Abnormally low tenders and the ill-advised use of solicitors to give evidence in court10/09/18
The case of SRCL Ltd v The National Health Service Commissioning Board (NHS)  EWHC 1985 (TCC) (27 July 2018) highlights that:
- Contracting authorities have some discretion about investigating abnormally low bids; and
- Solicitors should not give evidence of fact which their client could give, particularly where there is a potential conflict of interest between their own interests and those of the client.
Abnormally low tenders
SRCL Ltd (“SRCL”) (now Stericycle) challenged NHS England’s decision to award to another bidder a contract for clinical waste services. Bidders were invited to submit bids by way of an e-auction designed to drive prices down through more effective competition. SRCL (the main incumbent) were unsuccessful and brought a challenge alleging that both the winning and second placed bids were ‘abnormally low’.
The court ruled:
- If a contracting authority considers a bid to be abnormally low it may reject it but it must first permit the bidder an opportunity to justify the price. A court will only intervene in the decision if there has been a clear error. In this case, the contracting authority did not know or suspect that the tenders were abnormally low: it was highly relevant that there was 1% price difference between the first and second placed bidders.
Use of solicitors to give evidence of fact in procurement disputes
The court was highly critical of the decision of SRCL’s solicitor to give evidence of matters of fact because the solicitor was within the confidentiality ring (and therefore had access to confidential material) but an employee of SRCL was not. Instead, SRCL and their solicitors should have challenged – including by way of an application to the court if necessary – NHS England’s refusal to agree to the admission of any employee into the ring.
Regardless of that error in judgment, the solicitor gave evidence on the issue of limitation, which her firm would have advised their client on (the court was critical of the timing of the issue of proceedings). This created a potential “own interest” conflict (in breach of the Solicitor’s Code of Conduct) between SRCL and their solicitors (in terms of having to justify the decision taken not to issue a protective claim within the limitation period and reporting the facts relating to that decision).
Implications for contracting authorities and for bidders
Given the time and (likely) cost involved, contracting authorities will take some relief from the court’s ruling that it is not mandatory to investigate “suspect” abnormally low tenders.
The court’s criticisms of the use of a solicitor to give evidence of fact may mean that challengers will press more firmly for the inclusion of a client representative in a confidentiality ring. In instances where the contracting authority refuses to allow a representative of the claimant into the ring careful consideration should be given by the claimant to making an application to the court.
Practitioners will note that the court was very critical of SRCL for trying to introduce new arguments at trial and for issuing fresh proceedings, after the trial had finished but before judgment was handed down, which sought to separately litigate those same issues.
Finally, the judgment reaffirms that the court will not agree to extend the 30 day limitation period unless there is a good reason, which must be something like illness or something out of the claimant’s control which prevented them from issuing (Capsticks wrote about “good reasons” for extending the limitation period here.)
SRCL were represented by Bevan Brittan LLP
How Capsticks can help?
Capsticks regularly acts on behalf of commissioners and providers in handling complex and high-value procurement disputes, including on the issues identified in SRCL v NHSE (abnormally low tenders, confidentiality rings and the limitation period)