Geodesign Barriers Ltd v The Environment Agency

THE APPLICATIONS

This is a procurement dispute. Pursuant to an application dated 20 March 2015, the claimant seeks orders for specific disclosure of documents; an answer to its request for the identities of the four other unsuccessful tenderers whose bids were rated higher than their own; and permission to amend its particulars of claim following the provision of the specific disclosure sought and the relevant information. All these applications are opposed.

There were also applications by the defendant to lift the automatic suspension pursuant to Regulation 47H and by the defendant to strike out the claimant’s claim. Happily, those matters have been resolved by agreement. Accordingly, the parties are agreed that the suspension should be lifted, which has the effect that the claimant’s claim in these proceedings is for damages only. The defendant has withdrawn the application to strike out. The consequence of that is that the court is entitled to assume that the claimant has raised at least a prima facie case.

I propose to set out briefly the factual background (Section 2), before going on to address the pleaded claim and the issues that arise (Section 3). Having summarised the law in Section 4, I then consider the documents that have so far been supplied by the defendant, and the documents which they say do not exist (Section 5 below). Thereafter I deal in Section 6 with the application for specific disclosure; in Section 7 with the application for further information relating to the identities of the unsuccessful tenderers; and in Section 8 with the application in respect of amendments. There is a discrete point as to the membership of the confidentiality ring, which I deal with in Section 9 below. At the end of the hearing, because more than the full three hours had already elapsed, I indicated those parts of the applications I would grant, and those I would refuse, together with brief reasons. As promised, this Judgment contains my detailed reasons for my decision.

THE FACTUAL BACKGROUND

The defendant is a contracting authority and its procurement for temporary flood barriers systems was subject to the Public Contracts Regulations 2006. The tender process took place between October and December 2014.

The Invitation to Tender (“ITT”) stated that there were two stages to the evaluation process. The first stage was the verification of compliance with the mandatory performance specification; and the second stage was the scoring and ranking of the tenders. There were two elements to this second stage: the price, and a quality evaluation by reference to certain technical considerations. The price/quality split was 60/40. The quality criteria, which numbered six in total, each had a percentage weighting.

By emails at the end of December 2014, the claimant was notified that it had been unsuccessful. The successful bidder was Inero AB (“Inero”). The claimant, who was the incumbent provider of this service to the defendant, made immediate complaints about the tender process. In particular, the claimant complained that the Inero system did not comply with the mandatory performance specification.

The information subsequently provided to the claimant indicates that the scores awarded to the claimant in respect of the second stage technical considerations were precisely the same as those awarded to Inero. The claimant therefore lost on price; indeed, the defendant has said expressly that, by reason of price, the claimant’s bid was ranked sixth overall. This means that, in addition to Inero, there were four other tenderers (who have been referred to as A, B, C and D) whose bids scored more highly than that of the claimant.

The claim form was issued and served on 26 January 2015. Detailed particulars of claim were provided on 5 February 2015. The defence was served on 4 March 2015 and the reply on 30 March 2015. It is necessary to analyse the pleaded claims and the issues arising out of the pleadings in a little more detail.

THE PLEADED CLAIM AND THE ISSUES ARISING

Paragraph 14 of the particulars of claim sets out the detailed criticisms of the defendant’s bid evaluation process. Sub-paragraphs 14(1), (2), (3) and (4) are all allegations concerning what are said to be flaws in the defendant’s evaluation of the Inero bid. Furthermore, these allegations are very specific: they mainly go to the claimant’s principal complaint that the Inero bid did not comply with the defendant’s mandatory performance specification (i.e. the first stage of the tender evaluation process).

Paragraph 14(5) is a summary paragraph:

“(5)

In the premises, it is averred that:

(a)

The tender process and evaluation conducted by the Defendant was fundamentally flawed.

(b)

The Inero solution should have been disqualified on the basis that it was non-compliant with the mandatory specification.

(c)

Further, or in the alternative, the price and quality scores allocated to Inero failed to take into account the deficiencies and whole life costs of its solution.

