Treatment of Non-Compliant Bids in a Procurement Process

The recent decision of Inhealth Intelligence Limited -v- NHS England (2023) provides useful principles (guidance) for contracting authorities when considering the treatment of non-compliant bids and emphasises the importance for bidders in ensuring that they comply strictly with all tendering requirements within a procurement process.

What happened?

NHS England (‘NHSE’) ran a procurement for the award of contracts to provide Child Health Information Services across four regions. The procurement was divided into four lots, with bidders able to submit a bid for one or more lots. 

Inhealth Intelligence Limited (‘IIL’), the claimant in the proceedings, wished to participate in the procurement. As part of the process, bidders were required to upload their bids to an e-portal, with bids required to be submitted before a set deadline of 12 noon on 12 July 2022, (the date specified in the ITT document). 

The ITT confirmed that ‘any tender response received after the stated deadline and failure to submit a response by the deadline will result in the exclusion of the bidder from participating any further in this procurement’.

IIL intended to bid in relation to all four lots. On the day of the deadline, IIL sought to upload the final part of its bid documents onto the e-portal but the IIL employee responsible for this encountered an error message which it was later established had been caused by an error on behalf of the employee uploading a document for Lot 4 in the wrong place; the e-portal was designed such that it would not permit the same document to be uploaded in two locations and would not permit the submission of an incomplete bid. IIL was therefore unable to submit its bid in its entirety. With just minutes before the expiry of the deadline, IIL messaged the portal requesting assistance, but this was not responded to before the deadline passed. Following an investigation, NHSE subsequently excluded IIL from the process.

IIL sought to challenge the decision of NHSE under the Public Contracts Regulations 2015 to exclude its bid, alleging among other things that:

1. Where bids for each lot were to be separately evaluated, it was incumbent on NHSE to ensure that the tendering process allowed validly completed bids to be submitted to the procurement process, such that an error in uploading documents for one lot would not preclude the submission of bids for other lots
2. The error message that was generated by the e-portal system was not sufficiently transparent to allow a reasonably well informed and normally diligent tenderer to correct an error and submit its bid
3. The decision by NHSE to exclude the bid was unlawful, NHSE having a discretion as to whether to exclude IIL and in excluding NHSE, it had behaved in a way that was manifestly flawed and irrational.

What did the Court decide?

The Court held that:

1. NHSE’s e-portal was suitable and the way in which it functioned in relation to single and multi lot bids was clearly explained in the ITT and understood by IIL. All bidders had to use the e-portal in the same way and failure to follow the ITT instructions would have had the same consequence for all bidders. Nothing within the system with regard to single lot or multi lot bids offended the principles of equal treatment, transparency or proportionality. The issues encountered by IIL were a result of its own error and not a fault of the system. The option was always open to a bidder to simply remove a problematic lot to ensure that its bid for other lots was submitted.
2. The error message was clear and transparent to the reasonably well informed and normally diligent tenderer in all circumstances. Had IIL left more time for submitting its bid, the court found that it would likely have been able to remedy the problem.
3. NHSE had acted lawfully and in a manner that was neither manifestly flawed nor irrational in excluding IIL. The error was IIL’s and the consequence of failure to submit a compliant bid by the deadline was clearly spelt out by the ITT. There was also a significant risk that if NHSE waived the rule in these circumstances, that itself would constitute a failure to comply with the principles of equal treatment and transparency. The court also held that permitting the bid could have disadvantaged other bidders who had ensured that their bids were submitted in plenty of time, ensuring that they met the deadline but depriving themselves of additional preparation time.

Why is it important?

The judgment underscores the importance for bidders of ensuring that they leave plenty of time for the submission of bids and complying strictly with all the requirements set out in an ITT document.

For contracting authorities, the judgment usefully considers the approach that contracting authorities should take to non-compliant bids. The ITT in this case was very specific as to the conditions for participation in the process and NHSE had not reserved to itself a wide discretion to permit late bids. As a consequence, it acted correctly in applying the ITT terms strictly and, had it not done so, it would have risked a successful challenge from other bidders involved in the process who otherwise may have inadvertently disadvantaged themselves by complying with the deadline.