Court makes declarations in favour of MEAT tenderer but refuses to grant injunction to compel contracting authority to award it the contract

Posted by Joanne Thompson on
On 21 December 2017, the Technology and Construction Court handed down judgment in the case of MLS (Overseas) Limited ("MLS") v Secretary of State for Defence ("the MoD")[i]. The Court held that the MoD had acted unlawfully and breached the principles of transparency and equal treatment in a procurement process by rejecting MLS's tender in circumstances where the ITT omitted to state that a "fail" score on one criterion would result in its disqualification from the process.

Following on from that decision, a further Judgment was handed down by Mrs Justice O'Farrell on 25 May 2018[ii], setting out the remedy for MLS as a result of the MoD's breach.

This procurement was conducted pursuant to the Defence and Security Public Contracts Regulations 2011 and Regulation 52 states that when a contract has not been entered, the Court can make the following orders:

(i) the setting aside of the decision or action concerned;

(ii) compel a contracting authority to amend any document; and

(iii) award damages to an economic operator which has suffered loss or damage as consequence of the breach.

MLS sought orders seeking the following relief:

(i) a declaration that the procurement was carried out unlawfully;

(ii) an order setting aside the decision to award the contract SCA Shipping Consultants Associated Limited ("SCA"), whose tender had been identified as MEAT by the MoD; and

(iii) an order requiring the MoD to amend its award decision to award the contract to MLS.

The MoD adopted a neutral position with regards to the remedies sought by MLS save that it opposed a mandatory injunction (ie. point (iii) above) requiring it to award the contract to MLS.

The Court, having considered the authorities on this issue, held that MLS was entitled to a declaration that the procurement was carried out unlawfully and to an order setting aside the decision to award the contract to SCA but that it would not go as far as to order the MoD to award the contract to MLS. Instead, it made a declaration that it would not be unlawful for the MoD to award the contract to MLS. The reasons for refusing the injunction were:

(i) such an order would only be granted in exceptional circumstances and none arose in this case;

(ii) such an order would put MLS in a more favourable position that it would have been in had it simply been the successful bidder in the procurement given that the MoD had reserved the right to withdraw the ITT at any time, re-invite tenders and/or choose not to award any contract; and

(iii) the Court was not able to supervise the negotiations or due diligence exercise for this high value long term contract.

This judgment reinforces the Court's general reluctance to grant mandatory injunctions and establishes that this is not likely to change, even in the context of procurement where the ability to grant an injunction is expressly provided for in legislation. Although based on a procurement pursuant to the Defence and Security Public Contracts Regulations 2011, this decision is likely to be applied by the Courts in all cases involving procurement in the public sector. 

About the Author

Joanne is a Senior Associate in the Cardiff Litigation and Dispute Resolution Team with extensive experience of advising private, public and education sector clients on a wide range of commercial and corporate disputes, including procurement challenges, judicial reviews, breaches of contract, negligence, nuisance, defamation and breaches of confidence and non-compete/restrictive covenant clauses.

Joanne Thompson
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