Working on Wellbeing Ltd Trading as Optima Health v Secretary of State for Work and Pensions & Anor

Public procurement documents must state any disqualification consequence clearly and transparently. In context, a term providing that excess prices would be ‘discounted’ meant reduced to the applicable framework maximum, not automatic exclusion of the whole tender. Under the Public Contracts Regulations 2015, clarification may be required where an error or ambiguity is obvious to the contracting authority and material to the competition’s outcome. Equal treatment is a means of securing healthy competition and proper evaluation, not an end in itself. Clarification may correct an erroneous figure or add information without creating a new tender, provided it does not give the tenderer a second opportunity to improve its prospects. Excluding the best tender for obvious clerical errors with negligible evaluation impact was irrational and disproportionate.

Optima appealed from the decision of Freedman J in the Technology and Construction Court, reported at [2024] EWHC 766 (TCC). The dispute concerned a procurement by the Department for Work and Pensions for an occupational health and employee assistance programme call-off contract under a framework agreement.

Optima’s tender contained three prices above the framework maximum prices. The Department excluded the whole tender and awarded the contract to another bidder. The appeal concerned whether the invitation to tender contained a mandatory exclusion provision, whether the Department had lawfully exercised its discretion, and whether it should have sought clarification under regulation 56(4) of the Public Contracts Regulations 2015. The central issue was whether exclusion, rather than correction or clarification, was legally required.

Decision

1. Appeal allowed. Coulson LJ gave the leading judgment, with which Fraser LJ and Zacaroli LJ agreed.
2. The invitation to tender did not contain a mandatory exclusion provision. A requirement that prices must not exceed framework maximum prices was distinct from a provision requiring automatic exclusion of the whole tender. The word ‘discounted’, read in context, meant reduced to the relevant framework maximum. Any express right to exclude a non-compliant tender gave the Department a discretion. Any disqualification provision had to satisfy the clarity and transparency standard identified in Healthcare at Home Ltd v The Common Services Agency [2014] UKSC 49 and Capita Business Services Ltd v The Common Services Agency for the Scottish Health Service [2023] Scot CSOH 9.
3. The Department had unlawfully fettered its discretion. It proceeded on the mistaken basis that exclusion was mandatory and that clarification would necessarily breach equal treatment. Equal treatment, transparency and proportionality serve the wider purposes of healthy competition and proper evaluation. They do not require a contracting authority to exclude the best tender for an obvious and immaterial clerical error.
4. The clarification analysis has three stages. First, the error or ambiguity must be obvious to the contracting authority and material to the competition’s outcome. Secondly, the authority must consider whether clarification is required; in an appropriate case, regulation 56(4) converts the discretion to seek clarification into a duty. The least onerous course will ordinarily be clarification rather than exclusion. Thirdly, the response must not amount to a new tender or substantial amendment. A different figure is not automatically impermissible. The question is whether the response completes the original bid by correcting an obvious error, or instead gives the tenderer another opportunity to improve its prospects. The approach in Archus and Gama v Polskie Gornictwo Naftlowe SA EU:C:2017:358, Antwerpse Bouwwerken NV v European Commission [2009] ECR II-4439 and Siemens Mobility Ltd v High Speed 2 (HS2) Ltd [2023] EWHC 2768 (TCC) supported that analysis.
5. The three pricing errors were obvious and highly material to the outcome because, without clarification, Optima’s best tender would be excluded. The errors affected the price evaluation by only 0.02 per cent and did not affect quality. Clarification would not have improved Optima’s prospects because its tender was already comfortably the best. Exclusion was therefore irrational and disproportionate. DWP should have clarified the prices, reduced them to the framework maximum prices or accepted the clarified figures, and awarded the call-off contract to Optima.

The parties had not been heard on the precise remedy. The resulting order was to be agreed, failing which a further hearing might be required.

• Court of Appeal (Civil Division): Appeal allowed. The Court held that the tender had been wrongfully excluded and that the contract should have been awarded to Optima.
• Technology and Construction Court: Freedman J, [2024] EWHC 766 (TCC), rejected Optima’s challenge and upheld the exclusion.