Outer House case in which HFD sought to challenge Aberdeen City Council’s decision to appoint Muse Development Limited as preferred bidders for the development of a site (the former Council headquarters) at Broad Street in Aberdeen.

HFD argued that:

1. there had been various quantitative errors in the scoring matrix used to assess the bids;
2. what had been advertised had been a sale of the site but the successful bid was made on the basis of a sale and leaseback; and
3. a revised version of the HFD bid (based on a sale and leaseback) submitted after the closing date should, if the Council considered themselves precluded from accepting it, have given rise to recommencement of the bidding procedure.

Lord Brailsford refused HFD’s petition.

Errors in the scoring matrix
The alleged errors in the scoring matrix were not sufficient to impugn the bidding process and did not affect the overall ranking of the bids.

Sale and leaseback
The language used in guidance documents (issued for potential bidders by the Council), which indicated that the Council would accept joint venture and partnership agreements, made it “tolerably clear” (having regard to the importance/value of the subjects and the fact that the bidders were commercial bodies with expertise in the property market and with access to skilled professional advice) that the Council were actively seeking and encouraging innovative proposals for what was a major commercial development. As such, the language of the documents was sufficiently wide to encompass a sale and leaseback arrangement.

Submission after the closing date
Lord Brailsford agreed with reasoning in a prior case[1] to the effect that, although a seller can accept higher bids after a closing date, the practice is not well regarded and would involve the seller departing from the competitive tendering process which may be seen as an act of bad faith by the bidders. It would put into question the reliability of any future tendering process and, if it were to be routinely sanctioned by the courts,  the degree of certainty which a bidding process is designed to achieve would be lost. That reasoning also applied to HFD’s suggestion that the bidding process should have been started afresh after receipt of the Muse’s offer.

The full judgement is available from Scottish Courts here.

Outer House case in which the Scottish Ministers sought an interim order bringing to an end a prohibition under regulation 47(10) of the Public Contracts (Scotland) Regulations 2006. The prohibition prevented the Ministers from entering contracts relating to the provision of services in relation to trunk roads.

In November 2010, the Ministers (acting through Transport Scotland) advertised two contracts for the management, maintenance and improvement of trunk roads. After adopting the competitive dialogue procedure the Ministers invited tenders. Amey and three other operators submitted tenders. However, the Ministers wrote to Amey advising that they considered Amey’s tender to be abnormally low. They stated that this presented them with unacceptable financial, operational and reputational risks in fulfilling their statutory duties. They considered that Amey had manipulated the prices and rates and explained their concerns in some detail. Correspondence followed in which Amey argued that it had taken a “holistic approach to the tender” and provided price and other information. However, the Ministers rejected Amey’s bid concluding that the offer: (a) carried significant unacceptable risks; (b) was neither economically viable nor sustainable; and (c) was not genuine.”

Noting that Courts function was limited reviewing the Ministers’ decision solely to see whether or not there is a manifest error and/or whether the process was in some way unfair, Lord Hodge saw no legal basis on which Amey could challenge the Minister’s conclusion that its offer (a) carried unacceptable risks for them and (b) was neither economically viable or sustainable. However, if by concluding that the offer was not genuine, the Scottish Ministers were suggesting that the offer was a sham that was more problematic. Lord Hodge though did not consider that that was what was meant. The bids were assessed on the “Comparative Cost of Tender” which was a figure based on prices and rates entered by the tenderers. Lord Hodge interpreted the use of the word “genuine” as referring to the way in which Amey chose to present its offer, noting that the prices and rates Amey provided bore little relationship to the turnover that Amey expected from the contract. However, even the Ministers’ use of the term ‘genuine’ had been incorrect, that would not have undermined their conclusions about the risk, economic viability and sustainability of the bid.

With regard to the limited scope of the court’s review, Lord Hodge found that Amey had at best a weak prima face case (for continuing the prohibition). That was an important factor when considering the balance of convenience.  Lord Hodge also took account of the need to avoid delay in the process which would in turn lead to mobilisation issues for the successful contractors and increased costs for both the successful contractor and the Scottish Ministers. On the other hand, if the contract went ahead and Amey subsequently successfully challenged the Ministers decision, it would then have a remedy in damages. Taking these factors into account, Lord Hodge found that the balance of convenience favoured lifting prohibition. He also found that consideration of the public interest favoured lifting the prohibition (noting the need for an effective and non-discriminatory procurement process but also taking account of the need for economic and efficient operation of the procurement process and the need for proper provision of the required services to Scotland’s trunk roads).

Consequently, Lord Hodge granted the Scottish Ministers’ motion and lifted the prohibition preventing Transport Scotland entering the proposed contracts with other contractors.

The full judgement is available from Scottish Courts here.

Elekta Limited v The Common Services Agency, 21 June 2011
Outer House case concerning the procurement of radio therapy equipment (with an estimated value of around £21m) for cancer centres in Scotland.

Elekta, which produced radio therapy equipment, complained that the Common Services Agency (also known as NHS National Services Scotland), which was responsible for procuring the equipment, had effectively excluded them from bidding by specifying criteria which could only be met by one tenderer.  Four out of the five cancer centres in Scotland had a system manufactured by Varian and the Agency specified that the equipment would have to integrate with the Varian system. However, Elekta argued that Varian system was not compatible with those of other suppliers meaning that everyone other than Varian was excluded from bidding.

The effect of Elekta raising the proceedings (in terms of the Public Contract (Scotland) Regulations 2006) was to prevent the Common Services Agency from entering the contract with Varian and the Agency applied for an interim order bringing that prohibition to an end.

After considering the authorities, Lord Glennie laid down a number of points:

• the contracting authority must be entitled to decide upon the functional requirements it wishes to satisfy;

• the fact that the criteria included in the tender notice can only be met by one tenderer, or a limited range of tenderers, does not of itself contravene the principle of equality;

• the inclusion of these criteria can only be considered discriminatory if they cannot be justified objectively having regard to the characteristics of the contract and the needs of the contracting authority.

Lord Glennie noted that Elektra had not argued that the criteria were not objectively justified and pointed out that there a number of possible justifications for the decision such as the cost, disruption and potential teething problems involved in replacing one system with another.

Elekta also referred to the fact that the Agency had followed an open procedure (under regulation 15 of the procurement regulations) rather than the negotiated procedure (under regulation 14) arguing that, if it chose to follow the open procedure, it had a duty to frame the criteria in such a way that allowed a range of tenderers to bid. However, Lord Glennie said that, whilst it may have been that the Agency could have used the negotiated procedure, it did not follow that, by going down the route of the open procedure, it had to remove criteria which it regarded as essential to define its requirements (i.e. that the system could integrate with the Varian system).

In addition, Elekta complained that the criteria requiring integration with the Varian system had also been applied to the one cancer centre which did not already have Varian equipment. However, Lord Glennie also found that there was no merit in this point. The contracting authority was entitled to decide what its procurement requirements were and how to frame them.  It could properly decide (on the basis of objectively justifiable criteria) that there should be a sole tenderer to provide equipment across the five centres.

Lord Glennie was not asked to dismiss Elekta’s action but found its case to be a very weak one which had no reasonable prospect of success. As such, an interim order was granted removing the prohibition on the Agency contacting with Varian.