Academy trust’s breach of Public Procurement Regulations 2015

On 19 December 2022, the TCC division of the High Court published its judgment on a case which concerned various substantive breaches of procurement law under the Public Contracts Regulations 2015 (PCR) by a contracting body.

The Claimant (“Company Y”) was one of two technology companies shortlisted to the final stages of a procurement exercise, in a bid to be awarded with a contract to supply the contracting body with a cloud-based information management system. The contracting body was a large UK-based trust which manages various state academies and it intended to roll out the system across a number of schools.

Mr Justice Waksman held that the contracting body had committed four separate sets of breaches of procurement law:

1. Scoring

The scoring mechanism was applied incorrectly, as instead of following its published scheme of awarding scores from 0 to 5, the contracting body calculated the final scores on an aggregated and averaged basis.

The ‘averaging’ approach firstly meant that outlying scores were not removed – as they would have been in moderation – which the court found to have consequently inflated some bidders’ scores. Secondly, the moderation process was not clearly recorded, and was itself a breach of the contracting body’s duty to act transparently as it was unable to explain how the final scores had been reached.

The court found that the use of an averaging method, together with the absence of any proper moderation or record of reasons for the final award decision, was contrary to procurement law.

2. The drop-box

The method by which the winning bidder submitted its final tender was unlawful. Submission by the winning bidder was done by way of a drop-box, which they hosted themselves and to which that bidder had full, continued access, even after submitting their bid and after the deadline for final tenders had passed.

The impact of this was that the contracting body could not have monitored whether the bid was changed by the company which went on to win the bid after the tender deadline. Whilst there was no evidence of such changes having been made, the court still held that use of a drop box amounted to a breach of the PCR, as the methodology used here did not allow for the exact time and date of receipt of the tender documentation to be determined.

3. The discount

An important issue also arose as to whether the winning bidder was seeking to achieve an unfair advantage in the current procurement proceedings due to the existing relationship it had with the contracting body in connection with a separate contract.

As part of its price bid for the current contract, the winning bidder applied a discount on the separate contract it held with the contracting body, which was for the provision of the same cloud services, in respect of a number of other schools run by the contracting body.

The court took the view that the winning bidder was in effect trying to ‘leverage its incumbency’ and take advantage of its existing position as a current supplier to the contracting body, and that this amounted to a violation of procurement law.

The court found that the contracting body had also allowed the winning bidder to benefit from its incumbency in relation to the existing contract in other ways when scoring the other bidders’ bids.  In effect the winning bidder had been rewarded during the tender to which the challenge related for offering something which did not relate to that contract in question, in breach of rules the PCR.

4. Manifest error

Finally, the court found that the contracting body had improperly added costs to Company Y’s bid during the evaluation process (specifically data transfer costs) which the contracting body did not believe had been properly accounted for in Company’s Y’s pricing submission. However, the court determined that these costs had in fact been calculated accurately by Company Y and therefore that the contracting body’s actions in this regard amounted to a ‘manifest error’ (and therefore a breach of procurement law).

At least 10 other actions by individual evaluators were considered to amount to manifest errors resulting in scoring errors

Having formed the view that- had it not been for the various breaches of procurement law- Company Y would most likely have won the contract by some margin, the court made an award of damages in favour of Company Y.

Lessons to be learnt by trusts and authorities

The case poses as a useful reminder of some key rules for contracting authorities set out under the PCR. Moreover, whilst it by no means removes the perceived advantage enjoyed by an incumbent supplier, it does lessen the impact a little.

• A well-run tender process will set out clear processes and criteria in the Invitation to Tender. Any significant deviation from those processes and criteria increases the risk of a challenge to the outcome.
• Where there is any lack of clarity (in this instance relating to allocation of costs), clarification questions should be considered and used correctly.
• Records must be maintained which record a consistent approach to the evaluation process, particularly where there are a number of individuals involved on that process.

Any evaluation must only take account of the proposals which relate to the specific contract being awarded, and not to any other contract which any bidder may already hold. This is particularly relevant in the education sector where contracts for the same or similar services might operate across various schools within a Multi-Academy Trust.