria, weightings and sub-criteria, in breach of the principle of transparency, can only be actionable by a tenderer if it made a material or a significant difference to the conduct of tenderers or that it was determinative of the outcome of the tender process.

As I have explained in paragraph 42 above, the ECJ in Lianakis stated that the remedy is straightforward because if criteria, weightings and sub-criteria are not disclosed, an authority is simply not entitled to rely upon them when evaluating tenders (paragraph 38). This position has to be contrasted with the radically different position which applies in relation to disclosure of the weightings for sub-criteria in relation to which tenderers are required to demonstrate some potential impact, albeit only that the absence of disclosure could have affected the preparation of bids, not that it would necessarily have done so (ATI EAC, paragraph 32).

My conclusion, which is that the EC law obligation to disclose award criteria, weightings and sub-criteria does not depend upon whether non-disclosure would have had a material impact on the preparation of tenders, follows from the fact that the obligation is an inevitable consequence of the overarching principles of transparency and equal treatment. It is only by advance disclosure of each of these matters that observance of the principles of equal treatment and transparency required by regulation 30 can be ensured (see for example Universale Bau, paragraph 98; ATI EAC, paragraph 24; and Lianakis, paragraph 36). I agree with Mr. Giffin that those principles create general procedural obligations whose application has never been said to be dependent upon the consequences of non-compliance. Indeed, Article 47 (6) of the Regulations to which I return in paragraph 131ff below shows that a claim can be brought for a breach of the Regulations if the claimant “risks suffering loss and damage” and there is no suggestion in any of the ECJ cases to which I have referred that the threshold for liability should be higher.

For the purpose of completeness, I should add if, contrary to the above conclusion, the consequences of non-disclosure are material at all to the question of Newham’s liability, then I agree with Mr. Giffin that in accordance with the approach in the ATI EAC case to which I have referred in paragraph 30 above the issue can only be whether non-disclosure could (and not would) have made a difference to the preparation of the claimant’s tender.

Applying that test, I am quite satisfied that proper disclosure by Newham could, and indeed, would have made a difference to the preparation of its bid. I accept as correct the evidence of Ms Van Deth first that the preparation of the tender was a matter of judgment and second that she would have gone about preparing the claimant’s tender in a different manner if she had known of the criteria, weightings and sub-criteria which were actually used by Newham in evaluating the tenders. It is noteworthy that some of the sub-criteria (such as flexibility, problem solving) could not be found within the specification. As I have explained, I found Ms Van Deth to be an accurate and reliable witness whose evidence I should accept. Whether the claimant might or even should have been more successful at predicting Newham’s approach is simply not the critical or indeed the relevant question; indeed there is no basis for suggesting that it should be.

I have considered, but rejected, the suggestion that the claimant was not prejudiced by the fact that some of the award criteria and some of the weightings were not disclosed because there was no limit placed on the length of a tender, and so she could in effect have “thrown in the kitchen sink” by saying everything that could be said on the claimant’s behalf about everything mentioned anywhere in the ITT, and then it would all have been covered. The claimant was entitled to receive such information which would have enabled it to submit a tender which first focussed not only on all the relevant award criteria but second also took account of the weight to be given to each of these criteria.

I accept as correct the obvious common sense of Ms Van Deth’s evidence, based on her own experience of tender evaluation, which is that when the markers are faced with a large volume of material to get through, there is a great advantage in presenting them with a bid which allows them to see at once the information in which they are really interested and to which they will attach importance in marking. Mr MacCool was reluctant to accept this but I consider that it is clearly correct as it is totally consistent with common sense.

Mr. Giffin pointed out that Newham itself, through Mr MacCool, asserted that it was justified in refusing to disclose the weightings and sub-criteria on the basis that if it did so, tenderers would then inevitably tailor their bids to the detailed sub-criteria, which (so he said) would make it more difficult to distinguish between bids. This shows that a tender tailored to the award criteria, the award sub-criteria and the weightings is likely to be different from one made in ignorance of these factors. Mr. MacCool’s approach is in conflict with the transparency requirements of the Regulations.

