Bechtel Limited v High Speed Two (HS2) Limited (HT-2019-000061)

In a substantial judgment, the High Court has provided a welcome re-statement of the principles that will be applied to challenges to public procurement processes made by disappointed bidders. Contracting authorities and private sector bidders alike will benefit from a careful reading of the conclusions reached by the Court in determining when and on what terms it will intervene in the decision-making processes adopted by authorities.

Background

This procurement concerned HS2's selection of a partner to construct Old Oak Common, a new station to be built to serve the high speed rail link. The construction costs will be very significant, and materially in excess of £1.3bn. The successful bidder was a consortium referred to as BBVS. Bechtel, the claimant in this case, was the second-place and unsuccessful bidder. It was primarily unsuccessful because it was outscored materially by BBVS on price.

Bechtel raised a series of complaints relating to the outcome. The allegations will be familiar to authorities. In particular, Bechtel alleged:

• That tenders were not evaluated correctly and that Bechtel should have scored higher on some questions and the BBVS should have scored lower on certain questions;
• That the BBVS bid was abnormally low
• That, had the evaluation been correctly conducted, Bechtel would have won
• That BBVS ought to have been disqualified from the competition, and/or that the competition ought to have been abandoned
• That certain changes that occurred to the details of the contract entered into for the project amounted to a substantial modification of what HS2 had originally sought in the competition and therefore that it should have been re-conducted.

Key points of interest

1. Bechtel was unsuccessful in every aspect of its claim. One overarching reason for that finding was the Court's conclusion that Bechtel would have been disqualified even if it had been the overall winner of the competition on the basis of a fundamental qualification contained in Bechtel's bid. The Court decided this was sufficient to dispose of the claim. However, the Court also dealt at length with the substantive complaints raised by Bechtel and the evidence relating to those complaints.
2. The challenge faced by any disappointed tenderer in these claims is overcoming the considerable legal hurdle of meeting the relevant test, described here by the Court as "clear: the court will only interfere in the evaluation if there has been manifest error, or other breaches of obligation (such as that of equal treatment)". Moreover, the judgment restates the basic proposition (often overlooked in the heat of disappointment) that it is not the "function of the court to re-evaluate the different bids absent manifest error or other breach…Hindsight is of no assistance in proceedings such as these" (para 13). That latter comment was made by the Court in response to evidence submitted by Bechtel which attempted to demonstrate that a different outcome was feasible had certain confidential aspects of its submission been adjusted. The judgment thereby discourages the development by claimants of extraneous or after-the-event characterisations of their tenders by reminding parties to procurement claims that the focus of the Court's attention will remain on assessing whether it is possible to establish manifest error of the tenders actually submitted.
3. The judgment provides helpful and succinct commentary on the leading authorities in this field, citing with approval the judgments in Woods Building Services v Milton Keynes (No. 1), Lancashire Care NHS Foundation Trust v Lancashire County Council and SRCL Ltd v NHS Commissioning Board to re-state the propositions that (i) the Court will only intervene if manifest error or a breach of obligations including equal treatment and transparency can be shown; (ii) manifest error is a high hurdle requiring more than simple disagreement; it is another way of expressing irrationality; (iii) the Court will exercise a supervisory jurisdiction, respecting the conclusions of the decision-makers and affording a margin of appreciation to the contracting authority. On the facts of this claim, Bechtel was unable to establish any such errors.
4. Contracting authorities will also note with some pleasure, and, possibly, relief, both the Court's observations that procurement law does not impose a "counsel of perfection" upon them such that "any failure to achieve perfection will result in the court's interference" (para 28) and the related observation that these claims "are not an appeal against the outcome of a procurement competition" (para 20). Claimants will often view proceedings in these terms; whilst the Court has done no more than restate the existing law in this respect, authorities are likely to extract considerable comfort from those observations.
5. The judgment serves as a reminder of the significance the Court will attach to the audit trail recording the decision-making process on which the authority relies. In particular, it is important that authorities keep contemporaneous notes and minutes of clarification meetings with bidders.
6. The Court noted with approval that very thorough training had been provided to evaluators to ensure that the evaluation process was fairly conducted affording equal treatment to each bidder, applying lessons learned from the Court's decision in Energy Solutions v Nuclear Decommissioning Agency (para 169).
7. So far as the evaluation itself was concerned, the Court emphasised that the approach adopted by Bechtel in its challenge to the outcome – namely, criticising the scores awarded and offering alternative scores – was of very limited relevance to the task undertaken by the Court in determining whether any manifest errors were actually made by HS2. The judgment makes clear that, whilst claimant evidence has a role to play in proving its own case and explaining (often technical) aspects of its own bid, "a great amount of the documents speak for themselves" such that the relevance of claimant witness commentary on the terms of the ITT and the scoring methodology is dubious (para 136 and 138).
8. The Court also supplied some useful and practical reasoning in its consideration of whether the procurement competition could or should have been abandoned in the event that changes were made to the scope of the contract that was being competed for as a result of the bids received by HS2. Even putting to one side the Court's conclusion that Bechtel was unable to make out its complaints, the Court placed emphasis on the highly complex nature of the procurement and its importance to the overall programme of the HS2 project, citing the "exceptional delay and disruption" and consequential impact of such a re-procurement on the wider programme as factors which, together with the margin of appreciation enjoyed by contracting authorities regarding abandonment decisions, militate strongly against abandoning complex procurements (para 507). The Court's conclusion in para 508 is also worth reviewing in full.

Practical pointers

All practitioners working in this field will be familiar with the particular challenges that attract to conducting procurement litigation, and the judgment provides a useful summary of some topics that arise frequently.

The Court commented on the use of confidentiality rings to facilitate the transmission of confidential information relating to winning bids to claimants, and made observations about the extent to and practical manner in which information cited as confidential by parties will be treated as such by the Court.

Relatedly, and as is frequently the case, many documents (including witness statements) contained in the trial bundle were redacted by the defendant. Redactions are invariably contentious (albeit frequently unavoidable), and so it proved here. The judgment records certain observations on the extent to which some of the redactions were justified and the Court appears to have required an exercise to be undertaken whereby leading counsel was personally invited to review queried redactions with the result that redactions were in some instances lifted. Practitioners will note the suggestion made in paragraph 39 for an index of redactions and accompanying justifications to be produced by the legal teams acting for the party applying the redactions and take that into consideration.

Conclusion

The judgment provides a useful summary on a number of important points which arise frequently in procurements, including disqualification; abnormally low bids and allegations of manifest error in scoring. Contracting authorities may be relieved to see further affirmation by the Court of the high threshold to be met by claimant bidders and we suggest it is clear that the Court will not lightly interfere with evaluations. The emphasis placed in the judgment on areas of good practice (including in particular good record keeping and training of evaluators) coupled with the Court's express recognition that it does not expect "perfection" (provided that the procurement complies with the general principles and the relevant regulations) means that this is a good outcome for authorities in general and HS2 in particular.