MLS (Overseas) Ltd v The Secretary of State for Defence

In procurement proceedings, the relevant breach may be the contracting authority’s failure to apply the published tender criteria, rather than a defect apparent when the invitation to tender was issued. The limitation period therefore runs from the relevant breach, properly identified.

A claimant must establish a real or significant chance of success, rather than a fanciful chance, to show loss or damage. The court has a discretionary and proportionate power to grant procurement remedies. There is no presumption in favour of any particular remedy. An order requiring a public authority to enter into a long-term contract with a named contractor is exceptional.

The court had previously found that the Ministry of Defence had acted unlawfully by rejecting MLS’s tender after treating a failure on Question 6.3 as a threshold criterion which was not identified in the invitation to tender. The court also found that MLS would have been successful if that unlawful criterion had not been applied.

MLS sought a declaration, the setting aside of the decision to award the contract to SCA Shipping Consultants Associated, and an order requiring the Ministry of Defence to award the contract to MLS. SCA disputed liability, causation and limitation, and opposed relief which would disturb the award decision. The issues were whether the claim was time-barred, whether causation had been established, and what remedy was appropriate.

1. The court rejected SCA’s limitation argument. The invitation to tender identified the criteria for assessing the most economically advantageous tender and was not itself in breach because it failed expressly to state the consequences of a failure on Question 6.3. The relevant breach was the Ministry of Defence’s subsequent failure to apply the published criteria. Jobsin Co UK plc v Department of Health [2001] EWCA Civ 1241 was distinguishable because the defect in that case was apparent on the face of the tender document.

2. Causation was established under regulation 52 of the Defence and Security Public Contracts Regulations 2011. The applicable question was whether there was a real or significant, rather than fanciful, chance that MLS would have succeeded if the published criteria had been applied. The Ministry of Defence had expressly stated that MLS’s tender would have succeeded but for the unlawful failure score.

3. The court’s remedial discretion under regulation 58 was to be exercised proportionately, with regard to the need to apply the Regulations, the public interest, the claimant’s private interest, the seriousness of the breach, the adequacy and difficulty of assessing damages, and the prejudice to the competing tenderer. There was no presumption in favour of any particular remedy. The guidance in Mears Limited v Leeds City Council [2011] EWHC 1031 was applied.

4. Although the court had power to require the Ministry of Defence to contract with MLS, such a mandatory order would be exceptional, particularly for a high-value, long-term contract requiring negotiation, due diligence and continuing supervision. Applying Woods Building Services v Milton Keynes Council [2015] EWHC 2172, there were no exceptional circumstances justifying such an order.

5. MLS was entitled to a declaration that the rejection of its tender was unlawful. The decision to award the contract to SCA was set aside. The court declared that it would be lawful for the Ministry of Defence to award the contract to MLS, but did not order the Ministry of Defence to do so. SCA was ordered to pay the costs of the supplementary submissions, subject to any submissions in opposition within 14 days.