The claimant’s counsel make the valid point that Newham’s reasoning on this point is very similar to that of the contracting authority in Universale Bau in relation to the evaluation methodology in that case. Its approach was initially seen as legitimate by Advocate General Alber (paragraph 88):

A final variation of Newham’s “no difference” argument is that even if the claimant had been awarded a framework agreement it would have obtained little if any work, hence it has suffered little if any loss or damage. I am unable to accept that submission for four reasons. First, according to Mr MacCool, Newham reached a decision that the anticipated volumes of work meant that four tenderers should be awarded framework agreements under each Part. Thus it follows that appointing the claimant as one of the four would not have meant, as Newham now contend to be the case, that the claimant would have received little or no work for it – especially as the claimant was not the highest price bidder when set alongside the successful tenderers, and would therefore have been higher than some of them up the priority list for work under the call off procedure. It is of course entirely speculative exactly how much work will be available to successful tenderers over the life of the framework agreements, and how far the cheapest successful bidders would actually in fact be able to meet Newham’s requirements without it having to approach those lower down the list.

Second, there is no minimum level of loss requirement in regulation 47: the risk of any loss or damage is sufficient as I will explain in paragraph 136ff below. Third. it is almost always the position with framework agreements that successful contractors are not guaranteed any particular volume of work (that is why there is a framework rather than a firm contract). Finally, Newham’s argument amounts to saying that the award of framework agreements can never be challenged because tenderers can never establish that they would have suffered any particular amount of loss or damage and that cannot be right.

For the reasons which I have sought to explain, the claimant has satisfied me that Newham has failed to act with the requisite degree of transparency required by regulation 30 in failing sufficiently to disclose contract award criteria and weightings in advance, by not setting out in advance the detailed criteria and sub-criteria against which it actually marked the tenders, nor the way in which these factors were weighted relative to each other.

Mr Giffin contends that Newham acted in breach of the Directive and the Regulations because unknown to the claimant and the other tendering parties, it awarded only three marks out of five under each of the detailed sub-criteria for full compliance with the specification. The reason for this was that Newham had decided that the other two marks - in effect bonus points worth 40% under this head – were only to be awarded for exceeding the contract specification.

Originally, in a letter dated 22^nd November 2007, Newham described its approach as having been that five marks were awarded for a tender which “meets the standard completely”, four marks for a tender which “meets the standard well but not completely”, three marks for a tender which “meets the standard in the majority of aspects but fails in some”, and two marks for a tender which “fails to meet the standard in the majority of aspects but meets in some”.

During the injunction proceedings, Newham explained that it had adopted a very different approach because where the specification was satisfied, then a score of only 3 was awarded. In answer to a letter from the claimant’s solicitors, Newham explained in a letter dated 6 December 2007 that:

It became clear during the evidence that this was the approach actually adopted by the Panel which selected the appropriate tender. During his evidence, Mr MacCool explained that the approach of awarding only three out of five marks for compliance with a specification and the remaining two marks as bonus marks for exceeding the specification was only finally decided upon at the first meeting of the Evaluation Panel. It is clear from the oral evidence that Newham had not settled upon this approach when the ITT was produced so that those tendering, such as the claimant, could not then have been told to exceed the specification to obtain full marks because that approach had not then been adopted.

This marking scheme clearly had to be disclosed as it constituted in the wording of regulation 30 (which is set out in paragraph 8 above) the “weighting which it gives to each of the criteria” which was three marks for meeting them and up to five marks for exceeding them. This marking regime was clearly an element of the weighting of the criteria and so had to be disclosed especially as the word “criterion” means according to the New Shorter English Dictionary a “principle, standard or test by which a thing is judged, assessed or identified”.

