Decision : Upheld
Decision date : 28 May 2020
The Ombudsman's final decision:
Summary: Mr C complains that there was fault in the way the Council ran a tender for a contract for which his company bid successfully, but which was later awarded to a competitor. The Ombudsman has found that the Council was at fault because it did not establish whether Mr C’s bid was compliant before awarding him the contract. The Council has agreed to apologise to Mr C, pay him £250 for the frustration that he experienced at having the contract rescinded, and review its procurement procedures.
- Mr C complains that there was fault in the way that the Council ran the tender for a Data Management and Information contract for a regional partnership of which the Council is the lead member. He says the Council:
- should have re-advertised the tender;
- awarded his company a contract but then cancelled it;
- would not engage properly with him, withheld information from him and was uncooperative in responding to his correspondence; and
- did not treat him fairly compared with his competitor.
The Ombudsman’s role and powers
- We investigate complaints about “maladministration” and “service failure”. In this statement, I have used the word “fault” to refer to these. We must also consider whether any fault has had an adverse impact on the person making the complaint. I refer to this as “injustice”. If there has been fault which has caused an injustice, we may suggest a remedy. (Local Government Act 1974, sections 26(1) and 26A(1), as amended)
- If we are satisfied with a council’s actions or proposed actions, we can complete our investigation and issue a decision statement. (Local Government Act 1974, section 30(1B) and 34H(i), as amended)
- The law says we cannot normally investigate a complaint when someone could take the matter to court or appeal to a tribunal. However, we may decide to investigate if we consider it would be unreasonable to expect the person to go to court or appeal. (Local Government Act 1974, section 26(6)(c) and (a), as amended)
- The Information Commissioner's Office considers complaints about freedom of information. Its decision notices may be appealed to the First Tier Tribunal (Information Rights). So, where we receive complaints about freedom of information, we normally consider it reasonable to expect the person to refer the matter to the Information Commissioner.
How I considered this complaint
- I have first considered whether there is a remedy available to Mr C in the courts. The contract in question does not fall within the scope of the Public Contracts Regulations 2015, so the statutory court remedy available under those regulations does not apply. It is of course open to Mr C to take his own private legal action. However, Mr C’s business is a relatively small company, so I consider it reasonable to exercise discretion to consider his complaint.
- I have considered Mr C’s written complaint and supporting correspondence and discussed his complaint with him. I have written to the Council and considered its response and supporting papers. I have considered relevant legislation and guidance as set out below. I have also sent Mr C and the Council a draft decision and considered their comments.
What I found
Legal and administrative background
- There is a range of legislation relating to procurement. Public contracts over a certain value are covered by the Public Contracts Regulations 2015 (PCR 2015) - derived from EU legislation. Where the PCR 2015 do not apply, authorities should comply with the fundamental principles of the EU Treaty:
- Non-discrimination – discrimination based on nationality is not permitted.
- Equal treatment – all potential contractors should be given the same information and opportunity to submit tenders. Contract documents should be clear and unambiguous and contain all the requirements of the proposed procurement.
- Transparency – the process should be open and predictable and include publication of the contract award notice and selection criteria. Councils should undertake sufficient publicity to enable competition.
- Mutual recognition – the process should accept documents, certificates and qualifications awarded by other member states.
- Proportionality – qualification criteria and contract specifications must be proportionate to the works, goods, or services being procured.
- Mr C runs a company specialising in a specific area of data management.
- In February 2018, the Council published a Request for Information on the portal for a regional data management contract, for which it was the lead authority. It also undertook a Market Engagement Event.
- The Council then sent out a Request for Quotation (RFQ) on the portal for three weeks in March 2018. After a competitor of Mr C’s company submitted a query about Insurance / Liability, the Council increased the Professional Indemnity Insurance requirement from £1 million to £5 million.
- In early April, the Council awarded the competitor a contract via the portal. Three weeks later, Mr C complained to the Council. He said the Council had set a higher insurance level than necessary, and this had discouraged smaller and medium sized companies from bidding, including his own.
- The Council responded to Mr C’s complaint in mid-May. It agreed to reduce the insurance requirement to £1 million and reopen the RFQ. It reissued the RFQ on the portal for 10 days and received bids from Mr C’s company and his competitor.
- The Council then undertook post-tender clarifications over the following month and arranged a clarification meeting with Mr C in early July, before awarding his company the contract via the portal. The notice letter advised Mr C not to incur any expense or enter any binding arrangements until he received a signed and dated contract. It also told him it would notify the competitor of the decision and of his evaluation scores.
- Shortly after, Mr C’s competitor complained about the award of the contract. The Council told Mr C that it would need to consider the challenge and repeated the advice in the notice letter. The Council says there was no progress over the summer because as the competitor was part of an academic institution and key staff were unavailable.
- In early September, the Council contacted Mr C. It said that, due to the nature of the specification and the existing partnership agreement, it was almost impossible to seek alternative bids. The Council thought it would have to cancel the current procurement and undertake a new process.
- Between September and October 2018, Mr C contacted the Council seeking responses to his objections and its decision. The Council also investigated his competitor’s challenge and reassessed the bids.
- On 10 October, the Council’s Chief Operating Officer responded to Mr C’s complaint setting out the Council’s position and next steps. Mr C replied the next day.
- On 12 October, the Council concluded that there was no impediment to it considering other bids.
- Over the next two weeks, Mr C requested more information, and made a formal complaint and several Freedom of Information (FoI) requests.
- On 7 November, the Council responded to Mr C. It explained that it and its partners considered that his company’s bid “does not meet the following parts of the specification” relating to an alert service. This was part of the tender requirement and was referred to at the Market Engagement Event. Unfortunately, the Council did not pick up this non-compliance when it awarded his company the contract.