(d)

The award of the contract to Inero and the deployment of its untested flood defence system by the Defendant could create significant safety risks for English persons and property in flood areas. It is averred that a breach in a flood defence barriers unleashes forces which cause far greater risks than gradual floodwater damage, including potential loss of life.

(e)

In the absence of any other higher bids which are genuinely compliant with the specification, the Claimant should have been awarded the Contract and/or the tender and/or evaluation process should be rerun.”

In my view, on a proper reading, this sub-paragraph does not extend the nature of the claimant’s complaints beyond the points made in the preceding sub-paragraphs, which all concern the evaluation of the Inero bid and, primarily, the defendant’s failure to appreciate the non-compliant nature of the Inero design/specification.

The defence responds on all of these matters in some detail. Furthermore, at paragraph 15 of the defence, is a table intended to make good the point that the claimant, with an overall mark of 70.9, was ranked sixth out of the eight tenders which were said to be compliant. But at paragraph 17, by reference to these other tenders, a different point is taken as to causation. The defendant avers:

“If the Defendant had disqualified Inero or marked Inero’s tender unfavourably, as the claimant contends the Defendant should have done, it would have made no difference to the outcome for the claimants. At most, if Inero had been disqualified, the claimant’s tender might have been placed fifth rather than sixth out of the complaint tenders. It follows that the claimant had no chance of winning the contract and has not suffered or risked suffering any loss consequent on the breaches alleged in its Particulars of Claim, which relate exclusively to the evaluation of Inero’s tender.”

In the reply, this paragraph is put in issue and wider criticisms are made of the defendant’s evaluation process. The reply avers that an inference should be drawn that, so flawed was the defendant’s evaluation process, all of the allegedly compliant bids (other than the claimant’s own bid) did not in fact comply with the mandatory performance specification.

Although I accept that the claimant has demonstrated a prima facie case, it struck me on reading the papers prior to the hearing that this was not a claim which could be described as particularly strong. First, as demonstrated by my summary of the pleadings above, the pleaded criticisms of the defendant’s process focus entirely on the Inero bid.

Secondly, the claimant’s case amounts to a submission that the defendant has made a manifest error in accepting Inero’s detailed design, without realising that this design did not comply with their own performance specification. That seems to me to be a relatively high hurdle for the claimant to overcome. It is not that different to the claim advanced in Group M UK Ltd v Cabinet Office [2014] EWHC 3659 (TCC), which, on the application for an injunction, Akenhead J said was so unlikely to succeed that he found that it did not even raise a serious issue to be tried. This adverse impression is no more than a matter of common sense: just how likely is it that the defendant, with all its experience and technical expertise, would accept a tender that did not comply with its own mandatory performance specification?

Thirdly, the causation point raised by the defendant means that, even if permission was subsequently granted to amend the Particulars of Claim, the claimant would have to show that, in addition to the Inero bid, the other four bids A, B, C and D were also non-compliant, or should have been rejected for other reasons. That is, on any view, a tall order.

I had therefore expected the defendant to be able to demonstrate, in fairly short order, that its tender evaluation had considered, at least in general terms, the technical points now put in issue by the claimant, and how and why it had concluded that Inero’s tender was compliant. However, as we shall see, the defendant’s tender evaluation material is most unsatisfactory.

CPR 31.12 provides:

“Specific disclosure or inspection

31.12

(1)

The court may make an order for specific disclosure or specific inspection.

(2)

An order for specific disclosure is an order that a party must do one or more of the following things –

(a)

disclose documents or classes of documents specified in the order;

(b)

carry out a search to the extent stated in the order;

(c)

disclose any documents located as a result of that search.”

Early specific disclosure, in accordance with these provisions, has been a feature of procurement disputes for some time: see, by way of example, the decision of Vos J (as he then was) in Alstom Transport v Eurostar International Ltd [2010] EWHC B32 (Ch).

In Roche Diagnostics Ltd v Mid Yorkshire Hospitals NHS Trust [2013] EWHC 933 (TCC) I summarised the principles applicable to applications for early specific disclosure in these terms:

“20.

