Court of Appeal issues decision on disqualification and clarifications in public procurement

In its judgment of 14 February 2025, the Court of Appeal has set out clear and helpful guidance on when a contracting authority should seek clarification of errors in a tender.

In its judgment of 14 February 2025, the Court of Appeal has set out clear and helpful guidance on when a contracting authority should seek clarification of errors in a tender.  

The Claimant, Optima Health (‘Optima’) submitted a tender for a call-off contract under a framework agreement to provide services to the Department for Work and Pensions (‘DWP’). The framework agreement stipulated the maximum prices that suppliers could charge. However, Optima submitted a pricing schedule that exceeded the maximum prices in respect of three service lines (out of 133). This had no effect on scoring, and an impact of just 0.02% on the evaluation of the price. The DWP, however, deemed Optima’s tender non-compliant and excluded its bid without requesting clarification from Optima. This was despite Optima achieving by far the highest quality score; it would have been the winning bidder in the absence of the pricing issue. The DWP argued that this was necessary to uphold transparency, and to ensure equal treatment in the procurement.

In the High Court, Optima challenged their disqualification on three main grounds:

1. There was no clear warning in the Invitation to Tender (‘ITT’) that the entire tender would be excluded if prices exceeded the framework for any item;
2. The DWP failed to exercise their discretion when considering whether or not to seek clarification; and
3. The DWP had an obligation to seek such clarification.

The High Court confirmed that the DWP was justified in its decision to exclude Optima from the tendering process. The Court held that the ITT did meet the objective test of whether the Reasonably Well Informed and Normally Diligent (‘RWIND’) tenderer could have understood that failure to submit prices within the framework maximum prices would result in exclusion. 

Optima appealed; the grounds can be summarised as follows:

1. The High Court was wrong to conclude the ITT clearly set out a mandatory exclusion provision (in the event any price in a bid exceeded the framework maximum); and 
2. The DWP should have sought that Optima clarify the relevant pricing errors in its tender.

Optima’s appeal was successful. The Court of Appeal determined there was no doubt that the tender documentation did not include a mandatory exclusion provision, and that no RWIND tenderer would have come to any such conclusion. In particular, the provision of the ITT relied on to exclude Optima stated prices bid in excess of the framework maximum would be ‘discounted’ and this (in the context of the ITT as a whole) meant discounting the relevant excessive prices, and not ‘exclusion’ or ‘disqualification’ of the entire bid. 

Additionally, the Court of Appeal found that the DWP was obliged to seek clarification of Optima’s obvious and material errors, and in doing so would not have violated the principle of equal treatment. 

Ultimately, the Court of Appeal held that Optima should have been awarded the call-off contract. The Court of Appeal did not hear submissions on remedies and, as the call-off contract has already been awarded, it is not clear what form such remedies may take.

Clarifications, or the lack thereof, are a frequent issue in public procurement processes. In that context, this Court of Appeal decision helpfully confirms clarifications do not represent an opportunity for tenderers to have a ‘second bite of the cherry’. Taking a step back from the complexity of the analysis of the relevant legal principles, a key takeaway is the heavy dose of common sense involved in this decision which highlighted (i) the tiny effect of Optima’s clerical errors and (ii) that Optima’s bid was so obviously the best, such that to exclude Optima was plainly disproportionate and irrational. 

A link to the full judgment can be found here: Working on Wellbeing Ltd t/a Optima Health v Secretary of State for Work and Pensions & Anor [2025] EWCA Civ 127 (14 February 2025)