Recent Procurement Case – Lessons to be learnt on consequences of Pass/Fail criterion

You may have thought that if a Tenderer fails a Pass/Fail question set by you in your invitation to tender, that it would be obvious to the Tenderer that this would result in either a mandatory or discretionary right to reject their tender from your procurement process. This was not the finding of the Courts in a recent judgement MLS (Overseas) Ltd v The Secretary of State for Defence 2017 and serves as a warning to all contracting authorities to be mindful of the need to set out clearly in your procurement documents not only the tender requirements, rules and criteria for the competition but also the consequences of a tenderer failing to meet a criterion or evaluation threshold.

The case concerned a procurement for the provision of port, maritime and logistical support services to the Royal Navy, where the claimant’s (MLS) tender was disqualified by the contracting authority because it had not passed a pass/fail question on providing evidence of safety in its supply chain. MLS challenged the decision on a number of grounds, including on the basis that the Invitation to Tender issued by the contracting authority had not made it clear that a fail on the supply chain safety question would result in disqualification and as such the contracting authority was in breach of its duties of equal treatment and transparency and its decision to disqualify MLS was unlawful.

Despite the contracting authority arguing that it should have been apparent to a reasonably well informed and normally diligent tenderer what the consequences of a fail score would be, the Court agreed with MLS and upheld the claim. The Court noted that in relation to other pass/fail questions, the ITT explicitly stated that failing to meet the requirement would result in disqualification. A drafting error by the contracting authority meant that this warning was not included on the section of the ITT which included the supply chain safety question.

To avoid finding yourselves in a similar situation and at risk of a possible challenge, ensure your tender documents are absolutely clear and unambiguous and in all cases where failure to meet a mandatory requirement will or may lead to disqualification, this is highlighted to bidders in the ITT.

For further information on drafting ITTs and award criteria, refer to A Guide to Drafting ITTs and A Guide To Tender Evaluation which can be found on FELP ( the Further Education Library of Procurement) which is available to all CPC members.