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Unjustifiable refusal to accept late documents: QMAC Construction V Northern Ireland Housing Executive

  • Northern Ireland

    30-11-2021

    Introduction

    The Northern Ireland High Court (Humphreys J) recently decided a case which will be of general interest, dealing as it does with a common situation whereby documents are submitted late by a tenderer in a public competition1. A slightly unusual aspect to the case was that the late documents in question were contract references to be provided to the tenderer in question by the defendant authority (which the tenderer had previously worked for). A delay by the authority in providing the references back to the tenderer led to them being submitted after the deadline. The authority subsequently refused to accept the references and declared the submitted tender inadmissible, a decision which led to legal proceedings being issued. Judges are often reluctant to intervene where a decision-maker has discretionary power, as the authority had in this instance regarding the acceptance of late information. However, the High Court had no hesitation in finding that the decision to reject the tender was unjustifiable in light of the specific circumstances that arose in this case. 

    Factual Background

    The Northern Ireland Housing Executive (the Defendant) conducted an open procedure for planned maintenance services with a tender submission deadline of 3pm on 16 November 2020. The selection criteria required tenderers to submit examples of previous experience, including a ‘Certificate of Technical and/or Professional Ability’ independently verified by a referee in respect of each project relied upon. The Defendant foresaw that it may be requested to provide references and it published a document on the tender portal indicating the internal steps that it would follow in these circumstances. The Plaintiff, an incumbent service provider, duly contacted the Defendant on 12 November seeking a reference for two contracts it had completed for the Defendant. After some initial exchanges with the Plaintiff, the Defendant engaged its internal process for assessing the request. At 13.40 on 16 November (one hour and 20 minutes before the tender deadline), the references received final approval within the Defendant however these were not forwarded to the Plaintiff until 14.37 on 17 November 2020, almost 24 hours after the deadline. Despite the delay, the Plaintiff submitted its tender on time, noting therein that references were awaited from the Defendant. These references were finally received from the Defendant on 17 November and were uploaded to the tender portal later that day. On 10 December, the Defendant informed the Plaintiff that its tender had been rejected, apparently on the basis that completed references had not been received by the tender deadline. This decision prompted legal proceedings to be initiated by the Plaintiff.

    At trial, the Defendant called only one witness, its Director of Asset Management, who was ultimately responsible for the decision to reject the Plaintiff’s tender. His evidence was (i) that the Defendant had no discretion to permit the late submission of tenders or missing or incomplete documentation; and (ii) that even if there was discretion he would not have exercised it in favour of the Plaintiff because the request for references had been made late and he was concerned about litigation from other tenderers.

    Decision

    Humphreys J noted that Regulation 56(4) of the Public Contracts Regulations 2015 provides as follows:

    “Where information or documentation to be submitted by economic operators is or appears to be incomplete or erroneous, or where specific documents are missing, contracting authorities may request the economic operators concerned to submit, supplement, clarify or complete the relevant information or documentation within an appropriate time limit, provided that such requests are made in full compliance with the principles of equal treatment and transparency.”

    The Court also noted that in matters of judgement, discretion or evaluation, a contracting authority enjoys a margin of appreciation and the Court should only intervene when a manifest error has been committed.

    Familiar authorities were cited. Among these was Leadbitter2, where the claimant had failed to submit a number of required documents on time. The English High Court recognized that proportionality applied to a decision by a contracting authority to exclude an operator from the competition but held that the authority in that case did not in fact act disproportionately by excluding the tenderer in question. The Court also found that there “…may be circumstances where proportionality will, exceptionally, require the acceptance of the late submission of the whole or significant portions of a tender, most obviously where … it results from a fault on the part of the procuring authority.”       

    The CJEU decision in Manova3 was considered. Here, the authority afforded two tenderers the opportunity to submit a balance sheet two weeks after the tender deadline. The CJEU confirmed that this was permissible as the balance sheet could be objectively shown to pre-date the tender deadline (although this would not have been the case if the missing information was required to be provided “on pain of exclusion”).

    Humphreys J also recalled the English case of Dem-Master4 in which a tenderer had failed to submit percentage figures for overheads and profits and had provided a blank template spreadsheet. Lord Tyre in that case was not satisfied that the Manova test for accepting late documents was met and an explicit provision in the tender to the effect that missing information would not be considered was not overridden by any right to clarify. In these circumstances, a decision to admit the missing information would have breached the principle of equal treatment – “A contracting authority which acts in a manner necessary to avoid breaching that principle cannot … be said to be acting disproportionately.