In my view, the following broad principles apply to applications for early specific disclosure in procurement cases:

(a)

An unsuccessful tenderer who wishes to challenge the evaluation process is in a uniquely difficult position. He knows that he has lost, but the reasons for his failure are within the peculiar knowledge of the public authority. In general terms, therefore, and always subject to issues of proportionality and confidentiality, the challenger ought to be provided promptly with the essential information and documentation relating to the evaluation process actually carried out, so that an informed view can be taken of its fairness and legality.

(b)

That this should be the general approach is confirmed by the short time limits imposed by the Regulations on those who wish to challenge the award of public contracts. The start of the relevant period is triggered by the knowledge which the claimant has (or should have) of the potential infringement. As Ramsey J said in Mears Ltd v Leeds City Council [2011] EWHC 40 (QB), “the requirement of knowledge is based on the principle that a tenderer should be in a position to make an informed view as to whether there has been an infringement for which it is appropriate to bring proceedings”.

(c)

However, notwithstanding that general approach, the court must always consider applications for specific disclosure in procurement cases on their individual merits. In particular, a clear distinction may often be made between those cases where a prima facie case has been made out by the claimant (but further information or documentation is required), and those cases where the unsuccessful tenderer is aggrieved at the result but appears to have little or no grounds for disputing it.

(d)

In addition, any request for specific disclosure must be tightly drawn and properly focused. The information/documentation likely to be the subject of a successful application for early specific disclosure in procurement cases is that which demonstrates how the evaluation was actually performed, and therefore why the claiming party lost. Other material, even if caught by the test of standard disclosure, is unlikely to be so fundamental that it should form the subject of a separate and early disclosure exercise.

(e)

Ultimately, applications such as this must be decided by balancing, on the one hand, the claiming party's lack of knowledge of what actually happened (and thus the importance of the prompt provision of all relevant information and documentation relating to that process) with, on the other, the need to guard against such an application being used simply as a fishing exercise, designed to shore up a weak claim, which will put the defendant to needless and unnecessary cost.”

I note that these principles have been adopted in subsequent cases including Covanta Energy Ltd v Merseyside Waste Disposal Authority [2013] EWHC 2964 (TCC). I bear those principles in mind when approaching this application.

THE DOCUMENTS SUPPLIED AND THE DOCUMENTS THAT DO NOT EXIST

It is not unfair to say that, although the defendant has endeavoured to be helpful in terms of the documents which it has supplied to the claimant voluntarily, they are best described as something of a rag-bag. They comprise the following:

There is a tantalising glimpse of how the evaluation process actually worked in the defendant’s answer to the Request for Further Information in respect of paragraph 17 of the Defence. It is worth setting this out in full:

“a.

The deadline for the submission of tender responses was noon on 15 December 2014, with the submission to be made thorough the Procontract portal. The Agency received 10 tenders. Of these 10 tenders 2 were subsequently found not to satisfy the mandatory requirements. These submissions were ruled out following clarification from the bidders that they did not meet the mandatory requirement of holding back flood water to a 1m height.

b.

The tenders were assessed by three evaluators, with the assistance of a procurement officer to ensure that the evaluation was carried out fairly. The details and relative experience of the evaluators of the Procurement are outlined in the Defence at paragraph 24 and were provided to Geodesign’s solicitors on 22 January 2015. Together these evaluators, of whom two are chartered civil engineers, have more than 60 years of relevant experience. The evaluators are colleagues from different parts of the country and are fair and objective flood risk management professionals. No single evaluator dominated the evaluation and no evaluator felt unable to voice their opinion.

c.

No written guidance was provided to the evaluators, although aspects of the evaluation were discussed in emails. The assessment of the tenders was carried out in two stages as detailed in the tender document (see page 5 of the Annex to the Defence). The percentage weighting of each criterion reflected the Agency’s financial and operational priorities.

d.

Having analysed the tender submissions, two evaluators met in person on 15 December 2014 (with the third joining later that day) and then all three evaluators met on 16 December 2014 to assess the submissions. Firstly they considered whether each tender satisfied the mandatory requirements. This was a binary, or pass/fail decision: the submission either satisfied the mandatory requirements or it did not. Accordingly, the tenders were not scored against the mandatory requirements. Since the assessment against the mandatory requirements was either pass or fail, no separate record of the decision was prepared. Inero’s and Geodesign’s submissions were (amongst others) found to be compliant.”

