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

In a regulated procurement, tender documents must state the evaluation criteria and the consequences of failing a criterion with sufficient clarity to permit uniform interpretation by a reasonably well-informed and normally diligent tenderer. A contracting authority cannot reject a tender using an unstated or insufficiently clear threshold, particularly where the documents do not reveal whether failure produces mandatory or discretionary rejection. The authority must follow the decision-making procedure it published and must treat tenderers equally. The court will not substitute its own evaluation, but may intervene for manifest error, irrationality or failure to consider relevant matters. Clarification may correct or amplify an obvious error, but the authority need not invite additional evidence that would effectively create a fresh tender or confer an unfair advantage.

The claimant was an unsuccessful tenderer for a Ministry of Defence contract for global port, maritime and logistical support services. Although its tender was commercially compliant, had the lowest price and achieved the highest technical score, it failed Question 6.3, concerning the promotion and practice of a safety culture throughout the supply chain. The defendant rejected the tender and awarded the contract to the next-ranked tenderer.

The claimant challenged the decision on transparency, equal treatment, manifest error and discretion grounds. The central issues were whether the invitation to tender made the consequences of a fail score sufficiently clear, whether the evaluation was manifestly erroneous, and whether any discretion to reject had been lawfully exercised.

1. Transparency and equal treatment. The procurement was governed by the Defence and Security Public Contracts Regulations 2011 and the principles of transparency, equal treatment, proportionality and procedural fairness. The transparency test was objective: the published criteria had to be sufficiently clear to permit uniform interpretation by reasonably well-informed and normally diligent tenderers ([2001] ECR I-7725; [2014] UKSC 49).
2. The invitation to tender distinguished the scored Questions 1 to 5 from Question 6, which was marked pass or fail. It did not state that a fail in Question 6 would result in rejection, nor whether rejection would be mandatory or discretionary. The worked examples and other express rejection provisions did not cure that omission. The defendant therefore applied criteria that were arbitrary or insufficiently clear and acted unlawfully in rejecting the claimant’s tender.
3. Manifest error. The court would not substitute its own assessment for that of the contracting authority. It would intervene only for a manifest error, including failure to consider relevant matters, consideration of irrelevant matters or an irrational conclusion outside the range reasonably open to the authority ([2007] EWHC 2179 (Ch); [2015] EWHC 2011 (TCC); [2016] EWHC 1988 (TCC)). The evaluators and moderator had applied the stated criteria and rationally concluded that the tender did not provide sufficient evidence of a safety culture throughout the supply chain. No manifest error was established.
4. Clarification. The defendant had asked where the answer to Question 6.3 appeared in the tender. Inviting further evidence to remedy the identified deficiency would have gone beyond clarification or correction of an obvious material error and risked creating a fresh tender and unequal treatment ([2012] ECR I-10873). There was no obligation to invite such further material.
5. Discretion. Although unnecessary to the result, the court found that any discretion to reject had been genuinely exercised through a tiered decision-making process. The defendant considered the deficiency, the importance of supply-chain safety and the comparative position of the next-ranked tenderer. Rejection was a rational and proportionate option. The defendant could not rely on the claimant’s safety record, which was outside the published criteria.
6. The claimant was entitled to a declaration that the defendant had acted unlawfully.