MLS (Overseas) Ltd v The Secretary Of State For Defence

This judgment concerns a challenge to a Ministry of Defence procurement decision under the Defence and Security Public Contracts Regulations 2011. The claimant, MLS, submitted the lowest priced, highest-scoring technical tender but was marked "fail" on Question 6.3 (safety culture throughout the supply chain) and thereby excluded. The court held that the Invitation to Tender did not make clear, either expressly or implicitly, whether a "fail" on Question 6.3 would or could lead to rejection, so the MOD breached the obligations of transparency and equal treatment in the Regulations and the procurement was unlawful.

The court also considered but rejected MLS’s contention of a manifest error in the evaluators’ assessment; the evaluators’ independent scores and the moderator’s reasoning were within the range of reasonable conclusions. For completeness the court addressed discretion and found that, had a discretion existed, it had been genuinely exercised and not irrationally.

The claimant, MLS (Overseas) Limited, challenged the lawfulness of a competitive procurement run by the Secretary of State for Defence for port, maritime and other logistical support services. MLS had been the incumbent supplier, submitted the lowest price and obtained the highest technical score overall, but was given a "fail" on Question 6.3 (safety at work / safety culture throughout the supply chain). That "fail" led to the tender being treated as non-compliant and the Contract was awarded to the next ranked tenderer, SCA.

Nature of the claim / relief sought:

• Declarations of unlawfulness;
• an order declaring MLS to have submitted the most economically advantageous tender and to amend the decision to award the Contract to MLS;
• alternatively, orders quashing the Decision and requiring a lawful re-evaluation or re-running of the procurement; and
• alternatively, damages.

Issues framed by the court:

• Whether the ITT and evaluation procedure complied with the procurement obligations of transparency and equal treatment under the Regulations and Directive 2009/81/EC;
• whether the evaluators committed a manifest error in assessing Question 6.3;
• whether, if the MOD had a discretion to reject for a single fail, that discretion was lawfully exercised.

Court’s reasoning and decision: The court held that the ITT failed to make clear to the Reasonable Tenderer whether, or how, a "fail" on Question 6.3 would affect the outcome of the competition. The procurement documents separated the commercial compliant/non-compliant regime, the scored technical questions (Questions 1–5) and the pass/fail Question 6, but did not state the consequences of a fail on Question 6. The worked scoring examples and express mandatory minimums for Questions 1–5 did not include Question 6. Because the consequence of a fail could not be ascertained from the ITT, the MOD acted unlawfully in applying a ground of rejection that was not sufficiently clear and therefore breached transparency and equal treatment. The court found no manifest error in the evaluative judgments: the evaluators and moderator gave contemporaneous reasons and the assessment lay within the range of reasonable conclusions. On the exercise of discretion, the court considered the MOD had given anxious scrutiny and genuinely weighed relevant factors; it rejected submissions that any discretion was irrational, but that issue was academic once unlawfulness was found. The court granted a declaration that the MOD acted unlawfully.

This is a first instance decision. The court declared that the Ministry of Defence acted unlawfully in applying rejection criteria that were not sufficiently clear in the Invitation to Tender, in breach of the procurement principles of transparency and equal treatment. The court therefore granted MLS a declaration of unlawfulness. The court concluded there was no manifest error in the evaluators' assessment of Question 6.3 and, for completeness, that any discretion to reject had been genuinely exercised and was not irrational, but those findings did not cure the primary breach of transparency.