However, no documents of any kind have been provided in connection with the events of 15 and 16 December 2014, apart from the very skeletal manuscript notes, to which I have already referred in paragraph 20(d) above. Since those notes contain nothing in respect of the mandatory performance specification, it would appear that what the defendant calls the ‘binary decision’ involved in the first stage of the evaluation is not the subject of any contemporaneous documentation at all. No minutes of the pleaded meetings have been supplied, nor is there any evidence that there are any such minutes.

These absences are explained by the witness statement provided by Mr McKenzie, a senior lawyer with the defendant, who says in express terms that there are no contemporaneous Tender Evaluation Reports at all. He makes plain that, in terms of the documentation generated by the tender evaluation process, the claimant has been provided by the defendant with everything that the defendant has.

I have to say that I find that evidence extraordinary. In my experience, a contracting authority produces some kind of Tender Evaluation Report as a matter of routine, in order to aid and support the decision-making process. That Report will deal with all the evaluation criteria relevant to the procurement exercise, and will identify, in respect of each bid, the scores awarded, together with a brief explanation for each score. Where a question is more general, such as the so-called ‘binary’ question as to whether or not the tenderer’s design met the mandatory performance specification, there will usually be something recorded in writing recording the answer to that question in respect of each tender. Sometimes that will be done by reference to various key elements of the specification itself. Such a Tender Evaluation Report also forms the basis of the subsequent debriefing/feedback exercise when the tenderers are informed of the result.

As I observed in my brief oral judgment at the end of the hearing, the absence of a contemporaneous Tender Evaluation Report of any kind in this case raises a significant question mark as to the transparency and clarity of the procurement exercise. It gives rise to a whole host of questions. For example; how can any of the tenderers be certain that there has been a fair and transparent process if the documentation relating to that process is a miscellaneous collection of manuscript notes, some written on the back of an old notebook, and some subsequent documents produced for the debriefing/feedback exercise? Furthermore, how could that latter category of documents have even been prepared, if there were no contemporaneous documents recording the results of the evaluation? Take for example the comparison document which shows that the scores awarded to the claimant and Inero, in respect of the second stage technical questions, were the same. How could the writer of that document (whoever they were) have been sure that the scores were indeed the same, if there were no contemporaneous record of the scores actually awarded? How was the detail in that debriefing/feedback document prepared if there was nothing on which it could have been based?

Accordingly, as Mr Gollancz frankly acknowledged, it was the defendant’s case that the sort of Tender Evaluation Report and supporting documentation that are common in procurement cases, simply did not exist here. Instead, it would appear that the defendant was saying that everything was oral, informal, and ad hoc, and that detailed work was only done for the debriefing/feedback exercise subsequently. On the defendant’s own case, therefore, it seems to me that there are concerns about the process which was followed. In forensic terms, it might be said at this stage that the fact that this claim cannot be described as strong on the face of the pleadings is balanced out by the fact that the evaluation process on the documents looks, to put it neutrally, questionable. Against that rather unusual background, I turn to the application for specific disclosure.

THE APPLICATION FOR SPECIFIC DISCLOSURE

Categories A and B

These categories are defined in the draft order sought by the claimant as follows:

I am in no doubt that the evaluation documents referred to in category B, which would address the claimant’s particular complaint about the absence of any evaluation of the tenderers’ compliance (or otherwise) with the mandatory performance specification, are a sub-category of category A, which encompasses all Tender Evaluation Reports and related documents concerned with the tender process as a whole.

It is the documents in categories A and B which Mr McKenzie has said in a sworn statement do not exist. It is that omission which I have addressed in Section 5 above. On an application for specific disclosure, if a lawyer has said in a signed witness statement that a number of searches have been undertaken and that these documents do not exist then there is very little further that the court can or should do. Here there have been at least two searches. I am quite prepared to accept Mr McKenzie’s assurance, no matter how surprising I find it to be.

