HM Insights

Let us be clear... Supreme Court confirms obligations of clarity in tender criteria

It is well established that ambiguity in tender criteria leaves a contracting authority exposed to challenge if a court would not be able to conclude that the criteria were sufficiently clear to permit a uniform understanding among tenderers.

However, the recent Supreme Court decision in Healthcare at Home ("HAH") which confirmed the decisions of the lower Scottish courts should provide some comfort to contracting authorities. HAH had been unsuccessful in a tender run by the Common Services Agency (NHS) for the provision of some medical services in Scotland. HAH had challenged the procurement process on the basis that (1) the tender criteria were not sufficiently clear; and (2) the reasons given to HAH for rejection of its bid were insufficiently clear. The Supreme Court rejected both arguments. In relation to clarity of tender criteria, the Supreme Court confirmed that the courts should consider the matter from the perspective of a "reasonably well-informed and normally diligent" tenderer and not from the subjective perspective of the actual tenderer in question. The courts should be considering whether criteria are sufficiently clear to permit a uniform understanding; not whether all bidders did in fact interpret the criteria in the same way.

Although the judgment will be welcomed by contracting authorities and is line with European case-law, contracting authorities cannot afford to be complacent. As well as the threat of legal challenge due to non-compliance, ambiguous tender criteria may dissuade tenderers from competing or may lead them to submit bids at a higher price if they have to factor in uncertainty. It is vital that at the beginning of any procurement process a contracting authority carefully considers what criteria are appropriate and what the relative weightings should be, rather than following standard practice or historic precedent. Without appropriate tender criteria, a contracting authority cannot ensure that it will achieve best value.

From a tenderer's perspective, any ambiguity in tender criteria (or any other aspect of the procurement procedure) should be clarified by asking appropriate questions of the contracting authority at the appropriate stage in the process. Ambiguities should be addressed as early as possible to mitigate the potential risk of a subsequent challenge being time-barred. A claim under the procurement regulations for a remedy other than ineffectiveness (e.g. damages) must be started within 30 days of when the aggrieved tenderer knew or ought to have known that grounds for raising proceedings had arisen. This 30-day period can be extended by the court to three months but only in exceptional circumstances. Time limits for certain challenges can expire before the procurement process is concluded.

Clarity from the outset will also hopefully avoid potential tenderers wasting valuable time and resources submitting a bid on the basis of their misinterpretation of the requirement. In light of the resource-intensive nature of many procurement procedures, for both the contracting authority and potential tenderers, clarity as to fundamentally important aspects such as tender criteria is essential.

Jill Fryer is an associate with Harper Macleod LLP and can be contacted at jill.fryer@harpermacleod.co.uk.