Early disclosure in procurement challenges – The bidder's dilemma

All disappointed bidders must grapple with the inherent uncertainties involved in issuing a procurement challenge.

At the outset of any potential challenge, the bidder will generally only be in possession of an award decision notice and will not possess any further relevant documents to clarify the reasons as to why the bidder lost out.  In some cases it may be possible to determine on the basis of the award decision notice alone that a claimant enjoys reasonable, or even strong, prospects of success but the issue remains: does the bidder have the appetite for the risk and cost of litigation (which can be significant, even where that litigation is short lived) when it is not in possession of key relevant evaluation documents? When the initial view on merits is more finely balanced, albeit there is a prima face case which a bidder understandably wishes to pursue, the difficulties in this position are compounded.

A lack of documentation at the outset of any legal proceedings is not unusual; a robust opponent will invariably withhold relevant documentation during the pre-action correspondence, notwithstanding its pre-action obligations as technically read, on the basis of, among other things, proportionality. However, in procurement challenges, bidders suffer from a particularly acute imbalance of information where the strength of a potential claim more often than not rests with documents held (but not disclosed) by the authority from the outset.

'Roche' disclosure in procurement challenges

The Courts have long stressed the importance of authorities providing early disclosure.   Appendix H of the Technology and Construction Court Guide ("the Guide"), for example, states (paragraph 25) that:

"Contracting authorities are encouraged to provide their key decision-making materials at a very early stage of proceedings or during any pre-action correspondence."

However, the extent to which authorities follow the encouragement of the Guide varies widely from case to case.   Early specific disclosure applications are therefore a common feature of procurement litigation. 

The principles applicable to specific disclosure in procurement cases were laid down in the leading case of Roche Diagnostics Limited v Mid Yorkshire Hospitals NHS Trust [2013] EWHC 933 (TCC)) ("Roche"):

• An unsuccessful bidder who wishes to challenge evaluation is in a uniquely difficult position as the reasons for their failure are within the knowledge of the public authority. The bidder should therefore be provided promptly with essential information/ documents relating to the evaluation process so that it can form an informed view.
• The short limitation periods imposed by the Procurement Regulations confirm that the above is the approach that should be taken, as those limits are based on the concept of knowledge.
• The Courts still need to consider applications for specific disclosure on the basis of individual merit and a distinction should be made between cases where a claimant has made out a prima facie case and those cases where there appear to be little or no grounds for disputing an award.
• Any request for specific disclosure must be properly focused and applications must be decided by balancing the claimant's lack of knowledge against the need to guard against these applications being used as a fishing exercise intended to shore up a weak claim.

The OCS Group case and the lowering of the Roche threshold

Although undoubtedly tending to favour applications for specific disclosure, the Roche case still presents problems for claimants seeking early disclosure.  In particular, how is a claimant to show a prima facie case in circumstances where it may have very limited information?  How much of a prima facie case is it necessary to show?  If a prima facie case can be shown in relation to some aspects of the evaluation, is the claimant entitled to disclosure in relation to other aspects?

The recent judgment of the High Court in OCS Group UK Limited v Community Health Partnerships Limited [2023] EWHC 3369 (TCC) ("OCS Group") has to some degree provided answers to these questions and has arguably made it easier for claimants to obtain specific disclosure at an early stage where the majority of the substance of their claim is pleaded in fairly generic terms, owing to the lack of information available at that point.   

