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Ministry of Defence £385 Million Contract Tendering Debacle Exposed

PLEASE NOTE: Information in this article is correct at the time of publication, please contact DFA Law for current advice on older articles.

The consequences of public authorities failing to observe fairness and transparency rules when conducting contract tendering exercises can be severe indeed. In one High Court case, the Ministry of Defence (MoD) suffered acute embarrassment after applying arbitrary criteria in awarding a £385 million contract.

A company had submitted a tender for the six-year logistics contract that was commercially compliant, offered the lowest price and received the highest score in a technical evaluation. However, it received a ‘fail’ score in respect of a request for evidence that a safety culture existed throughout the company’s supply chain. As a result, the tender was rejected on the basis that it was non-compliant and the contract was awarded to another bidder.

After the company launched proceedings under the Defence and Security Public Contracts Regulations 2011, the Court declared that the procurement exercise had been carried out unlawfully. Due to an administrative error, the invitation to tender either did not state, or was ambiguous as to, the consequences of a fail score, and the MoD had thus not been entitled to automatically reject the tender.

In setting aside the award of the contract to the rival bidder, the Court found that the breach of the Regulations was both serious and obvious. The MoD acknowledged that, had the error not been made, the company would have been awarded the contract, and it would therefore not be right to confine the company to a remedy in damages. Although the Court stopped short of ordering the MoD to award the contract to the company, it made a declaration that it would be lawful to do so.

If you have been unsuccessful in a tender application because of an unfair process, contact us for advice on the best course of action to take.

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