This article is an excerpt from the 2021 edition of The Art of Tendering: A Global Due Diligence Guide, which is available for purchase.
In its September 2010 decision in Azam & Co Solicitors v. Legal Services Commission, the England and Wales Court of Appeal (Civil Division) upheld the government’s rejection of an incumbent’s late bid. The dispute dealt with a tendering process conducted by the Legal Services Commission for the provision of publicly funded immigration-related legal work. The appellants, a firm of solicitors who were incumbent service providers to the Commission, submitted their bid late and were disqualified. The law firm challenged the disqualification, seeking a mandatory order requiring the Commission to accept their late bid. In summarizing the background facts, the Court of Appeal noted that the Commission (referred to as the “respondent”) had issued public notices of the new tendering opportunity:
In October 2008 the respondents published on their website a consultation paper entitled “Civil bid rounds for 2010 contracts”. It was sought to provide opportunities for both new and existing providers to compete for contracts. On 30 November 2009 the respondents published on their website information by way of invitations to tender for immigration and asylum contracts from 2010. A press release placed on the website at the same time identified the closing date for bids as 28 January 2010, as did the document previously mentioned. Further, an advertisement was published in the Law Society Gazette referring to the forthcoming invitation to tender and also stating that the process would close at 12 noon on 28 January 2010.
The appellant’s reaction or lack of reaction to those documents was described by the judge at paragraph 25 of his judgment. He, that is Mr Azam, said that he had not noticed the July 2009 publication of the LSC’s intention to extend the Unified Civil Contract for a further six months, nor did he or anyone in his firm either monitor the Law Society Gazette for publication of matters relevant to his firm’s practice, still less study the advertisement pages where the LSC’s advertisement of the immigration tender was placed. For those reasons, neither he nor anyone in his firm became aware of the launch of the immigration tender for 2010 prior to receipt of the 23 December 2009 letter.
By a standard form letter to all existing providers, including the appellants, dated 23 December 2009, the respondents gave information in relation to the tendering process which they had set in motion. The letter provided:
We notified providers in July this year that we intended to extend the Unified Contract (Civil), which is due to expire on 31 March 2010, for a further six months. We have extended that period slightly, to six months and 2 weeks. Please find enclosed formal notice of extension of your Unified Contract (Civil) under clause 2 of the Contract for Signature. This contract will now end at midnight on 13 October 2010. You do not need to take any action in relation to this extension and can carry on working as usual.
If you wish to undertake publicly funded civil work after 13 October 2010 in any category of law you must submit a tender(s), in response to our Invitations to Tender (ITT) by the applicable ITT deadline. The first ITTs, in relation to the Immigration category of law, were published on 30 November 2009 and 16 December 2009. ITTs for the remaining civil categories of law will be published from February 2010 onwards. Full information on the tender processes and how to tender can be found on our website at www.legalservices.gov.uk following the path Community Legal Services > Tenders > Civil contracts for 2010.
We look forward to receiving your tender(s) in due course and continuing to work with you in the future.
The judge found that on visiting the website, the reader would have seen a timetable which identified the relevant deadlines for tendering for work including immigration. In his evidence Mr Azam said that neither he nor anyone else in his firm carried out any systematic monitoring of the contents of the respondents’ website and did not subscribe to the respondents’ update service.
However, the Court of Appeal found that the law firm failed to follow up on those public notices, assuming that as an incumbent service provider it would receive direct notice from the Commission regarding any need to submit a new bid to win a new contract. After discovering that it was late, the law firm tried to convince the Commission to waive the deadline and accept its late bid. However, in an exchange of correspondence, the Commission summarized the applicable tendering rules and confirmed that it would not be accepting the late bid since the incumbent law firm was not entitled to special notice or special treatment in the bidding process:
Mr Azam assumed that since the appellants’ contract was being extended until October 2010 there was no immediate need to do anything about it. He assumed that the firm would receive a further letter from the respondents giving express notice of the relevant deadline, as had been done, he said, in relation to all previous civil and criminal contract renewals and other matters of importance arising out of existing contracts such as extensions. Nothing was done about responding to the invitation to tender for immigration work until Mr Azam learned of the deadline during casual conversations with a professional colleague on 4 February 2010. There is no evidence of any other existing or prospective provider of the services having failed to meet the deadline or having complained about it.
Mr Azam took immediate action. He sent an e-mail to an officer of the respondents, Mr Hatrick, at 21.42 on 4 February:
Dear Mr Hatrick, I am totally stressed today; due to the fact that I missed the deadline to submit the Tender for the 2010 Standard Civil Contract — Immigration.
I have spoken to bravo solutions about the closing date for two other Tenders – ITT_15 and ITT_16 and have also checked in the website.
I have submitted my two Tenders by completing ITT_15 and ITT_16 tonight at 9.30 pm.
I have briefly explained that I missed the submission date of 28th January 2010. I need your urgent help and guidance to submit the tender of which I missed the deadline.
Kindly advise me on how I should rectify this situation.
On the following day a relationship manager, though not the manager to whom the email had been addressed, replied by email:
Dear Mr Azam
I write to you as the relationship manager for Hackney & City firms.
Unfortunately there exists no provision for accepting bids once the tender had closed. The reason for this is to ensure that all tenders are accessed within the context of standardised criteria.
Mr Azam took prompt action by way of a letter dated 8 February to the respondents’ Director of Policy. That set out what had happened. It made complaints, subsequently made at the hearing, and stated:
In view of the fact that we acted promptly and the process has just closed, we do not feel the integrity of the process would be disaffected were you to allow us that opportunity.
Mr Azam supplied further information on the following day by letter.