But it is important to stress the consequences of that assurance. I dealt with this orally during argument so there could be no doubt about it. The existence of these documents is so central, both to the claimant’s pleaded case, and to this application for specific disclosure, that it could not be said at a later date that the defendant was unaware of precisely what was being sought. Neither could it credibly be said that these documents had, somehow, been inadvertently overlooked. If in the future the defendant purports to disclose documents which plainly fall within categories A or B, then Mr McKenzie’s assurance would, quite simply, have been untrue. Significant consequences would probably flow from that.

Accordingly, for the reasons that I have given, I accept Mr McKenzie’s assurance that there are no further documents of this type, and I therefore make no order in respect of categories A and B.

Category C

The documents in this category are described in the draft order sought as:

Although the defendant originally said that these documents did not exist, it subsequently modified that position (in contrast to the position in respect of categories A and B) and stated that there were some emails between the evaluators and the procurement officer, Mr Robin Browne. The suggestion is that these emails may contain some of the relevant guidance. However, the defendant maintains that the claimant has more than enough information as it is, and has no need for the early specific disclosure of these documents at this stage.

I respectfully disagree with that submission. I have already expressed my surprise at the dearth of any contemporaneous documentation relating to the tender evaluation process. Because of the absence of a Tender Evaluation Report (or anything remotely like it), these emails may be the only contemporaneous documents which will be disclosed in this case that evidence the evaluation process actually undertaken. They may therefore be of critical importance. It seems to me that, particularly since the defendant has taken the time and trouble to indentify that there are these emails in existence, they should be disclosed forthwith.

Category D

These documents are said to comprise:

In general terms, the position in relation to category D is the same as in respect of categories A and B, namely that no further documents are said to exist, beyond those documents that have already been disclosed. Again I accept Mr McKenzie’s assurance to that effect; again, should further documents in this category be provided subsequently, it would mean that his statement was untrue.

There are two possible exceptions to that position. One possible exception concerns the scores provided in respect of tenders A, B, C and D. The defendant has taken the line that those documents are not relevant to the pleaded case. I address that in the context of the bids that were made by tenderers A, B, C and D, dealt with in Section 6.4 below. If I conclude that those four bid documents should be the subject of specific disclosure then it would follow that so too would any scores and evaluation documents relating to those four bids (to the extent that they have not already been disclosed).

Secondly, this category might also catch any of the documentation which underlies the process which has been pleaded in answer to the request for the further information and which focused on the meetings on 15 and 16 December 2014 (paragraph 21 above). As I have said, the clear inference from Mr McKenzie’s statement is that there are no contemporaneous documents dealing with these meetings and discussions, beyond the emails which are the subject of category C. But to the extent that there is any doubt about it, I order the specific disclosure of any contemporaneous documents relating to the process described in paragraph 21 above.

Category E

This category comprises the bid documents making up tenders A, B, C and D. I take the view that these documents are disclosable and should be the subject of specific disclosure now. My reasons are set out below.

I accept Mr Gollancz’s submission that the bids put in by tenderers A, B, C and D are irrelevant to the claimant’s pleaded claim for breach of the Regulations. The evaluation of those bids is likewise irrelevant to that claim. As I have noted, the pleaded claim focuses entirely on the evaluation of the Inero bid.

However, I consider that paragraph 17 of the Defence (paragraph 12 above), and the reply to that paragraph, expressly put these tenders in issue. It is the defendant who, quite reasonably, takes the point that, even if the claimant’s pleaded criticisms of the evaluation of the Inero bid were all sustained, it would have made no difference to the outcome because there would have been four other compliant bids that were cheaper, and therefore would have prevented the claimant from being awarded the contract in any event. In order to meet the causation point taken by the defendant, the claimant will be required to argue that, in some way or another, tenders A, B, C and D were all non-compliant or had in some way been evaluated as a result of manifest errors. This may be something of a tall order, but it is the path down which the claimant has to go, in view of the defendant’s pleading and the claimant’s comparatively high price for the work.

For those reasons, therefore, it seems to me that bids A, B, C and D are relevant to the pleaded issues in the case. Moreover, as I made plain at the hearing, it is in both parties’ interests for these documents to be disclosed now. Mr Gollancz confirmed that the defendant could disclose these documents easily and promptly. If the claimant receives copies of these bids now then, with the assistance of the expert (see below), the claimant ought to be able to say in pretty short order whether or not they are compliant. If they are, then that may well be the end of the litigation.

