Letting International Ltd v London Borough of Newham

Public procurement authorities must disclose, before tenders are submitted, all award criteria and sub-criteria used to identify the most economically advantageous tender, together with their relative weightings. The obligation applies according to substance, irrespective of whether the matters are labelled criteria, sub-criteria or scoring methodology. An authority must apply the disclosed criteria and cannot reserve undisclosed marks for exceeding the specification. A breach is actionable where the economic operator has suffered, or risks suffering, loss or damage. It is sufficient to show the loss of a significant chance of obtaining the contract; actual loss or proof that the claimant would have won is unnecessary.

The claimant, a property management company, challenged Newham’s tender process for framework contracts concerning private-sector leased accommodation. The Invitation to Tender disclosed broad evaluation headings and overall percentages, but not the detailed headings, sub-criteria and weightings actually used. Newham also awarded only three of five marks for compliance with the specification and reserved the remaining marks for tenders exceeding it.

The claimant alleged breaches of the Public Contracts Regulations 2006, including the requirements of transparency and equal treatment. It also challenged alleged marking errors and relied on an implied contract. The central issues were whether the disclosure and marking systems were lawful and whether the claimant had a sufficient interest in bringing the claim.

1. Issues A and B succeeded. Newham breached regulation 30 by failing to disclose the detailed award criteria, sub-criteria and their relative weightings, and by failing to disclose that full compliance would attract only three of five marks.
2. The court applied the principles stated by the ECJ in Universale-Bau, [2002] ECR I-11617, ATI EAC, [2005] ECR I-10109, and Lianakis, Case C-532/06. Transparency requires tenderers to know all matters taken into account in identifying the economically most advantageous tender and their relative importance. The court must look at substance rather than labels.
3. The five Method Statement headings were award criteria because they were used to assess and mark the tenders. The 28 detailed elements were sub-criteria or, at minimum, an evaluation methodology which could have affected tender preparation. Their disclosure was therefore required. The fact that some matters appeared in the specification, or might have been guessed by an experienced tenderer, did not satisfy the obligation.
4. The undisclosed marking scheme was also unlawful. An invitation to provide a full explanation of how the specification would be met did not inform tenderers that two marks would be reserved for exceeding the specification.
5. The duty to disclose did not depend on proving that disclosure would have changed the result. If consequences were relevant, it was enough that disclosure could have affected preparation. The evidence established that the claimant would have prepared a more focused and potentially stronger tender.
6. The challenge based on marking errors was academic. Applying the approach in Lion Apparel Systems v Firebuy Ltd, [2007] EWHC 2179 (Ch), only some alleged errors were manifest, and they would not have changed the result.
7. Regulation 47(6) required only a risk of loss or damage. The claimant had lost a significant chance of obtaining a framework agreement and work under it. Actual loss, a guaranteed volume of work, or proof that it would have won was unnecessary.
8. The parties were invited to agree the appropriate remedy. The implied-contract issue did not arise.

• Court of Appeal: On an interlocutory appeal, the court allowed the claimant’s appeal and restored an injunction restraining Newham from entering into the proposed contracts: [2007] EWCA Civ 1522.
• High Court (Queen’s Bench Division): The present court determined liability in favour of the claimant, while leaving the remedy for agreement or further submissions.