Those who compete for public contracts have a legally enforceable right to expect a transparent and even-handed tendering process. In a case concerning the award of a number of regional road-surfacing contracts, however, the High Court found that the playing field was far from level.
A civil engineering company launched proceedings after six of the eight contracts on offer were awarded to a rival bidder. It sought damages from the public authority concerned on the basis that lawful compliance with the Public Contracts Regulations 2006 would have resulted in a very different outcome.
Ruling on the matter, the Court noted that the rules of such competitions are required to be clear, precise and unequivocal. However, the rules applied in the instant case were opaque, imprecise, equivocal and lacking in detail. The process was certainly not transparent and the reality was that there were no rules.
The rival was allowed to submit identical tenders in respect of seven of the contracts although it had the resources necessary to fulfil, at most, four of them. After winning six of the contracts, it was permitted to withdraw from two of them. Those contracts were awarded to runners-up in the process.
The rival was invested with complete discretion as to which of the contracts it chose to discard and that necessarily meant that runners-up were treated neither equally nor transparently. The rival's freedom to select which of the contracts it would perform also offended against the principle of non-discrimination.
The Court found that the authority fell into manifest error in giving the rival top marks for its answers to two questions in three tenders although it did not have the resources to perform those contracts. The company was prevented from understanding or verifying the mechanism whereby the authority permitted one runner-up to be preferred over another.
Remaining issues in the case, including causation of loss and the availability and quantum of damages, would be considered at a further hearing.
For legal help on contracts please speak to Roy Colaba on 08081668827
For help on dispute resolution please speak to Dean Parnell.
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