Mr MacCool tried to justify this by explaining that tenderers had been urged in the ITT to go beyond the contract specification. I am unable to accept this justification of the marking system which was used because the ITT did not urge tenderers “to go beyond” the contract specifications. Indeed having set out a list of Method Statements which tenderers were required to provide, it then stated that:

In my view, a test of considering if a standard is “fully met” does not mean that the test is really one of exceeding it. I would respectfully agree with the approach in the interlocutory appeal in this case adopted by Moore-Bick LJ who explained in respect of the submissions of Newham on this point which I have just explained in the last paragraph that:

The next way in which Newham tried to justify this approach is that the claimant’s tender would not have been any different if Ms Van Deth and through her the claimant had known that 40% of the marks were reserved for exceeding the specification. There are at least three reasons which have individually and cumulatively led me to the conclusion that this submission is flawed.

First, as I will explain in paragraph 136ff below a claim for breach of the Regulations is not dependent on the claimant showing that if there had been full disclosure of the relevant criteria and approach, the claimant’s tender would have been different. The claimant has namely to show that as a result of the breach of the regulations it “risks suffering loss and damage” in accordance with Regulation 47(6).

Second, Ms Van Deth explained that greater effort would have been made by the claimant to exceed the specification if the claimant had been informed that such a course was required in order for the claimant to have any prospect of achieving high marks and being successful on its tender. After all, she had been retained in order to ensure that the claimant obtained the contract and she impressed me as somebody who would have done everything to ensure that the claimant fared as well as possible with its tender.

Third, there are numerous ways in which a different approach would have been adopted if the claimant had realised that it had to exceed the specification. Ms Van Deth gives many examples in her witness statement such as the sharing of savings and surpluses through other efficiency gains, the provision of additional services that could be provided through the Tenant Support Officer role, to help tenants into more permanent accommodation, the delivery of additional services by the in-house repairs teams and providing properties that exceeded the Council’s standards, making them more attractive to prospective tenants and reducing refusals. I accept this evidence as being correct.

At the end of the day I conclude that Newham had failed to act with the degree of transparency required by Regulation 30 in failing to apply the disclosed criteria by only awarding three marks out of a possible five under each head for compliance with the specification and reserving the remaining two marks for those which exceed the specification.

Introduction

The claimant contends that Newham failed to mark its tenders fairly, reasonably and objectively with the result that it acted in breach of Regulation 30, regulation 4(3) and the EU law principles of transparency and equal treatment. The claim is strenuously resisted. As the claimant will succeed on issues A and B, then issue C becomes academic and will not alter the relief to which the claimant is entitled. My comments on this issue will be briefer than they would have been if this was a live issue.

The correct approach to this claim

The legal principles applicable to the marking challenge are not in dispute between the parties. They were set out by Morgan J in Lion Apparel Systems v Fireby Ltd [2007] EWHC 2179 (Ch) in which he stated with my emphasis added that:

The thrust of the case for Newham is the claimant’s allegations of errors fall well short of reaching the threshold of there being a manifest error in the assessment of the tenders. Mr. Giffin sought to show that there were manifest errors by cross-examining Mr. MacCool to show that the Panel should have reached a different decision. In other words, this became an appeal on the facts to show that wrong marks were awarded to the claimant and some of the other tenderers; in both cases, it was said that such awards were to the claimant’s disadvantage with the claimant’s case having to reach the threshold of showing manifest errors in order to succeed. It is not sufficient for the claimant to show that there was an error, which does not amount to a “manifest error” made by Newham.

Before considering the errors relied on by the claimant, it is appropriate to make four points. First, Mr. Giffin correctly in my opinion disavowed any wish to contend that Newham was influenced by a deliberate desire to distance itself from the claimant as a result of an independent auditor’s report which had criticised aspects of Newham’s existing procurement arrangements under which the claimant was considered to be a particularly favoured supplier. This point had been raised in cross-examination of Newham’s witnesses but has not been pursued by the claimant. Mr Giffin did contend that there was unconscious bias but having seen Newham’s witnesses being cross-examined on this issue, I am quite satisfied that I must reject that contention as there is no evidence to support it.