    Humphreys J distilled a number of guiding principles from these and other authorities:

    (a)  The precise terms of the tender documents require close analysis in any given case. Has the authority reserved a wide discretion to admit late tenders or permit missing documents to be furnished after a deadline has expired or has a “bright exclusionary line” been adopted?

    (b)  Where such a line has been drawn, the authority must consider whether exclusion is proportionate. Exceptional circumstances (such as the fault of the authority) may justify the admission of late submissions.

    (c)  Where the authority has reserved discretion, this must be exercised in accordance with the principle of equal treatment.

    (d)  The starting point is that deadlines are to be respected and only exceptionally should an authority permit late or missing information.

    Having set out these principles, the Court made a number of findings on the present facts:

    1. It was quite apparent that the Defendant had reserved to itself a discretion to admit late or missing documents. The tender documents were “absolutely clear” in this regard.
    2. Regulation 56(4) of the Public Contracts Regulations 2015 confirms the exercise of such a power, provided it is exercised in accordance with the principles of equal treatment and transparency.
    3. The Defendant, personified by the Director of Asset Management, fell into manifest error by not recognising that the discretion existed.
    4. It was clear that the Court could not remit the matter back to the Defendant to consider whether it should exercise its discretion in favour of the Plaintiff as the Defendant had clearly set itself against such course of action. This prompted the parties to invite the Court to consider whether the Defendant should have permitted the late documents to be submitted. It was noted that that where a margin of appreciation is left to the decision-maker the Court should only intervene where the decision is unjustifiable. In the present case, the decision-maker did not weigh up the pros and cons of any particular course of action. He had not taken into account various factors which may have been relied upon by the Plaintiff in favour of admission.
    5. Would a discretionary refusal to admit the late documents have been unjustifiable? Having considered the arguments for and against admission, the Court found that the Defendant would not have been justified in exercising a discretion to refuse to admit the late documents. The fact that the certificates had been approved by the Defendant prior to the tender submission deadline was a powerful factor in the Plaintiff’s favour, demonstrating unarguably that the documents were in existence prior to the submission deadline. In light of Manova, acceptance of the references would not  breach of equal treatment and the power contained in Regulation 56(4) could be lawfully exercised.
    6. Would exercising discretion in favour of the Plaintiff have been a proportionate course of action? Although the Plaintiff delayed in seeking references from the Defendant until relatively late in the process, evidence revealed that five other references had been sought and provided within 2 working days. If the Plaintiff’s references had been processed within such a timeframe it would have been in possession of them before the deadline. Had the decision-maker apprised himself of that factual background and analysed the reasons for delay these matters would have weighed heavily in the Plaintiff’s favour. Together with the fact that the references were in the possession of the Defendant prior to the deadline, the decision-maker could only have lawfully concluded that the discretion should have been exercised in favour of the Plaintiff and the late references accepted. The Court found that this would have been the proportionate response and accordingly it set aside the decision to reject the Plaintiff’s tender.

      Conclusion

      This is an interesting example of the growing body of caselaw concerning missing and late documents. It is commonplace for tenderers to omit certain information, for various reasons. A contracting authority’s decision not to accept documents offered after the submission deadline will often have adverse consequences for a tenderer. However, the correct approach will be determined largely by the rules set out in the tender documentation and by the guiding principles of equal treatment and proportionality and a failure to adhere to these can be fatal for the authority, as the present case illustrates.

      Undoubtedly, there is merit to setting clear and unambiguous rules on late or missing information in the tender documentation. Careful drafting should be adopted to reflect the authority’s position and it must remain cognizant of the published rules when the relevant circumstances arise, applying them in accordance with the fundamental principles. While authorities may instinctively be concerned about admitting late documents, in certain instances there will be good reason to do so and upon proper analysis there may be no real threat to the integrity of the competitive process, as this common-sense judgment of the High Court demonstrates. 

      *This casenote was originally prepared for Public Procurement Law Review


      1. QMAC Construction Limited v Northern Ireland Housing Executive [2021] NIQB 41

      2. JB Leadbitter & Co Ltd v Devon CC {2009] EWHC 930 (Ch.)

      3. Ministeriet for Forskning v Manova A/S [2014] PTSR 254

      4. Dem-Master Demolition Services v Renfrewshire Council [2016] CSOH 150

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