Facts

• OCS Group UK Limited ("Claimant") was the incumbent provider of NHS cleaning services to the defendant authority ("Authority").  The Authority issued a tender for a new contract with a value of £236 million over nine years.
• The tender process for the new contract required bidders to respond to quality questions and completion of a pricing submission.
• The Claimant was unsuccessful in its bid.  It achieved an overall aggregate score of 85.33% compared to the successful bidder's score of 85.35%, a margin of just 0.02%. Given the extremely narrow margin, the Claimant highlighted that even a single error could result in it being awarded the contract. 
• The Claimant took issue with the Authority's evaluation of its response to two questions in the tender process (questions 6 and 13).
• Before issuing proceedings, the Claimant had obtained some early disclosure of documentation from the Authority including:
  • Individual evaluator/ consensus reports relating to the scoring of the Claimant's response to question 13 (but no records relating to the evaluation of the successful bidder's response);
  • Consensus evaluation records relating to both the Claimant and the successful bidder for question 6, but no individual evaluator scoring records.
• The Claimant issued proceedings and applied for specific disclosure of both the outstanding evaluation records relating to questions 6 and 13 and evaluation records in respect of the remainder of the 'quality' questions.
• In its application, the Claimant argued that the Authority's disclosure was incomplete and it was entitled to further disclosure in order to investigate its complaints.
• The Defendant argued that the Claimant's application was based on a fundamental misunderstanding of the law related to specific disclosure and that it had already provided sufficient reasoning behind its decision to award the Claimant's score, and that additional disclosure was not justified.

The Court's approach in the OCS Group case

• The Court recognised the particular difficulties faced by the Claimant, and the "special principles" set out in Roche [para 62].
• The Court noted, however, that application of the Roche principles must be balanced against the need to avoid a fishing exercise, and where ordered, any disclosure order must "be proportionate and drawn as tightly, as is consistent with any obligation to give reasons or to give disclosure in support of reasons that the defendant might be under" [paras 63].
• The Court noted that the Claimant had specific (albeit 'narrow') criticisms of questions 6 and 13 whereas, in relation to the other questions, the Claimant had simply asserted a general lack of transparency. The Court held that the Claimant's criticisms of questions 6 and 13 were "at least arguable" [para 68] and that the broad nature of the assertion of a general lack of transparency was a "consequence of the fact that the claimant does not have the information to assess the adequacy of the process in greater detail" [para 67]. Further, the Court relied on an apparent mistake within the award decision letter and clear evidence of a potential error of evaluation (in respect of question 6) in support of its view that the Claimant had an arguable case in respect of questions 6 and 13.  Overall, this supported the Claimant's argument that it had a "prima facie case to seek disclosure more broadly on those issues" [para 69].
• The Court did not agree with the following arguments raised by the Authority:
  • Approval of the Claimant's application would result in automatic right to specific disclosure for disappointed bidders in any regulated procurement case;
  • The application should fail on the basis that the Claimant has to show that reasons for scoring provided in the notice are inadequate, and where adequate reasons have been provided within the award letter, the claimant would simply fail in an application for specific disclosure, on the basis that an early application for specific disclosure should be limited to the documents necessary to judge the adequacy of reasons provided.
  • Approval of the application would lead to a duty of disclosure which would be disproportionate.
  • As the Claimant had not critiqued the scoring of its own bid, no order in respect of documents relating to the evaluation of its own bid would be justified.
• In response to the above, the Court reasoned that:
  • There would be no automatic right of suspension in future cases as a result of granting the Claimant's application because:
    • the request would be filtered by the requirement that a claimant needed to show it had a prima facie case and not all claimants would be able to demonstrate this; and
    • if adequate reasons for evaluation had been provided within the award decision letter, then the claimant would simply fail in their application for specific disclosure, on the basis that an application for early disclosure should be limited to the documents necessary to determine the adequacy of the reasons provided.
  • The order sought by the Claimant in OCS Group was sufficiently tightly drawn in order to avoid any disproportionate disclosure.
  • The evaluation process is a comparative one and the question that needed to be resolved was not whether each of the claimant and the successful bidder have been correctly evaluated, but whether both of them have been correctly evaluated. Without knowledge of the latter, a claimant would not be able to sustain a challenge.
• The Court ordered the authority to disclose the documents sought by the Claimant.

Impact of OCS Group on Applications for Early Disclosure

Whether OCS Group represents a lowering of the Roche threshold for specific disclosure in procurement challenges or simply serves as clarification of the Roche test is up for debate. In any event, the ruling will instil confidence in disappointed bidders looking to widen the scope of their specific disclosure requests, in circumstances where, on the basis of the documentation available, their prima facie case only 'bites' on a narrow aspect of the evaluation exercise. 