The second point is that the claimant only contended that the evaluation process contained manifest errors in respect of very few factors, most of which I have found not to be manifest errors for the reasons which I will seek to explain. It must therefore be inferred that Newham has not made any other errors in respect of the remaining vast majority of factors.

Third, I agree with Mr. Anderson that it is not my task merely to embark on a re-marking exercise and to substitute my own view but to ascertain if there is a manifest error, which is not established merely because on mature reflection a different mark might have been awarded. Fourth the issue for me is to determine if the combination of manifest errors made by Newham in marking the tenders would have led to a different result.

I propose to comment on various marks which the claimant contends were clearly wrong; then I will stand back and ascertain if the claimant’s complaints are justified bearing in mind the margin of discretion to which Morgan J referred in the passage which I have set out in paragraph 111 above.

The claimant received only two out of five marks for “size” under the “procurement of accommodation” heading and this meant that its tender was “unsatisfactory” in this respect. It is noteworthy that this mark was given although the claimant made a firm commitment to procure accommodation of the size required by Newham. Mr MacCool himself correctly conceded that the claimant’s tender had been marked too low under this head. He said correctly in my view that it should have been given three marks.

A further criticism of the marking was that some of the successful bidders had been awarded four marks to the other tenderers for “size” which meant that those bidders had offered a commitment to exceed Newham’s minimum size requirements. Mr Anderson accepts that the award for company B was “generous”. I am satisfied that the marks for the other companies A, C and D fell within the margin of discretion of the panel especially as it could and did take into account positive commitments by company A to improve on room size, the commitment of company C to be flexible and its view of the track record of company D.

I conclude the claimant was marked too low on “size” while the successful tenderer company B was marked too high and these marks are manifest errors.

The claimant received lower marks than each of the successful tenders for the headings of “ease of upkeep” and of “matching our needs” under “procurement of accommodation”. “Ease of upkeep” was apparently intended to refer to likely future costs of repair .Newham’s justification for marking the claimant as it did was that it would have expected to see (but did not see) in the claimant’s bid a commitment on its part to preferring risk-free properties. I do not consider this to be an error and that was certainly not a manifest error as it fell within Newham’s discretion.

Mr MacCool explained that the members of the Panel were looking for commitments by tenderers first to prefer properties which were free of potentially inconvenient easements or which themselves benefited from appropriate easements and which had not been subject to dubious repair works and second to exceed the “Decent Homes” standard.

In evidence, Mr MacCool accepted that there was nothing in contractor A’s tender which showed that it would meet those commitments to which he had referred but even so the precise mark was, if anything, an error of judgment. He was able to justify the mark for company B because of what it said about risk appraisals. For contractor C, Mr MacCool relied on a passage that it had available the services of a Consultant Chartered Environmental Health Practitioner with extensive experience of decent homes standard and that justified the higher mark it received. Contractor D does give a commitment to exceed the “Decent Homes” standard and the availability notice and that could justify his marking. I therefore reject the criticisms of the marks for companies B, C and D as being “manifest errors”.

I have come to the conclusion that the claimant may well have been marked marginally too low on “ease of upkeep”/“matching our needs” and that company A might have been marked too high but neither is a manifest error.

The claimant received only two out of five marks for “appropriate escalation routes for complaints” and only three for “complaints handling” from tenants. Other tenderers received higher marks but it is significant that their system involved escalation outside the company either to an ombudsman or to Newham. I agree with Mr. Anderson that whether this is a valid distinction is a matter for Newham which unlike the Court has expertise which must be respected.

On the issue of escalation, which is concerned with the relationship between the claimant and Newham, Mr. MacCool accepts that he was a little harsh but this was a question of judgment. I am not satisfied that any manifest errors were made especially as Mr. MacCool accepted that importance was attached to the fact that other tenderers identified individuals as the person through whom the complaints could be channelled.

