On 5 April 2024, the High Court handed down judgment in a claim brought by Wellbeing Ltd t/a Optima Health (Optima) against the Secretary of State for Work and Pensions and the Department for Work and Pensions (together, the DWP). In a comprehensive judgment which considered a number of fundamental principles of procurement law, Mr Justice Freedman dismissed Optima's claim on all grounds and found that the DWP had lawfully disqualified Optima from the procurement process on the basis of its non-compliant bid.
The case concerned the proper approach for contracting authorities to exercise a discretion to disqualify bidders for non-compliance, together with the requirement for tender documentation to be clear, transparent and ensure equal treatment of all tenderers.
Background
The claim concerned the procurement by the DWP of a call-off contract for occupational health and employee assistance programmes (the Procurement). As part of their bid, tenderers were required to provide a detailed pricing schedule and it was an express requirement that all unit prices submitted in the pricing schedule must not exceed the maximum prices which tenderers had submitted for the purposes of the original Framework (the Framework Maximum Prices).
During the course of the Procurement, various iterations of the pricing schedule were issued by the DWP for completion by the tenderers. Tenderers were repeatedly reminded by the DWP that prices must not exceed the Framework Maximum Prices, with attention being drawn to the DWP's ability to disqualify tenderers for non-compliance with the requirements of the tender documents.
Within its final pricing schedule, Optima included three service line prices which exceeded its Framework Maximum Prices, although the actual value of these items was said to be trivial in the context of the overall Procurement.
As a consequence of Optima's non-compliance with the tender requirements, the DWP exercised its discretion to disqualify Optima and the contract was awarded to PAM. PAM was the only tenderer who had submitted a compliant bid in the Procurement, and Optima would have been successful, had its bid not been disqualified.
Optima challenged the outcome of the Procurement on the basis that the decision to exclude its bid was unlawful because, in summary:
1. there was a lack of clarity in the tender documentation, which did not clearly and transparently set out the consequences of a tenderer failing to comply with the requirement for the pricing schedule not to exceed the Framework Maximum Prices;
2. the DWP had automatically disqualified Optima's bid but, even if it had exercised a discretion to disqualify the bid, the DWP failed to take into account relevant considerations and/or failed to act rationally and proportionately; and
3. if there was non-compliance in Optima's bid, that ought to have been put right by reducing the excess sums to the Framework Maximum Prices (or otherwise) and/or by seeking clarification from Optima.
The DWP denied that the consequences of non-compliance were not spelt out in the tender documents or that there was a breach of the principles of transparency and equal treatment. The DWP further denied that it had acted unlawfully in excluding Optima; it had exercised a discretion, which was apparent from the documents which had been disclosed, and had considered its options before exercising its discretion.
The Decision
Optima failed on all of its arguments. The Judge held that:
- The tender was clear, transparent and provided equal treatment to the tenderers. There were clear explanations at each stage of the Procurement which left the reasonably well informed and normally diligent (RWIND) tenderer in no doubt as to the importance of complying with requirements and the possibility of being disqualified. There was no ambiguity about the meaning of the word "discounted" in the tender documents, the natural meaning of which, in the context, was that the bid as a whole would be disqualified if the Framework Maximum Prices were exceeded.
- The DWP did exercise a discretion in favour of proceeding with the disqualification. There was evidence that other options were considered by the DWP and ruled out, and the evidence was sufficient to identify and evaluate the reasons for the decision to disqualify. The DWP took into account all relevant considerations.
- There was no obvious mistake or ambiguity which would make it clear to the DWP what the erroneous prices should have been. The mistake made by Optima was one which would require an inquiry into Optima's intended price, which was objectionable because it would open up a change of bid, or the opportunity for a change of bid, and would infringe, or risk infringing, the principles of equality of treatment and transparency.
- The failure of the DWP to seek clarification from Optima, or allow it to resubmit its bid, was not unlawful. To the contrary, in circumstances where a compliant bid had been received from PAM, a clarification could have breached the principle of equal treatment.
- Case law provides that changing a bid does generally lead to an infringement of procurement law, and this was not a case where there was an ambiguity or obvious error which had a simple explanation and could easily be resolved. There was nothing exceptional in this case to justify allowing Optima to change its bid after the bids had closed.
- The deficiencies in the bidding process were the responsibility of Optima, not the DWP.
- The DWP did not act irrationally or arbitrarily, or unreasonably or disproportionately in rejecting the bid of Optima. The decision was not disproportionate and was one which the DWP was entitled to make in the exercise of their discretion.
Practical Implications
The case is an important reminder for contracting authorities that clear and transparent wording in procurement documents is paramount, both to ensure compliance with transparency and to avoid (or successfully defend) any challenge to the process or a decision for perceived ambiguity.
The judgment also highlights the importance of contracting authorities keeping clear, thorough and contemporaneous records of decisions taken, particularly of the consideration and exercise of any discretion. In the judgment, the Court placed a great deal of emphasis on the evidence which the DWP produced to demonstrate the factors which had been taken into account, and the other options which had been considered but rejected, when exercising its discretion to disqualify Optima.
From a bidder's perspective, the importance of checking a bid for compliance prior to submission cannot be overstated. Even small errors (or non-compliances), which could be trivial in the overall context of a procurement, could lead to your bid being deemed non-compliant. The judgment re-iterated the well-established authority that non-compliance (such as late submission, or minor error) should only be waived in the most exceptional of cases, but that waiver will generally infringe the principles of equal treatment, non-discrimination and transparency.
Finally, the judgment also provides a helpful summary of the leading case law in a number of common areas of challenge including the general principles of procurement (in particular, equal treatment and transparency), the position of the RWIND tenderer, manifest error, ambiguous tenders, exercising discretion and disqualifying bidders, seeking clarifications and providing proof of a contracting authority's reasoning. It is therefore essential reading for procurement professionals and legal advisors alike.
Working on Wellbeing Ltd trading as Optima Health v (1) Secretary of State for Work and Pensions (2) Department for Work and Pensions [2024] EWHC 766 (TCC) – the judgment can be found here.