It is accepted on behalf of the appellants that the letter of 12 February is the relevant decision letter. The respondents are not constrained by the short and immediate e-mail response by a relationship manager on 5 February. The letter, which is signed by a legal adviser to the respondents, referred to the decision under challenge, namely:
The Commission’s refusal to consider an out of time application by the Claimant concerning the Commission’s Invitation to Tender to deliver Publicly Funded Immigration Services in respect of the 2010 Standard Civil Contract.
The respondent’s responded:
We are afraid that the Commission cannot accept an out of time application from you and does not consider that that decision is susceptible to judicial review as you suggest, for the reasons set out below.
There is then a long explanation. Reference is made to the 2006 Regulations:
The Commission is satisfied that it has conducted the tender in question in accordance with the relevant law, and in particular the Public Contract Regulations 2006, insofar as they concern Part B services contracts. In this context the Commission’s obligations are broadly that it treats economic operators equally and that it acts in a transparent way, its obligations to advertise being limited (where, in any event, the Commission had advertised the tender in the Law Society Gazette on 19 November 2009 and on its website).
The writer dealt with the claim that the appellants had a legitimate expectation of receiving further information. The letter continues:
The tendering process was governed by the terms and conditions in the information for applicants (IFA) which was publicised by a range of methods. The Commission was obliged to treat all tenderers equally and to conduct the process in a transparent way. To do otherwise for your firm would be unfair towards other applicants and reduce the transparency in the process.
The appropriate comparator for the purposes of procurement law is the communication to the whole class of other potential tenderers, not just existing suppliers. Judged on this basis your firm has not been treated any differently from other applicants.
European authority was cited. The letter continued:
Thus, all entities which are in a comparable position in terms of their ability to participate in the procurement exercise must be treated equally. If some already have contracts to work for a public authority, this is not, in itself, a reason for different treatment, all [emphasis in the letter] tenderers must face the same conditions.
Reference was then made to Commission v France [2000] ECHR 1-8315 and to the decision of the European Court of Justice in Commission v CAS Succhi di Frutta SpA [2004] ECR 1-381/01. I will refer later to that case. The letter continued:
When viewed in the context of the procurement exercise as a whole, the Commission has treated your firm no worse than it treated the class of potential tenderers for the delivery of Publicly Funded Immigration Services in respect of the 2010 Standard Civil Contract.
It is not for the Commission, after the tender has closed, to evaluate the overall pros and cons of awarding your firm a Contract out of time. Indeed, it would be inappropriate, in the context of a nationwide procurement exercise, governed by the Terms and Conditions of Tender, set out in the IFA, for the Commission to embark upon such an exercise now.
In conclusion, the Commission does not consider, for the purposes of judicial review, that its approach could properly be said to disclose any error of reasoning on its part, let alone an error that would make its decision one which no reasonable decision-maker could have reached having regard to all the circumstances.
As the Court of Appeal summarized, the trial judge dismissed the law firm’s legal challenge after ruling that the rejection of the late bid was not a disproportionate act by the Commission given the strictness of the tendering rules and the duty to treat all bidders equally:
I referred to earlier findings of the judge. The judge then considered the respondents’ refusal to extend the deadline and acknowledged the harsh economic consequences for the appellants of a failure to do so. Having done that, he gave reasons why there were weighty considerations to the contrary. Paragraph 70:
But that analysis ignores the weighty reasons to be considered in the balance against the grant of a week’s extension. First, the immigration tender process had been published expressly on the basis that deadlines were there to be complied with, and that no extensions would be given. Secondly, the grant of an extension to the firm, occasioned by a failure to submit a tender on time which was by no means beyond its control, would run the grave risk of constituting unequal treatment of other tenderers. In particular, it would be likely to be regarded as unfair by tenderers who would have wished for longer time in which to perfect their tenders, but who nonetheless completed them on time and, in reliance on the warning that extensions would not be granted, sought no further time for themselves. Thirdly, it seems to me that the principles of transparency and good administration weigh very heavily in the balance against an applicant for an extension of time who is unable to point to reasons beyond his control by way of justification.
The judge concluded at paragraph 71:
…it was not a breach of the LSC’s obligation to respect the principle of proportionality for it to refuse the requested extension.
The judge found that the claim wholly failed “but not without considerable sympathy for Mr Azam and his staff”, sympathy which, I add, I share. The appellants had failed “to take a proper care in the furtherance and protection of its own interests”. There was no breach of duty by the respondents.
While the incumbent appealed the trial decision, arguing that the history of prior relations between the Commission and the law firm created a legitimate expectation that the Commission would provide direct notice to the firm regarding the future bidding deadline, the Court of Appeal rejected this argument:
I am entirely unimpressed with the claim based on legitimate expectation. I acknowledge the working relationship which had developed between the parties since 2003, including the respondents’ appointment of a relationship manager. As an existing provider, the appellants received the letter of 23 December 2009: the letter is plain; it refers to the need to submit a tender; it states where full information of the tendering process can be found and it looks forward to receiving a tender in due course. That was a sufficient notification, making full allowance for earlier dealings between the parties. The appellants had no legitimate expectation that a further letter, or any further information, would be given to them prior to the deadline for receipt of tenders. The submission that different treatment was required to achieve equality for the appellants is without merit.
The respondents plainly had to take care — and this applies also to the proportionality challenge — that individual tenderers, or prospective tenderers, were not being given favourable treatment, and that applies where the suggestion could be that it was an existing provider who has the advantage of earlier dealings who was given that advantage.
The Court of Appeal upheld the trial court’s finding that the rejection of the late bid was not disproportionate given the duty of equal treatment that applies to a public tendering process and therefore dismissed the appeal. As this case study illustrates, bidders are subject to strict bid submission deadlines. Purchasing institutions are under a duty to enforce those deadlines regardless of any past dealings with incumbent service providers.
