DWF Llp v Secretary of State for Business Innovation And Skills

Factual and Procedural Background

This appeal arises from a judgment dated 9th May 2014 of His Honour Judge Raynor QC, sitting as a Deputy Judge of the Technology and Construction Court, who refused an application by the Plaintiff firm of solicitors ("Plaintiff") for permission to amend its Particulars of Claim against the Defendant, the Insolvency Service ("Defendant").

The dispute concerns a tendering exercise initiated by the Defendant on 5th July 2013 to procure legal services for England and Wales and Scotland, awarding up to six contracts over three years with an estimated value between £32 million and £50 million. The Plaintiff submitted bids for both jurisdictions on 5th November 2013 and attended a presentation on 10th December 2013.

By letter dated 23rd January 2014, the Defendant informed the Plaintiff that its bids had failed, awarding contracts to incumbent providers and a new provider ("Company B"). The Plaintiff's scores were 47% for the Statement of Requirements and 27% for the Pricing Model, totaling 74%, narrowly behind Company B and another bidder for England and Wales.

Following a debriefing meeting on 29th January 2014, the Defendant explained the scoring rationale but did not disclose moderation details. Subsequent disclosure of detailed scores revealed an unexpected higher score for the Plaintiff's Scottish bid compared to England and Wales, despite the Plaintiff’s greater experience in the latter jurisdiction. This discrepancy was termed the "Scottish anomaly."

Proceedings were issued on 3rd February 2014, alleging breaches of the Public Contracts Regulations 2006, EU Directive 2004/18/EC, and general EU law principles, focusing primarily on the Regulations. The Plaintiff sought relief including preventing the Defendant from awarding the contracts.

The Defendant’s application to lift the automatic suspension on awarding contracts was initially granted but stayed pending this appeal. The appeal concerns two issues: (i) whether the Judge was correct to refuse the Plaintiff’s application to amend its Particulars of Claim, and (ii) if the amendment is allowed, whether the automatic suspension should continue until judgment.

Legal Issues Presented

1. Whether the Judge was correct to refuse the Plaintiff's application to amend its Particulars of Claim in a procurement challenge alleging breaches of transparency, equal treatment, and non-discrimination under the Public Contracts Regulations 2006 and related EU law.
2. Whether the automatic suspension on awarding contracts to the Plaintiff’s competitors should continue pending the resolution of the substantive claim, assuming the amendment is permitted.

Arguments of the Parties

Appellant's Arguments

• The Plaintiff argued that the proposed amendments did not introduce a new cause of action but clarified the basis for the existing claim, moving from inference based on the "Scottish anomaly" to explanation through disclosed facts, including previously undisclosed award criteria applied after presentations.
• The Plaintiff contended that the Defendant had applied undisclosed and unlawful criteria in marking down its tender, breaching duties of transparency, equal treatment, and good administration.
• It was submitted that the amendment was timely as it was made within the limitation period from disclosure of the relevant report and that the amendment should relate back to the original claim.
• Regarding suspension, the Plaintiff argued that there was a serious issue to be tried and that damages would not be an adequate remedy, given the difficulties in quantifying reputational and team damage.

Respondent's Arguments

• The Defendant contended that the amendment introduced a new cause of action based on lack of transparency and undisclosed criteria, distinct from the original claim which was based on inequality of treatment, thus falling outside the limitation period.
• It was submitted that the Plaintiff had "nailed its colours to the mast" in the original pleading, limiting the claim to unequal treatment and not transparency.
• The Defendant argued that the downward moderation of scores was properly applied and that damages would be an adequate remedy.
• Regarding suspension, the Defendant contended that lifting the suspension would not cause undue harm as alternative arrangements could be made and that the suspension should not continue given the refusal to amend.

Table of Precedents Cited

Court's Reasoning and Analysis

The Court analyzed the nature of the Plaintiff’s original claim and the proposed amendments. It held that the original pleading, while framed around unequal treatment, implicitly included a complaint about transparency due to the "Scottish anomaly" and the lack of explanation for the scoring irregularity. The Court reasoned that the amendment did not introduce a new cause of action but rather clarified and expanded upon the existing claim based on the same facts.

In construing the pleadings, the Court emphasized the perspective of the reasonable reader, particularly the Defendant, who had understood the claim as alleging a breach of duties arising from the unexplained scoring anomaly. The Court rejected the argument that the Plaintiff had limited its case exclusively to unequal treatment and not transparency.

Regarding the automatic suspension, the Court applied the American Cyanamid principles, finding that there was a serious issue to be tried on whether the Defendant's moderation of scores was lawful and consistent with published criteria. The Court considered the timing of the trial feasible within a short period and found that damages would not be an adequate remedy to the Plaintiff due to the difficulty in quantifying reputational and team damage.

The Court also considered the impact on the Defendant and other bidders, finding that the Defendant could manage interim arrangements without undue difficulty, and that the suspension could be lifted in respect of some bidders but not others, specifically maintaining suspension as to the Plaintiff and Company B.

Holding and Implications

The Court ALLOWED the appeal with respect to the refusal to amend the Particulars of Claim, holding that the amendment did not introduce a new cause of action and was therefore not out of time.

The Court REFUSED to lift the automatic suspension in respect of the contract award to Company B, but LIFTED the suspension as to the other successful bidders.

The direct effect is that the Plaintiff's claim may proceed with the amended Particulars of Claim, and the suspension on awarding some contracts remains in place pending trial, preserving the Plaintiff’s position. No new legal precedent was established beyond the application of established principles to the facts of this procurement dispute.