Lancashire County Council v Environmental Waste Controls Ltd

A procurement decision is unlawful if the contracting authority in fact takes an irrelevant consideration into account when evaluating tenders. The issue is actual influence, not apparent bias. A court may find subconscious influence despite an honest decision maker’s contrary belief, but should be slow to do so where a carefully devised scoring procedure was honestly operated, the decision maker knew which matters were relevant, and the allegation was not plainly put in evidence. Detailed concerns recorded outside the formal evaluation do not by themselves establish unlawful influence. A loss-of-chance assessment must also rest on sufficiently probative evidence.

A local authority conducted a tender exercise for waste-management services under the Public Contract Regulations 2006. It selected SITA UK Ltd although Environmental Waste Controls Ltd had submitted a substantially lower tender.

The trial judge found a breach of regulation 4(3) because concerns about Environmental Waste Controls’ financial standing and tender price had been taken into account. He assessed damages on the basis of a 50 per cent loss of a substantial chance of winning a three-year contract. The authority appealed against the legal test, the factual finding of improper influence and, if necessary, the loss assessment.

1. Appeal allowed; claim dismissed. The trial judge had applied the correct legal test by asking whether the evaluation was, on the balance of probabilities, influenced by concerns about the respondent’s financial position. The issue was actual influence, not apparent bias.
2. The applicable procurement-review framework, stated in Lion Apparel System Ltd v Firebuy Ltd [2007] EWHC 2179, required scrutiny of compliance with equality, transparency and objectivity obligations, verification of the facts relied upon, and review for manifest error or misuse of power. There was no margin of appreciation as to compliance with those obligations, although a margin existed in matters of judgment or assessment.
3. The trial judge was not entitled to conclude that the evaluation had been infected by an irrelevant consideration. The procedure was carefully devised and involved scoring under numerous published criteria. It was honestly and professionally operated by officials who understood which matters were relevant. The responsible officer had been told to disregard financial standing and was found to have done his honest best. The judge also found no deliberate manipulation, bias or partisanship.
4. A court may in an appropriate case find subconscious influence contrary to the decision maker’s belief. It should, however, be very slow to make that finding in circumstances such as these. The allegation should be put to the relevant witnesses in the plainest terms. Here, the central allegation was not fully put to the principal decision makers.
5. Since no breach was established, the respondent could not establish unfair treatment or loss of a chance of being awarded the contract. It was unnecessary to decide whether the 50 per cent assessment was sustainable. If the issue had arisen, further analysis of the marks, the effect of the improper consideration and the possibility and consequences of re-tendering would have been required. The use of a three-year rather than five-year contract period was correct on the assumed basis that a substantial loss of chance had been established.

• Court of Appeal (Civil Division): allowed the authority’s appeal and dismissed the respondent’s claim.
• Queen’s Bench Division, Manchester District Registry Mercantile Court: His Honour Judge Hegarty QC found a breach of regulation 4(3) and ordered damages to be assessed on the basis of a 50 per cent loss of a substantial chance of obtaining the contract.