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Imagine this scenario: you spend weeks preparing a tender for a particularly important contract. After burning much midnight oil, you submit your tender and are quietly confident of your chances. Then the bombshell lands: the authority informs you that due to a clerical error your tender has been rejected.
Sound familiar? It is a far more common problem than you would think.
In the last six months alone we have seen numerous issues relating to errors in tenders, including:
Each of these cases creates risks which the authority must weigh up carefully: the risk that a rejected bidder may seek to challenge its rejection, versus the risk that another bidder complains about unequal treatment favouring a bidder who the authority allows to correct errors in its tender.
In this article we will consider:
Policy considerations
The courts are keen to avoid the risk of abuse of process. For example, the deadline for tender submission ensures a level playing field for all bidders and ensures no bidder has an opportunity to improve its tender once it has seen others' tenders. Allowing bidders to correct tenders after the deadline risks undermining these fundamental tenets of competitive procurement.
Equally, if bidders know they cannot correct their tenders, there is a view that they will take better care at the tendering stage to comply with the requirements of the competition, and this will benefit the procurement process as a whole.
On the other hand, the courts recognise that it may be beneficial in certain circumstances to allow a bidder to correct its tender. For example, if a genuinely competitive tender contains a simple clerical error, and that tender is excluded from the competition as a result of that minor error, ultimately the public (and the public purse) will suffer.
Bidders may also be dissuaded from taking part in future competitions if their tenders are regularly rejected on purely technical grounds due to minor clerical mistakes.
For these reasons, the current law seeks to achieve a balance between curbing the risk of abuse whilst simultaneously ensuring fair competition. The principles of equal treatment and proportionality feature large in this balancing act.
General rule on duty to permit corrections
As a rule, authorities are under no general duty to allow a bidder to correct errors in its tender.
In J.B Leadbitter v Devon County Council ([2009] EWHC 930), the tender documents specified that tenders had to be submitted through the authority's electronic portal, that all parts of the tender must be submitted in one go, and that tenders must include a minimum of four completed case studies. Having submitted its tender,but before the deadline, Leadbitter realised that it had not included the four case studies. It tried to submit them (again before the deadline) but the portal would not allow additions to a previously submitted tender. The authority rejected its tender on the basis that it was incomplete. The court ruled that the Council does not generally have a duty either to admit a late tender or to allow correction of a substantially non-conforming tender.
In brief, it is essential for bidders to ensure their tenders comply with the formal requirements set out in the invitation to tender and that they do not contain mistakes.
Exceptions to the general principle
Nevertheless, there are two limited but important exceptions to this general principle. These are:
Contracting authority at fault
In Leadbitter and again in JR Jones v Legal Services Commission ([2010] EWHC 3671), the court recognised that there may be a duty to allow correction in circumstances where fault on the part of the contracting authority has contributed to the error.
For example, if the tendering documents contain conflicting information it may be impossible for a bidder to be fully compliant.
Ideally of course, rather than seeking to rely on this exception post tender submission, the sensible approach is for the bidder to raise a clarification question in advance. Indeed, this is the safest course of action and the courts are not always sympathetic if bidders seek to rely upon the authority's mistake. For example, in The Queen on the Application of the Greenwich Community Law Centre and Greenwich London Borough Council ([2011] EWHC 3463), the ITT listed two different return dates for submission of tenders but the court considered in the circumstances that the authority's intention was clear. In any case, the bidder could have sought clarification.
From a contracting authority's perspective, it is crucial that tender documents are carefully checked (and then checked again by a fresh pair of eyes) to minimise the risk of unclear or inconsistent information.
Obvious mistakes and proportionality
In Tideland (Case T-211/02 - Tideland Signal v Commission [2002]), the ITT required tenders to state that they would remain valid for 90 days from the tender deadline. Although Tideland included this statement in its tender, it had forgotten that the tender deadline had changed, with the effect that its tender was ambiguous as to its period of validity. The Commission excluded the tender on that basis.
Tideland successfully challenged that decision. The court held that, where a tender contains an ambiguity that "probably has a simple explanation and is easily resolved", the contracting authority should seek clarification of the ambiguity. Here, the reason for the error should have been obvious to the Commission and in the circumstances it would be disproportionate not to allow Tideland to correct its tender. Key to this was the fact that the intended content of the tender was clear from the tender itself.
So the authority must invite bidders to correct their tender if:
This offers a common-sense opportunity to save good competitive tenders from the scrap heap without unfairness to other bidders.
It does impose a certain expectation on authorities that they will identify obvious ambiguities or errors. Does this go as far as expecting them to clarify a bid where the same figures are variously described as "including VAT" and "excluding VAT" or the total at the bottom of a column of numbers is clearly wrong? It seems to the authors that it does.
