J Varney & Sons Waste Management Ltd v Hertfordshire County Council

In public procurement, a contracting authority has no discretion to comply only partially with its duties of equality, transparency and objectivity. Its evaluative judgments do, however, attract a margin of appreciation and will be disturbed only for manifest error. The abnormally low tender provisions require investigation before rejection of a tender which appears abnormally low; they impose no general duty to investigate every tender which might, with hindsight, appear commercially questionable. A tenderer may price by reference to other anticipated sources of income where the procurement documents permit that approach. A material amendment to an essential contractual condition may engage procurement principles, but ordinary non-enforcement or temporary performance problems do not establish such an amendment. Where the Regulations provide a comprehensive regime, no parallel implied contract governing the tender process should be implied.

The claimant was an unsuccessful tenderer for contracts to operate Hertfordshire’s household waste recycling centres. It brought two actions under regulation 47(6) of the Public Contracts Regulations 2006, alternatively alleging breach of an implied contract. The first action challenged the tender process, including transparency, equal treatment, financial assessment, post-tender discussions, abnormally low tenders, marking and contract enforcement. The second alleged that a later proposed change to the recycling incentive bonus scheme amounted to an impermissible award of new contracts.

The trial was confined to liability. The central issues were whether the Council had breached the Regulations, whether any claim was time barred, and whether the proposed bonus-scheme change constituted a material contractual amendment.

1. Transparency and equal treatment. Return Schedules 1 to 15 were sub-criteria or sub-sets of the stated customer-satisfaction criterion, not separate award criteria. Return Schedule 16 concerned price and Return Schedule 17 merely summarised information. Applying the principles in ATI EAC v ACTV Venezia, disclosure of the sub-criteria and their equal five-mark weightings was not required because disclosure could not have affected preparation of the tenders. The Council had no margin of appreciation as to whether it complied with transparency and equality obligations, although it had such a margin in evaluative matters: Lion Apparel Systems Ltd v Firebuy Ltd.
2. Financial stability. The Council acted unlawfully in taking financial stability into account at the award stage without identifying that factor and the necessary information in the invitation to tender, as required by regulation 16(15)(c). That breach did not affect Varney’s ranking and caused no recoverable loss.
3. Time bar. Under regulation 47(7), the transparency claim accrued when the invitation to tender was issued, since the alleged omission was then apparent and the Council intended to mark the Return Schedules. The three-month period expired before proceedings were commenced. Uniplex (UK) Ltd v NHS Business Services Authority did not establish an immutable rule that time always begins only when reasons for rejection are supplied.
4. Post-tender discussions and marking. The discussions with tenderers were legitimate clarification, not negotiations. The court would not substitute its own marks for those of the authority. Intervention required a manifest error, meaning a clearly or obviously wrong mark. The alleged errors did not satisfy that test.
5. Abnormally low tenders. Article 55 of the Directive and regulation 30(6) required investigation before rejection of a tender appearing abnormally low. They imposed no general duty to investigate tenders which the authority neither knew nor suspected were abnormally low and which it did not intend to reject. The Council’s comparison with the mean tender price was permissible. Its acceptance of the tenders was not shown to involve manifest error.
6. Contract performance and variation. The principles of transparency and equality apply to a material amendment of an essential contractual condition, as explained in Commission v Succhi di Frutta SpA and Pressetext v Austria. Temporary staffing, uniform or welfare problems, coupled with active contract management, did not amount to a de facto amendment. The proposed RIBS change was never formally agreed or implemented as a contractual variation, and payments made in anticipation of it did not alter the contracts.
7. Implied contract. The Regulations created a complete statutory regime, including specific limitation provisions. No parallel implied contract governing the tender process arose.

Save for the limited breach concerning financial stability, the claims failed. The limited breach caused no loss, and the proceedings were dismissed in substance.