Failure to facilitate review outside the court process did not prejudice a rejected tenderers’ rights

Failure to facilitate review outside the court process did not prejudice a rejected tenderers' rights - Robert Owens v. Kildare County Council [2020] IEHC 435

On 4 September 2020, the High Court dismissed procurement proceedings brought against Kildare County Council's (KCC) relating to its decision to eliminate a bidder from a tender competition for failure to submit a quality submission and proposing abnormally high and low rates. The case is notable in three respects. First, it reinforces the SIAC standard of review in relation to cases involving claims of manifest error. Secondly, the Court held that the rejected bidder had not suffered any prejudice by KCC's failure to facilitate review of its decision by the Society of Chartered Surveyors. Third, the Court held that engagement with other tenderers on pricing abnormalities was not contrary to the principle of equal treatment in circumstances where the Applicant's tender was radically different given the high number of pricing abnormalities and the absence of a Quality Submission.

Background

On 2 May 2018, KCC commenced a tender competition for the establishment of a Multi-Party Framework Agreement for Planned Building Maintenance Works for County Kildare (the Framework Agreement). The Framework Agreement was divided into two Lots. Lot 1 was for the appointment of 12 contractors to a panel for minor works while Lot 2 was for the appointment of 2 preferred contractors for "quick turnaround works" with a further eight reserved bidders being appointed to a reserve panel.

The duration of the Framework Agreement was for a period of twelve months with the option to extend by up to three additional twelve month periods. The total spend under the Framework was set at a maximum of €10m over the lifetime of the Framework. KCC utilised a restricted procedure. On 28 August 2018 following an initial pre-qualification stage, KCC invited a number of bidders to submit tenders by 2 October, 2018 (later extended to 9 October 2018). The ITT required that each tender must include a completed Form of Tender and Schedule, a completed Pricing Document and a Quality Submission.

The Applicant, Robert Owens, submitted his tender before the extended tender deadline of 9 October 2018. On 12 November 2018, KCC wrote to the Applicant seeking clarification in relation to the absence of a Quality Submission and in respect of Lot 2, clarification in respect of various abnormally high and low rates in the Pricing Document for Lot 2. The Applicant replied on 20 November 2018 making a number of submissions but did not enclose with his reply a Quality Submission or a revised Pricing Document.

On 26 November 2018, the Tender Assessment Panel met and finalised the list of tenderers with markings and rankings. It recommended that given the Applicant had failed to submit a Quality Submission and 439 items in the Pricing Document were abnormally high or low, the Applicant's tender should be rejected.

On 14 December 2018, KCC wrote to the Applicant informing him that his tender had been rejected. The Applicant wrote to KCC on 20 December 2018 stating that he was disputing his elimination and considered that other tenders were given an unfair advantage as they were asked to adjust and/or increase their rates on specific items whereas no specific guidance had been given to the Applicant. He requested that the Council's position be reconsidered and that he be reinstated to the short-list. On 10 January 2019, the Applicant again wrote to KCC noting that he was still awaiting a response to his letter of 20 December and expressing concern that other contractors had been contacted with the intention of signing contracts in circumstances where he had written to dispute the decision in accordance with Section 9.4 of the ITT. In this regard, Section 9.4 of the ITT provided as follows:-

“A Tenderer who disputes a decision of the Employer about whether a Tender complies with these Instructions must in the first instance raise the matter with the Employer within seven days of the matter coming to its attention. Failing resolution of the matter, the Tenderer may, within seven days after receiving the Employer’s response, request the Employer in writing to refer the matter to the Society of Chartered Surveyors (the Sanctioning Authority) for review and recommendation.

Within seven days of receiving the Tenderers’ request, the Employer should submit to the Sanctioning Authority a statement giving reasons for the initial decision together with a copy of the Tenderer’s written request. A copy of the Employer’s statement should also be forwarded at the same time to the Tenderer. The Tenderer may then make a further written submission to the Sanctioning Authority within seven days.

Any review or recommendation by the Sanctioning Authority will not be binding on the Employer or the Tenderer, and will not affect their rights or obligations”.

On 15 January 2019, KCC responded to the Applicant repeating the contents of its rejection letter of 14 December 2018 and stating that no contract would be concluded for a period of 14 days. On 4 February 2019, the Applicant subsequently issued legal proceedings.

The decision to eliminate the Applicant

The Court reiterated that the test to be applied in considering the decision to eliminate the Applicant was whether KCC fell into manifest error (as per Fennelly J in SIAC). The Court reviewed the relevant provisions of the ITT and correspondence and noted KCC's right to reject a tenderer where the tendered amounts did not reflect a balanced allocation or if they were abnormally low or abnormally high and also for failure to submit a Quality Submission. On that basis, the Court considered that the decision to eliminate the Applicant was within the discretion to exclude him conferred on KCC by the ITT.

Communication with other tenderers on pricing abnormalities – no breach of equal treatment

The Court observed that between 15 and 27 November 2018, the Senior Executive Engineer at the Housing Department of KCC had started work on the preparation of a "works callout document" which involved engagement by him with individual tenderers (whose tenders had not been deemed inadmissible) and included identifying certain pricing abnormalities.

The Court held that the engagement by KCC with those not eliminated was not discriminatory or unfair to the Applicant. The Court concluded that the absence of a Quality Submission coupled with the 439 items which had been deemed to have been priced abnormally high or low distinguished the Applicant "so radically" that the engagement with the other tenderers did not constitute unequal treatment or unfair discrimination against the Applicant. The Court further observed that the principles of fairness and equality do not require that tenders be treated identically.

Failure to facilitate review by the Sanctioning Authority

The Court observed that when the Applicant wrote to KCC on 20 December 2018 stating that he was disputing his elimination, he did not expressly invoke the facility for a reference to review in accordance with section 9.4 of the ITT for Lot 1. The Court was satisfied, however, that the cumulative effect of the Applicant's letters dated 20 December 2018 and 10 January 2019 was to notify an intention to seek such a review.

The Court noted that section 9.4 of the ITT expressly stated that any review or recommendation "will not be binding on the Employer or the Tenderer and will not affect their rights or obligations". The Court held that the effect of this provision would mean that the Applicant suffered no legal prejudice by reason of the failure of KCC to refer the matter for review to the Society of Chartered Surveyors.

The court further held that it could make no assumptions as to what the outcome of such a review may have been or whether KCC would have accepted any recommendation of the Society. In light of this and all the other provisions in the ITT, the Court was satisfied that the Applicant had not demonstrated that he suffered prejudice by reason of the failure to provide such review. Further, the Court concluded that it would be unjust to make an order to set aside the decision by reason of this failure alone.

For more information on this topic please contact Anna-Marie Curran, Partner or any member of A&L Goodbody's EU, Competition & Procurement team.

Date published: 21 October 2020