The practical difficulty for the authority is then to ensure that the correction or clarification does not lead to changes to the tender that could amount to the submission of a "new tender". In practice, authorities should ask bidders not just to correct or clarify their bids but to explain how the ambiguity arose and to satisfy the authority that the tender (as clarified or corrected) is the same tender. This explanation should enable the authority to satisfy itself that the Tideland conditions are satisfied.
Discretion and the tender documents
Even if there is no obligation on the authority to invite the bidder to clarify its bid or correct a mistake, the authority may have a discretion to waive a non-compliance. Generally, this power is limited to situations where the non-compliance is technical and not fundamental. The rationale is that such formalities are imposed for the authority's convenience and it is therefore in its discretion to waive them (Case C-243/89 - Commission v Denmark [1993]).
This was a consideration in Manova (Case C-336/12 - Ministeriet for Forskning, Innovation og Videregaende Uddannelser v Manova A/S [2013]). The court held that the authority had not breached the principle of equal treatment by asking a candidate to provide missing information (balance sheets required to be appended to applications submitted at a preliminary screening stage) after the expiry of the deadline. This was because (a) the balance sheets could objectively be shown to pre-date the deadline, and (b) the tender documents did not expressly state that failure to provide the documents would result in exclusion from the tender. Had the authority stated in the ITT that it would exclude any submission that did not include the balance sheets, the outcome may well have been different.
Whilst it is tempting for authorities to seek certainty and to state in the ITT that non-compliant bids will be rejected, in the authors' view this creates an unwelcome straightjacket. In practice, the authority may find itself bound to reject a very good tender due to an insignificant non-compliance. We suggest that the ITT should instead provide that, taking account of the principles of equal treatment and proportionality, the authority may reject any tender that does not satisfy the formal requirements set out in the ITT.
Equal treatment
If a contracting authority allows a correction to a tender, it must take care to ensure that this does not result in a breach of the principle of equal treatment, which would expose the authority to challenge from other bidders.
In a recent case we were involved in, whilst the ITT specified that tenders should be submitted electronically, a bidder submitted its tender by hand in a sealed envelope. The authority accepted the tender. The persuasive factors were:
The issue also arose in Travis Perkins (Travis Perkins Trading Company Ltd v Caerphilly County Borough Council [2014] EWHC 1498). Here, the ITT required bidders to submit a bond, parent guarantee or other guarantees of financial liability.
Travis Perkins failed to submit the required evidence with its tender. The authority sought "clarification" from Travis Perkins and some other bidders, asking for the appropriate form to be submitted by 9am the following day, failing which the tender would be automatically disqualified. After initially erroneously submitting a blank form by email at 8.55am, the correct completed form was submitted by Travis Perkins at 9.12am. In light of this late submission, the authority rejected the tender.
Travis Perkins then started court proceedings, claiming that its tender was not given the same treatment as other tenders (it claimed that three other tenders were also deficient but were not disqualified). Although this issue has not yet been considered by the Court, the background highlights the importance of ensuring that bidders are treated equally when authorities seek clarification or correction of mistakes.
Indeed, as the Court of Justice made clear in Slovensko (Case C‑599/10 - SAG ELV Slovensko a.s., and others v Úrad pre verejné obstarávanie), if the authority invites one bidder to clarify or correct its tender, it must offer the same opportunity to all bidders in the same situation. Of course, not every bidder who has made a mistake should necessarily have the chance to correct it: this will depend on the authority's assessment of the seriousness of the mistake.
Summary
Conclusion
Whilst each case turns on its own facts, the same questions and issues crop up again and again.
For an authority facing a challenge by an aggrieved bidder, it is tempting to think that the safest course of action is invariably to reject tenders containing errors on the basis that they are non-compliant. Sometimes in practice this approach is riskier and leaves the door open to a bidder to challenge the decision on the grounds that it breaches proportionality and equal treatment.
For bidders, if the worst materialises and it transpires, after submission, that the tender contains an error, notify the authority as soon as possible. If the error can be traced back to a fault on the part of the authority, or if the error or ambiguity is such that the intended content of the tender is obvious, you may be able to persuade the authority not to reject the tender.
No one, of course, wants the procurement process to get bogged down in litigation. Prevention is always better than cure. So bidders and authorities have a common interest in trying to prevent these problems arising. The table below sets out some key tips for bidders and authorities.
For more information, please contact James Falle, partner on +44 (0)1392 411221 or email [email protected] or Catherine Haugh, solicitor on +44 (0)117 915 4984 or email [email protected]
