Optima Health v DWP – When can a non-compliant tender be excluded?

The High Court in Working On Wellbeing LTD (t/a Optima Health) v SoS for Work and Pensions and Department for Work and Pensions [2024] EWHC 766 (TCC) has dismissed Optima’s challenge against DWP’s decision to reject as non-compliant Optima’s bid for a call-off contract.

This judgment contains an in-depth survey of the law regarding the correct treatment of non-compliant tenders and provides useful clarity for bidders and contracting authorities. The judgment underlines: (i) the importance of bidders ensuring that they carefully adhere to all tender requirements to mitigate the risk of exclusion; and (ii) the benefits for contracting authorities of keeping clear records of decision-making processes.

Overview

DWP invited bids for a call-off contract for occupational health and employee assistance programmes. The procurement was conducted under the Public Contracts Regulations 2015 (PCR). Optima was one of five bidders.

The relevant framework agreement stipulated that suppliers could not charge more than the framework prices. DWP’s tender documents indicated that bids exceeding the framework prices would be “discounted” and included a general right to exclude non-compliant bids.

All the bidders were given more than one opportunity to submit compliant pricing schedules (in line with additional instructions and guidance provided by DWP).

Optima’s final pricing schedule contained three items priced in excess of framework prices. DWP determined that Optima’s bid was non-compliant and excluded it from the competition.

Of the four other bidders, one had withdrawn, another was excluded on qualitative grounds and a third also submitted prices in excess of the framework maximum prices. As such, there was only one compliant bid and that bidder was awarded the contract. Optima challenged the decision contending that it had the highest total quality score and, but for its exclusion, would have been the successful bidder.

The Court dismissed the challenge examining the lawfulness of DWP’s exclusion decision, focussing on the principles of transparency and equal treatment as they relate to the exclusion of a non-compliant tender and whether alternative steps should have been taken in the interests of proportionality.

Issues

The Court considered:

1. Whether the ITT transparently set out the consequences of including charges higher than the framework prices (Optima accepted that there was a sufficiently clear requirement not to exceed the framework prices).
2. If the ITT was sufficiently clear about the consequences of exceeding the framework prices, whether DWP acted lawfully by excluding Optima’s bid rather than by taking alternative action such as discounting Optima’s prices (i.e., reducing them to a level where they did not exceed the framework prices), seeking clarification, waiving the non-compliance or otherwise exercising a discretion.

The decision

The Court found against Optima on both issues.

On the first issue:

• The Court considered that DWP had been clear and transparent and had treated tenderers equally. The decision found support in the nature of the process, as Optima had several opportunities to submit a compliant pricing schedule in accordance with the additional guidance provided by DWP (in which DWP had reiterated its right to exclude a non-compliant bid).

• The Court held that the use of the term “discounted” to mean disqualified or excluded was unambiguous. The only sensible meaning was that the bid would be excluded. Optima’s contention that “discounted” meant reduced made no sense as there was nothing to suggest what the reduction should have been between zero and the maximum amount for the relevant service line. There was no mechanism in the tender documents that allowed DWP to discount prices in excess of the framework maximum prices down to the framework maximum prices.

One the second issue:

• The Court held that before it disqualified Optima, DWP had considered alternatives – such as whether to allow bids to be resubmitted, a reduction in unit prices, another round of tendering and whether to disqualify at all – and rejected them on the grounds that they would infringe the principles of equal treatment and transparency, particularly because there was already a compliant bid.

• The Court considered Optima’s argument that it should have been given an opportunity to clarify its prices, but concluded that it would have: (1) been to the detriment of the compliant bidder; and (2) in breach of the principle of equal treatment if the same opportunity was not afforded to the other non-compliant bidders.