The accessibility factor depended on the impression given on inspection in the light of this factor and Newham’s expert knowledge. I was not persuaded that there were any manifest errors made.

The Claimant received only two out of five marks for Disability Discrimination Act ("DDA") compliance when its premises were, as Newham admits, fully DDA compliant but the only real complaint was in relation to disabled access being at the rear. I have not seen the premises and I do not consider that this mark for the claimant was a “manifest error”. The claimant was given the same score as another tenderer whose office Mr MacCool stated “fails almost every test” of DDA compliance. Mr MacCool could not explain the marks. In my view this constituted an error and probably a manifest error.

The insuperable problem for the claimant is that even if there are manifest errors it is necessary that any such error must be of some consequence to the result. In Case T-250/05 Evropaiki Dynamiki-Proignena Systimata etc v Commission of European Communities, a valuation committee proceeded upon the wrong basis of what the applicant’s price was but because the applicant’s score on quality was so low, the incorrect price had no influence on the decision to award the contract to another tenderer. For those reasons it was held that “the applicant had not demonstrated that the [contracting authority] had made a manifest error”.

In the present case on my findings that there was only manifest error in relation to the marking on size and on disability discrimination but that does not change the final outcome that the claimant would not have been the successful tender as was shown by a table handed in by Newham when final submissions were being made.

Thus I have come to the conclusion that the claimant has not made out their case that there has been a failure to mark the tenders fairly, reasonably and objectively in such a way that it would have scored higher marks than other tenderers, who were successful.

Newham contends that the claimant is precluded from making its claims because it cannot comply with the requirements of Regulation 47(6) which provides that:-

Mr Anderson contends that these provisions mean that the claimant must show that it has suffered actual loss in that if the errors complained of had not occurred, it would have been awarded a contract and in consequence, it would have made some profit. He relies on the comments made by Morgan J in Lyon Apparel Systems Ltd v Firebuy Ltd [207] QWHC 2179 when he stated that:

Mr Anderson also points out that in Devilbiss Medequip Ltd v NHS Purchasing Supply Agency [2005 EWHC 1757, Lewison J stated that:

Applying that reasoning to this case, the case for Newham is that the claimant was obliged by regulation 47 (6) to provide satisfactory evidence (which it has not done) that:-

The claimant contends that a party can satisfy the requirements of Regulation 47(6) if there is a chance of it suffering a loss.

In my view the submissions of Newham on the construction of regulation 47 (6) cannot be accepted for four reasons which I now set out in no particular order of importance. First, the submission of Newham failed to attach adequate or any weight to the use of the words “risks, suffering, loss or damage”. The word “risk” shows that there must be merely a possibility of damage because the word “risk” means, according to the Shorter Oxford English Dictionary, “the chance or hazard of commercial loss”.

Second, I respectfully adopt the comments of Moore-Bick LJ when dealing with this case on the injunction appeal when he said of the submissions made on behalf of Newham which were along the lines of Mr. Anderson’s submissions in the present case that (with my emphasis added):

Ward LJ agreed with the judgment of Moore-Bick LJ but he did not make any separate comment on this point. I appreciate that the comments of the Court of Appeal were made in the context of an application for an interim injunction. Nevertheless, it is noteworthy first that Moore-Bick LJ had as much information and material on the construction of Regulation 47 (6) as I have and second that he expressed his views on this point not on the basis that there was “a serious issue to be tried” but in very categorical and definite terms as appears from the sentence which I have emphasised.

A third reason why I cannot accept Mr Anderson’s submission is that it would substantially undermine the transparency obligations of a contracting authority because in very many cases in which such an authority had infringed the principles of transparency there would be no remedy against it. Indeed, it would be impossible in very many cases for tendering parties to bring proceedings in cases where an authority has failed to have any tender procedure simply because the tendering party could not prove it would have succeeded in winning a contract if the contract had been advertised and if a tender procedure had been held in accordance with the Regulations; the reason for that conclusion would be that the tendering party would have no idea who else might have bid and on what terms.