For those reasons, I consider that the documents in the category E should be the subject of specific disclosure. They would be disclosed into the confidentiality ring to which I refer to at Section 9 below.

Category F

These documents are said to be:

(f)

“Any written references and/or notes of conversations with referees obtained in the relation to the Inero AB bid, the Applicant bid and/or Tenders A, B, C and D) (category F).”

In my view this can be dealt with shortly. These documents may well be disclosable pursuant to standard disclosure. They are, however, of peripheral relevance. There is no reason why these documents should be the subject of early specific disclosure.

Summary

Accordingly, I order disclosure of the documents in category C and E, together with any documents that may have slipped through the net in category D, and any documents recording the scores/evaluations relating to bids A, B, C and D. I confirm that that order is on the basis that there are no other documents in existence in categories A, B and D.

THE APPLICATION PURSUANT TO CPR PART 18.1

The claimant seeks, by way of a request for information, the identities of the tenderers A, B and C. In my view, the request is unwarranted. The claimant does not need to know who these unsuccessful bidders were; the claimant simply needs to know what their bids contained. No basis has been identified for how or why the names themselves should be supplied. Accordingly, when the bids are disclosed into the confidentiality ring, the A, B, C and D nomenclature should be retained.

THE APPLICATION IN RESPECT OF AMENDMENTS

The claimant originally sought permission to amend in the future, following the specific disclosure process. However, as I pointed out during the course of argument, that is entirely premature. Amendments must be dealt with in the normal way; save for permission to make consequential amendments to a defence or a reply, it is almost always a mistake for a court to grant permission to amend without the actual amendments being before the court.

As an alternative, Ms Hannaford QC suggested that the court could lay down a timetable for amendments, with the defendant having an opportunity to object, but otherwise allowing the future amendments. That can sometimes be an appropriate course. However, I would be reluctant to adopt that course here. This case has all the hallmarks of a procurement dispute where everything seems to be in issue. Furthermore, adopting the course suggested by Ms Hannaford QC means that the court may lose an important element of its case management role: the defendant may not object to an amendment but the court might. In addition, it would be a great shame if controversial amendments were allowed through simply because the defendant failed to make an objection by a particular date.

For all those reasons, I decline to make any orders in respect of amendments.

THE CONFIDENTIALITY RING

The confidentially ring in the present case is made up of counsel and solicitors representing the claimant. No representative of the claimant company itself is within the confidentiality ring, and no application has been made to me for such a person to be added.

Instead Ms Hannaford QC argued that the confidentiality ring should include two experts, so as to allow the lawyers to be advised by those experts as to the technical compliance (or otherwise) of the other bids with the performance specification. She makes the point that, if the confidentiality ring included neither clients nor experts, the lawyers alone would be wholly unable to deal with the technical points arising out of the detail of the bids.

It seems to me that that submission is correct. It would be wrong to hobble the claimant’s preparation of its case by refusing to allow documents to be disclosed into the confidentiality ring to anyone other than lawyers. I am aware that this is a common problem in procurement disputes and that, all too often, defendants insist that only lawyers should be in the confidentiality ring. There may be times when that is appropriate but, all too often, detailed issues arise out of the subject matter of the bids which the lawyers are simply unable to address.

Thus, I give permission for the confidentiality ring on the claimant’s side to include an expert. As I said at the hearing, it would be much better if it was limited to one expert, and that is the order that I make. I have not seen anything which explains why two experts are required.

I should also emphasise that this decision is not to be taken as an early indication that, in some way, I consider that expert evidence is going to be appropriate in this case. Far from it: for the reasons set out in BY Development Limited and another v The Covent Garden Market Authority [2012] EWHC 2546 (TCC), I consider that it will be relatively rare for expert evidence to be admissible in a procurement dispute. In any event, in the present case, if there is a dispute about expert evidence, it is for another day. An expert can be included in the confidentiality ring but that is as far as this current order must go.

I would urge the parties to agree the form of the order arising from this Judgment and to agree, if possible, all other consequential matters.