- Procurement Law - Rejection of Late or Incomplete Tender Submissions not Disproportionate, Even if IT Problems are the Cause
- November 13, 2009
- Law Firm: Mayer Brown JSM - Hong Kong Office
The recent decision of the English High Court in JB Leadbitter & Co Ltd v Devon County Council confirms that it is only in exceptional circumstances that proportionality will require a public body to accept a late or incomplete tender submission even where IT difficulties are responsible for causing non compliance with tender conditions.
The Claimant was one of 25 contractors invited to submit an expression of interest for a four year Framework Agreement under which construction projects were to be tendered by public bodies in the South West of England.
The invitation documents specified a fixed deadline for the submission of expressions of interest and also required submissions to be uploaded electronically to a secure portal to prevent the risk of collusion and to preserve confidentiality. The invitation documents expressly provided that it was the Tenderer's responsibility to ensure that all relevant documents were uploaded and that an incomplete set of documents would render any submission invalid.
The invitation documents also provided that any submission posted, emailed or faxed outside of the portal would not be considered.
While the Claimant made its submission well before the tender deadline, it discovered 15 minutes or so before expiry of the deadline that certain parts of its submission had been omitted from the upload into the portal. While the Claimant tried to upload the missing documents, the portal would not accept a second submission. The Claimant then sent the missing documents by email some 30 minutes or so after expiry of the tender deadline.
The County Council refused to consider the email sent following expiry of the tender deadline and rejected and disqualified the Claimant's submission as being incomplete.
The tender process was governed by the Public Contract Regulations 2006. These provide (in similar terms to common law authorities on procurement law applicable in Hong Kong and other common law jurisdictions) that tenders must be dealt with equally and in a non discriminatory way and that procuring entities are required to act transparently.
The Claimant argued that the County Council had acted in breach of the duty of equality and non discrimination in failing to waive compliance with the requirements of the tender invitation documents. It was also argued that in considering whether or not to waive compliance with tender conditions, the County Council was under a duty to act proportionately.
By rejecting its tender submission for incompleteness, the Claimant argued that the County Council breached its duty and imposed a sanction which was disproportionate to the Claimant's error in having made an incomplete submission.
The court held that a waiver of a tender requirement which was expressly stated as applying without exception would amount to a departure from the terms of the procurement process. It would therefore be an exceptional event and would carry the risk of unequal treatment, discrimination and the lack of transparency, all of which are duties placed on entities which issue invitations to tender.
It was further held that while the principle of proportionality will exceptionally require the acceptance of the late submission of the whole or part of a tender submission (where, for example, it results from mistakes on the part of the procuring entity) even if there is a discretion to accept late submissions, there is no requirement that procuring entities do so, and the circumstances in which such a discretion is exercised are likely to be very rare.
The decision in Leadbitter provides a salutary reminder that strict compliance with tender invitation requirements is necessary to ensure that procuring entities become obliged to assess and evaluate tender submissions.
The reminder is particularly timely in relation to the large number of construction contracts that are likely to be issued for tender in Hong Kong and the region in the next few years as governments pump money into infrastructure projects.
Tenderers should note that even where late or incomplete tender submissions result from technical difficulties in making submissions electronically in accordance with the requirements of the tender conditions, this is unlikely to oblige procuring entities to waive tender conditions or requirements.
While the concept of proportionality was recognised by the court in Leadbitter, allowing late or incomplete submissions may result in an advantage being provided to one tenderer over other tenderers and may result in unequal treatment.
The acceptance of late or incomplete tender submissions is therefore likely to be exceedingly rare.