Siemens Mobility Limited v High Speed Two (HS2) Limited

In a negotiated utilities procurement, the contracting utility must apply the published tender rules objectively, uniformly and transparently. It retains a substantial margin of appreciation in technical evaluation and may be challenged only for a clear or manifest error, reliance on undisclosed criteria, or irrationality.

A discretion to admit a shortfall tender must be exercised rationally and consistently with equal treatment and transparency. The Utilities Contracts Regulations 2016 do not impose a general duty to repeat completed verification exercises or to act in accordance with legitimate expectations where the procurement documents and regulations provide adequate protection. Post-award negotiations may be broad under the negotiated procedure, but cannot cure a breach of the tender rules or result in an unlawful substantial modification.

HS2 conducted a negotiated procurement under the Utilities Contracts Regulations 2016 for the manufacture, supply and maintenance of HS2 rolling stock. Siemens and a Bombardier-Hitachi joint venture proceeded to the final whole-life-value stage. HS2 selected the joint venture as lead tenderer and later awarded it the contract.

Siemens brought consolidated Part 7 and judicial review claims alleging defective scoring, unlawful admission of a shortfall tender, improper consent to a change of control, errors in the Stage 5 evaluation and abnormally low tender review, inadequate verification and pre-contract checks, unlawful modifications, conflicts of interest and inadequate reasons.

1. Scoring and evaluation. The tender documents were to be construed objectively by reference to the reasonably well-informed and normally diligent tenderer. HS2 had to apply the disclosed criteria uniformly and without manifest error. The court’s role was supervisory and it could not substitute its own technical assessment for that of the evaluators. The scoring challenges failed because the identified deficiencies had been considered and weighed by the assessors, and the resulting scores were within the available range.
2. Shortfall tender. HS2’s discretion under section 6.4 of the IfT was subject to principled limits. It was exercised rationally after considering the extent of the shortfall, the joint venture’s performance elsewhere, the risks to deliverability, the other tenders and the consequences of proceeding with only one tender. The decision to admit the joint venture to Stage 5 was lawful.
3. Change of control and clarification. The acquisition became a definite change only on completion. HS2 was entitled to approve the resulting continuation of the joint venture’s tender. Limited disclosure of bid status was permitted by the tender rules and caused no unfairness. Telephone communications breached section 5.2.2 of the IfT technically, but the breach had no causative effect because the communications were promptly confirmed in writing. Clarifications correcting obvious errors or inconsistencies were within HS2’s discretion and did not amount to new tenders.
4. Stage 5 and abnormally low tender. Stage 5 was confined to the disclosed whole-life-value methodology. Earlier technical scores and proposed design changes were not inputs to the Assessed Price. HS2 applied the same methodology to both tenders and rationally concluded that neither tender was abnormally low. Regulation 84 did not require HS2 to seek explanations where it had not concluded that a tender appeared abnormally low.
5. Verification, modifications and conflicts. Neither the PQP nor the ITT imposed a general obligation to repeat completed verification. Regulation 47 permitted wide negotiations with the lead tenderer, subject to equal treatment, transparency and the requirement to recheck ranking where a negotiated amendment materially increased the Assessed Price. No modification decision had been made, and hypothetical future modifications could not be adjudicated. Membership of a separate Bombardier pension scheme and continuing social contact with former colleagues did not give rise to a conflict under regulation 42.
6. Outcome. Claim 9 had no real prospect of success and was struck out, with summary judgment for HS2. Permission for the judicial review claims was refused and those claims were dismissed. Siemens was entitled to no damages or other relief.

First-instance decision of the High Court (Technology and Construction Court). The judgment determined consolidated Part 7 and judicial review claims arising from the same procurement.