Nats (Services) Ltd v Gatwick Airport Ltd

Regulation 30 of the Utilities Contracts Regulations 2006 does not impose a general duty on a utility to investigate every tender which appears unusually low, nor a duty to reject an abnormally low tender. The provision operates where the utility is considering rejection: the tenderer must first be given an opportunity to explain the tender, and the explanation must be assessed and verified.

A tender is not abnormally low merely because it is substantially lower than a competing tender. It must fall below the range of what may legitimately be regarded as normal in the particular procurement, such as where it is commercially indefensible or predatory. Very late amendments will generally be refused where they disrupt an expedited procurement trial and the prejudice cannot be remedied by costs.

The claimant, the incumbent provider of air navigation services at Gatwick Airport, challenged the defendant’s procurement decision selecting DFS Deutsche Flugsicherung GmbH. The applications concerned amendment of the Particulars of Claim, strike-out, and disclosure before an expedited trial.

The court had previously continued the statutory or equivalent suspension pending trial: [2014] EWHC 3133 (TCC). The present issues were whether allegations concerning an allegedly abnormally low tender disclosed a viable claim, whether further complaints about scoring and undisclosed criteria should be admitted, and whether disclosure could be extended within the confidentiality arrangements.

1. Paragraph 17. The original allegation concerning DFS’s allegedly abnormally low tender disclosed no intelligible cause of action. It merely expressed concern and reserved the right to plead a claim after disclosure. The proposed re-amendment identified statutory breaches, but still had no realistic prospect of success.
2. Regulation 30. Regulation 30(6) is directed to the circumstances in which a utility is considering rejecting an offer because it is abnormally low. In that event, the utility must request an explanation, take account of the evidence supplied, and verify the offer or relevant parts. The Regulation does not require a utility to investigate all tenders which might appear suspect, or to reject every tender found to be abnormally low.
3. The European authorities, including Fratelli, Lombardini and Mantovani, TQ3 Travel Solutions Belgium SA and SAG ELV Slovensko, were consistent with that construction. The court followed the analysis in Varney and Sons Waste Management Ltd v Hertfordshire County Council: a general investigative duty does not arise unless the authority actually knows or suspects that the tender is abnormally low and is considering rejection.
4. “Abnormally low” has no statutory definition. It requires a bid which is below the range of what may legitimately be regarded as normal in the particular procurement. A substantially lower price alone is insufficient. The pleading did not allege that DFS’s tender was non-genuine, non-viable, predatory or otherwise unlawful.
5. Other amendments. The proposed Schedule 1, containing 17 detailed scoring complaints, was refused. The material had substantially been available earlier, there was no satisfactory explanation for the delay, and its admission would seriously disrupt preparation for the expedited trial. The amendment alleging that the award decision relied on undisclosed factors was allowed because it raised a factual issue which GAL could fairly meet.
6. The application to strike out the original Paragraph 17 was granted, the proposed amendments to Paragraph 17 and the amendment incorporating Schedule 1 were refused, and the remaining agreed amendments were allowed. The disclosure application was resolved by agreement.

This was a first-instance interlocutory judgment in procurement proceedings. An earlier decision continued the statutory or equivalent suspension pending trial: [2014] EWHC 3133 (TCC).