National law firm sues Insolvency Service over failed bid for legal services contract

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9 July 2014

Court of Appeal: issue needs to be resolved at trial

DWF has begun legal action against the Insolvency Service (IS) over the procurement exercise which saw the national law firm narrowly miss out on appointment to its legal services panel, it has emerged.

As a result of the action, the award of a contract to one of the successful bidders, Scottish firm Shepherd & Wedderburn (S&W), has been put on hold.

DWF claims that the IS made errors in the way it assessed the firm’s tender, and also that it used criteria that were not set out in the tender document.

News of the action entered the public domain yesterday when the Court of Appeal allowed DWF’s appeal against a refusal to allow the firm to amend its particulars of claim.

In July 2013, the IS issued a tender for legal advice with a view to appointing four firms in England and Wales and two in Scotland for three years, with the overall value of the contracts put at £32m-50m.

DWF unsuccessfully tendered for both, with the England and Wales contracts going to the three incumbent providers and to S&W, which also won one of the Scottish contracts. S&W has an office in London as well as three in Scotland.

The decision notice showed that DWF had scored 74% against the tender requirements, just 1% behind S&W and regional firm Howes Percival, and the IS told DWF that S&W’s proposal contained more detail and gave greater comfort. The other successful firms scored higher.

More detailed information requested by DWF then revealed that it had scored better for Scotland than for England and Wales. In its claim, DWF described this as “inexplicable” given that its experience of England and Wales is “far greater” than of Scotland, leading it to argue that the IS had committed “manifest errors” in the procurement exercise and not treated the firm equally with other tenderers. DWF also questioned how S&W could have scored more than it for England and Wales.

It emerged in subsequent disclosure that DWF had originally scored 75% along with S&W and Howes Percival, but was marked down for the “marginal weakness” of being over-reliant on two partners expert in public interest law having to disseminate this knowledge to other insolvency lawyers.

DWF sought to amend its claim on the basis that this was an undisclosed criterion, but was originally refused because of the very short limitation period allowed under the 2006 Public Contract Regulations to challenge contract awards. The Court of Appeal overturned this ruling to allow the amendment.

The regulations also provide that where there is a challenge, the award of the contracts is automatically suspended, although this can be lifted by the court. The appeal court refused to do so in respect of S&W’s contract in England and Wales, but otherwise lifted the suspension.

Sir Robin Jacob, giving the court’s ruling, said a trial was needed to resolve the dispute and that it could happen quickly, possibly in August or September. Further, damages would not be an “adequate remedy” for DWF, and the level would also be “quite impossible to quantify fairly”.

He dismissed the IS’s suggestion that without lifting the suspension it would have difficulty in sourcing services until the trial. “That is wholly improbable given that the period is short, the IS has access to other frameworks, it could do small discrete awards for each job… and it could allow existing contracts to continue,” the judge said.

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