MSI- Defence Systems Ltd v The Secretary of State for Defence

On an application for strike-out or summary judgment, the court must not conduct a mini-trial. A claim should proceed where factual disputes may determine the existence or scope of legal duties, or where evidence reasonably available at trial may affect the outcome. Procurement pleadings must state concisely the facts relied upon, but an inadequate pleading may be ordered to be clarified rather than struck out. A contracting authority has a broad discretion to abandon or rewind a procurement, subject to equal treatment and transparency. That discretion does not necessarily extinguish an accrued cause of action arising before the rewind. The reasons for a procurement decision must be sufficiently clear to enable the affected tenderer to defend its rights and the court to exercise supervision.

The claimant, the incumbent contractor in a procurement governed by the Defence and Security Public Contracts Regulations 2011, challenged the defendant’s decision to rewind the procurement and issue a revised invitation to negotiate. It alleged breaches of equal treatment, transparency and related public law duties, errors in evaluating the original bids, inadequate reasons, and unfair changes to the tender rules.

The defendant applied to strike out the claim, alternatively for summary judgment or strike-out on proportionality grounds. The claimant applied to re-amend its particulars of claim. The central issues were whether the pleaded claims disclosed reasonable grounds or realistic prospects of success, whether the rewind decision could be challenged notwithstanding the defendant’s broad discretion, and whether the pleading obstructed the just disposal of the proceedings.

1. Applications dismissed. The defendant failed to show that the claim disclosed no reasonable grounds, had no realistic prospect of success, or was likely to obstruct the just disposal of the proceedings. The application to re-amend was therefore not opposed.
2. Summary judgment and strike-out applications are not occasions for a mini-trial. The court must consider whether the claimant has a realistic rather than fanciful prospect of success, including evidence reasonably expected to be available at trial. Where significant factual disputes concern the existence or scope of legal duties, strike-out is appropriate only where the claim is certain to fail.
3. The claimant’s complaints about the reasons for the rewind decision could not be rejected summarily. The decision letter identified one reason, while later correspondence, disclosure and the defence suggested a shifting or inconsistent account. Whether the reasons were clear and unequivocal, and what considerations informed the decision, were fact-sensitive issues for trial.
4. The defendant had a broad discretion to cancel or rewind the procurement. That discretion was subject to fundamental procurement principles, including equal treatment and transparency. The court was not satisfied that the applicable standard for challenging a rewind decision, or the relationship between that discretion and pre-existing duties, had been fully established for summary disposal.
5. The claimant’s case that it should have been awarded the contract before the rewind raised a potentially accrued cause of action. Following Amey Highways Ltd v West Sussex County Council, cancellation or rewinding did not necessarily extinguish such a cause of action. The absence of disclosure concerning the competing bid meant that the merits could not be determined at this stage.
6. The revised scoring guidance could arguably disadvantage the claimant and therefore raised a properly arguable issue under equal treatment and transparency. The fact that the claimant might later win the contract, or could challenge a later award, did not eliminate the present claim.
7. The pleading was prolix and contained material better suited to evidence or submissions, but it remained possible to identify the substance of the case. The appropriate response was case management and clarification, not the draconian remedy of strike-out. The claimant was directed to finalise its pleading after disclosure and to co-operate in preparing a list of issues and proposals for resolving the litigation.