A recent procurement case in Scotland highlights the risks both for bidders and for contracting authorities when dealing with non-compliant tenders: Capita Business Services Ltd v The Common Services Agency for the Scottish Health Service  CSOH 9 (see judgment here). In current more challenging markets, the judgment provides useful guidance to bidders as to how they engage with regulated procurements, and for authorities as to how they manage non-compliant tenders.
The challenge was brought under the Public Contracts (Scotland) Regulations 2015 (the PC(S)R 2015) by Capita against The Common Services Agency for the Scottish Health Service, more commonly known as NHS National Services Scotland (NSS).
NSS published a PIN on 16 August 2021, followed by the Contract Notice on 31 September 2021. The procurement was for the re-tendering of the Scottish Wide Area Network (SWAN). In procurement law terms, SWAN is a collaborative framework agreement on behalf of over 90 public sector organisations in Scotland under which authorities can connect to a single secure broadband network designed for the public sector across Scotland. The procurement was conducted under the competitive procedure with negotiation (CPN) in accordance with the PC(S)R 2015.
The Invitation to Submit Final Bids (ITSFB) was issued to bidders on 15 August 2022 and with a deadline for returns on 2 September 2022. Following a period of clarification with Capita and before proceeding with the evaluation of Final Bids, NSS took the decision to disqualify Capita on the basis that its Final Bid submission was non-complaint. The central concern was with pricing assumptions that Capita had included within its Final Bid submission. Whilst pricing assumptions were permitted at earlier phases of the competition, they were not permitted at Final Bids Phase, at which point submissions were to be fully priced covering whole life costs over the six year framework period.
Capita challenged this decision on the basis that its Final Bid submission was fully compliant and that NSS’s decision was in breach of: (1) Regulation 19 of the PC(S)R 2015 (the requirement to treat bidders equally and without discrimination and to act in a transparent and proportionate manner); and (2) Regulations 30(23)(c) and 76(4) of the PC(S)R 2015, requiring the evaluation to be conducted on the basis of award criteria specified in the procurement documents.
In his judgment Lord Braid identified the following three questions:
- Were NSS’s ‘Instructions to Bidders’ sufficiently clear to permit of uniform interpretation by all ‘reasonably well informed and normally diligent (RWIND) tenderers’?
- If NSS’s ‘Instructions to Bidders’ were sufficiently clear, was Capita’s Final Bid submission compliant with those instructions?
- If Capita’s Final Bid was non-compliant, did NSS act proportionately (and rationally) in deciding to disqualify it.
As part of the evaluation criteria, bidders were required to offer a price for the provision of the connectivity services at identified sites by a series of specified dates, known as the ‘transformation dates’. A key consideration for bidders in proposing their solutions was whether the necessary infrastructure build needed to connect the sites would be in place by those transformation dates, one critical consideration being the progress made with the Scottish Government’s Reaching 100% (R100) programme. NSS’ position was that it had been made clear to bidders that this was a risk bidders had to account for when proposing their technology solution for the provision of the services, NSS requiring that bidders provided a fully costed solution, including taking the risk that all necessary infrastructure build was in place by the required transformation dates. Capita’s solution was based on Fibre to the Premises (FTTP), which provides connectivity via shared fibre infrastructure, meaning that it relies on that infrastructure build to be in place.
Lord Braid held, granting decree of absolvitor, that in disqualifying Capita’s Final Bid NSS had not acted in breach of its obligations under Regulation 19 of the PC(S)R 2015. Crucially, as the Final Bid submission was materially incomplete, NSS was entitled to disqualify it, rather than having to score it.
The judgment took each of the three questions in turn, concluding that:
- The procurement documents did have the requisite degree of clarity and transparency to permit of uniform interpretation by all RWIND tenderers. Lord Braid found there were no ambiguities which required clarification, and nevertheless, the clarifications given were also clear and consistent with the wording of the documentation - confirming that Final Bids were to be fully priced. Accordingly, the drafting of the documentation did not place NSS in breach of its Regulation 19 obligations.
- Capita’s Final Bid submission did include a pricing assumption, therefore it was not a fully compliant Bid. Of fundamental importance, the Final Bid was not fully priced, and in that material respect, it was not compliant with the ‘Instructions to Bidders’ as it was incomplete. Lord Braid noted that there was not a ‘neat dividing line between pricing and technical assumptions’, rather the question here was whether Capita’s assumption had an impact on the price, which was found to be the case.
- NSS was entitled to disqualify a materially incomplete Bid. Lord Braid found that Capita’s Final Bid was not only incomplete, it also omitted the infrastructure costs which had been included in its Interim Bid submission. Overall, NSS’s decision to disqualify Capita was not manifestly disproportionate or irrational.
Challenge to Automatic Suspension
It is interesting to note that earlier in the proceedings, Lord Braid had refused NSS’s motion to bring an end to the automatic suspension and NSS had brought a reclaiming motion (appeal) to the Inner House of the Court of Session due to the urgency to conclude the new SWAN framework agreement. This was also refused on 30 December 2022, the Inner House concluding that on balance the suspension could be left in place provided the case could be expedited and heard in a matter of weeks (court dates having been set for the week of 16 January 2023).
This case highlights the risks around non-compliant bids and the importance of having clear instructions to bidders in procurement documents. For bidders, it highlights the dangers of taking risks in their interpretation of procurement documents and instructions when preparing and submitting their tender submissions. These risks are a particular feature in current more challenging markets where bidders may not be prepared to accept risk positions that may leave them exposed in the event they are ultimately successful.