Claimants should, however, bear in mind that OCS Group does not dislodge the test as formulated in Roche and does not provide carte blanche for claimants to embark on fishing expeditions. Prior to issuing on a specific disclosure application, claimants will still have to attempt to establish whether they have an arguable case on the basis of the information in the award decision letter and any early disclosure that can be obtained from the defendant authority on a voluntary basis.  

For authorities, OCS Group serves as a reminder of the importance attached by the Courts to early disclosure.  However, the case also illustrates the importance of providing unsuccessful bidders with clear and detailed reasons for their scores and for the scores awarded to the successful bidder.  If the reasons provided in the award decision letter are comprehensive, clearly explain why each score was awarded by reference to the award criteria and any evaluation methodology and reflect the underlying notes of evaluators and the moderation meeting, then the authority should be well-placed to resist early specific disclosure.

Impact of the Procurement Act 2023 on early disclosure applications in procurement challenges

The Procurement Act 2023 ("PA 2023"), which is due to come into force on 28 October 2024, will replace the current procurement rules, which remain based on EU law, with an entirely domestic system of procurement law.  Many of the key features of the current rules will, however, remain including the ability for disappointed bidders to challenge procurement decisions through the Courts.

The PA 2023 and associated regulations ("Procurement Regulations") do not fundamentally change the obligation of contracting authorities to notify bidders of the reasons for procurement decisions.  The award decision letter provided to unsuccessful bidders under the present rules will be replaced by what is termed an "assessment summary" (see our blog Transparency of procurement under the Procurement Act 2023 – more information but less openness?).  The assessment summary will have to set out how the tenders of both the successful bidder and the recipient of the summary were assessed against the award criteria for the procurement, including:

• The score determined for each award criterion; and
  • An explanation for that score by reference to relevant information in the tender; and
  • Where an award criterion includes sub-criteria for assessment, an explanation of how the tender was assessed by reference to each sub-criterion; and
• The total score and any sub-total scores.

This requirement, which moves away from the somewhat confusing requirement under the current rules to set out the characteristics and relative advantages of the successful tenderer, reflects how a well-drafted award notification should be prepared in any event.  There is however no express requirement for contracting authorities to go further and provide, for example, the underlying evaluation documents.  Thus, battles over early disclosure of evaluation documents are likely to continue in the new regime. 

How those battles will be determined – and whether the Court will continue to follow the Roche/OCS Group approach to early disclosure – is however a matter of uncertainty.  Although the Court has shown in cases such as Roche and OCS Group a general sympathy with the information disadvantage faced by claimants at the early stages of a procurement challenge, the legal rationale for insisting on the provision of detailed reasons to unsuccessful bidders rests on the obligation of contracting authorities under regulation 18 of the Public Contracts Regulations 2015 (and equivalent in other procurement regulations) to act transparently.  The duty of transparency in procurement, deriving ultimately from EU law, has been treated as a hard-edged obligation on authorities and used to impose duties of disclosure throughout all stages of a procurement.

Under the PA 2023, there is no overriding and general duty of transparency (see our blog Transparency of procurement under the Procurement Act 2023 – more information but less openness?).  Instead, contracting authorities will be subject to numerous specific obligations to notify or publish information (of which the provision of an assessment summary is one), combined with a requirement to have regard to the importance of transparency.  This appears to remove the ability of the Court to develop specific, and arguably more onerous, obligations on contracting authorities to give reasons/ provide disclosure etc. based on a general obligation of transparency.  The legal analysis underlying Roche and OCS Group may therefore be hard to sustain under the new regime. 

That does not mean that all will be lost for claimants seeking early disclosure.  The power of the Court to order specific disclosure is a general one that must be exercised taking account of all the circumstances of the case in the light of the overriding objective of enabling the Court to deal with cases justly and at proportionate cost.  The advent of the PA 2023 will not change the basic information asymmetry in procurement challenges.  We would therefore expect and hope that the Courts will continue to look favourably on applications for specific disclosure by claimants who have tried and failed to obtain voluntary early disclosure.