Fourth, the effect of Mr Anderson’s submission is that tenders for framework agreements would be in practice outside the Regulations because in each such case, the very nature of a framework agreement meant that a party who had tendered successfully for a framework agreement would always be in the position that it might never receive any work.

Regulation 47(6) means that the claimant is not precluded from claiming that there has been a breach of regulation 30 provided that it can show that it has suffered in the words of Moore- Bick LJ “the loss of a significant chance of obtaining the contract” and it is unnecessary to show actual loss.

Applying the facts to this case, Mr. Anderson contends that the claimant cannot satisfy the requirement of this regulation because there was not a significant chance of the claimant obtaining the contract. He points out that Mr Patel who gave evidence on behalf of the claimants, acknowledged that it is quite possible that even if the claimant had been a successful tenderer, it would have not secured any work whatsoever from Newham because the agreements which were being tendered for were framework agreements, which enabled them to be considered rather than actual agreements.

Mr Anderson also stresses that Mr MacCool’s description of the present climate and the demand for the services show first that there was a limited demand for services covered by the framework agreement and second that even if the claimant had been successful, tenderers other than the claimant would have secured that work before the claimant did especially as the successful tenderers had submitted tenders which would be more attractive to Newham in terms of price. For those reasons, it is said that the claimant is not permitted to bring the present claim.

My starting point is that if the claimant had been informed as it should have been first of the weight attached to each item in the Method Statements (including the sub-categories) and second that to obtain five marks, they had to exceed the specification, I am sure that with Ms Van Deth’s assistance, the claimant would have submitted a tender which is likely to have been accepted. That leaves the issue of considering whether if the claimant had been a successful tenderer for the framework contract, it would have then obtained any work.

I am not impressed with Newham’s submission that in those circumstances, the claimant would have received little, if any, work. Mr MacCool explained that Newham decided to award contracts to four tenderers under each part of the tender on the basis of the anticipated volume of work. I have difficulty in understanding how it can be said that if the claimant had been one of the four or was one of the five successful tenderers, it would have obtained little work particularly as the claimant was not the highest price bidder when compared with the successful tenderers.

In consequence it is likely that the claimant would probably have been higher on the priority list for being given work than one or more of the successful tenderers. At the end of the day it is a matter of speculation as to how much work over the life of the framework agreement any particular bidder would obtain but significantly there is no minimum level of loss requirement in regulation 47 (6).

I believe that if the claimant had been informed as it should have been first of the weight attached to each item in the Method Statements (including the sub-categories) and second that to obtain five marks, it had to exceed the specification, then it would have had “a significant chance” of being both a successful tenderer and then successfully obtaining some work under the framework agreement.

In my view, Regulation 47 (6) does not provide a defence to the claimant’s claim because the claimant has as a result of the breaches of the regulation lost the chance of preparing a tender which had a significant chance of obtaining a contract. That in my view is enough to justify bringing its claims for breach of the transparency provisions.

In those circumstances I have come to the conclusion that Newham acted unfairly without the requisite transparency and contrary to the regulations first by failing sufficiently to disclose contract award criteria and weightings in advance and second by failing to apply those criteria which were disclosed.

It was agreed that if I reached those conclusions I should invite the parties to agree on the remedy which should be adopted. Rather than having a new tender procedure, Newham might consider it prudent merely to add the name of the claimant as one of the successful tendering parties. This is merely a suggestion and I will happily hear submissions if this were not to be mutually acceptable.

The complaints about the marking become academic. I consider that insofar as Newham made a few manifest errors when assessing the tenders of the claimant and the other tenderers, if these errors had not been made, the claimant’s tender would not have been successful.