- Mr C sent the Council further emails with complaints, challenges to the award of the contract and FoI requests. Given the volume of correspondence, the Chief Operating Officer directed all correspondence to the Head of Procurement. Over the following month, the Council allowed Mr C’s company to provide evidence to support his view that his bid complied with the Council’s requirements.
- The Council responded to some of Mr C’s comments through its complaints procedure and advised him he could escalate his complaint to the Ombudsman.
- Mr C submitted further comments after the Council’s complaint response, which the Council considered and responded to until 30 November, when it advised him that it would not correspond further on these matters.
- In mid-December, the Council awarded the competitor the contract and sent Mr C’s company a rejection letter. Mr C continued to write to the Council and sent five “Challenges” to the decision. The Council declined to engage in further correspondence but advised him that he could complain to the Ombudsman.
- There is much detail in the correspondence from Mr C to the Council about the suitability of his bid, the non-compliance of his competitor’s bid and the failings in the process. The Ombudsman’s task is to consider if there was administrative fault in the process and what injustice this may have caused Mr C. However, it is not for the Ombudsman to answer every question that Mr C may have about the way the Council handled the tender.
Failure to re-advertise the tender
- Mr C says the Council did not fully re-advertise the tender but sent an internal message via the portal which was only visible to organisations that had already registered an interest. He says the Council should re-advertise and repeat the tender so that all organisations who had not bid because of the insurance requirements would know that the specification had changed.
- If other parties had concerns about the insurance requirements, it was open to them to raise any concerns during the original tender process. Moreover, despite the Council not considering this to be a material amendment, it allowed those who had previously expressed an interest a further opportunity to bid.
- I see no reason for the Council to fully repeat the tender, and there was no requirement for it to do so under its Procurement Standing Orders. The Council’s action seems to me a proportionate response. Besides, this has not caused Mr C any injustice as he was in any event able to bid.
- Mr C says the Council cancelled the contract it had awarded his company because it was almost impossible for any alternative bids to be sought due to the nature of the specification and partnership. But it then reversed this position.
- The Council had felt that it might not be possible to accept alternative bids, because there was a contractual requirement to work with a third-party alert service. However, the partnership discussed this and agreed that this was not the case. So, this was not the reason for refusing Mr C’s company’s bid. Instead, it rejected his bid because it did not consider that it complied with all the criteria in the RFQ. I see no fault here.
Failure to take views into account
- Mr C says the Council would not engage properly with him, withheld information and was uncooperative in responding to his correspondence.
- I have viewed the extensive correspondence between Mr C and the Council. I do not see grounds to uphold Mr C’s complaint in this regard. Rather, I consider that the Council responded proportionately to the extensive correspondence that it received from Mr C. It also withheld information which it considered commercially sensitive – it was of course open to Mr C to contact the Information Commissioner if he considered that the Council was wrongly withholding information. I see no fault here.
- Mr C says the Council did not treat him in an even-handed manner compared with his competitor. He says:
- it did not fully consider his comments on why his bid complied with the specification and why his competitor’s bid did not before re-awarding the contract, and ignored his further correspondence after 30 November 2018; and
- it re-evaluated the tender when his competitor challenged his winning bid but would not respond to his challenges after the contract was re-awarded, even though official challenges can only be made after the award.
- There was fault in the original tender process in that the insurance requirement was set too high and this discouraged Mr C’s company from bidding. However, this did not cause Mr C injustice because the Council reopened the tender when he raised this concern.
- The Council was at fault in awarding Mr C’s company the contract, while failing to notice the aspects of his bid which it subsequently considered to be non-compliant. This caused Mr C injustice because the Council wrongly raised his expectations. I consider that a payment would be appropriate to remedy this injustice.
- I note that Mr C says this caused his company reputational damage because he told third parties that he had won the contract and he then had to retract this. However, the Council advised Mr C not to incur costs or enter contracts before receiving a signed contract. It seems to me that it would also have been reasonable for Mr C not to publicise the award of the tender until he had received the signed contract. I am afraid that I consider that he did so at his own risk.
- I note also that Mr C then expended considerable time and energy in challenging the decision. I understand he did so because he felt that he had been wrongly treated throughout the process. However, as I do not consider that there was fault in the way the Council responded to Mr C’s subsequent correspondence, I see no grounds to seek a remedy for Mr C’s time and trouble.
- Mr C also says the Council would not engage properly with him, withheld information from him and was uncooperative in responding to correspondence. I have viewed the extensive correspondence between Mr C and the Council. I do not see grounds to uphold Mr C’s complaint in this regard. Rather, it seems to me that the Council responded proportionately to the extensive correspondence from Mr C. However, it withheld some information which it considered commercially sensitive – it was of course open to Mr C to contact the Information Commissioner if he considered that the Council was withholding information that it should have disclosed. I see no fault here.
- The Council has agreed to the Ombudsman’s recommendations that it apologise to Mr C and pay him £250 to reflect the frustration and distress caused to him by awarding him the contract and wrongly raising his expectations, when it later determined that his bid was non-compliant.
- It has also agreed to review its procedures to try to identify ways to avoid a recurrence of the errors in this case, including any steps that might be taken to:
- ensure that the potential implications of third-party contracts are considered when setting bidding criteria; and
- identify non-compliance with the specification before awarding a contract.
- I have closed my investigation into Mr C’s complaint because I consider that agreed remedy is a suitable response to the injustice caused to Mr C.
Investigator's decision on behalf of the Ombudsman