Veolia Water UK Plc & Ors v Fingal County Council, [2006] IEHC 137 (2006)

Docket Number:2006 83JR
Judge:Clarke J.



FINGAL COUNTY COUNCILRESPONDENTJUDGMENT of Mr. Justice Clarke delivered 2nd May, 2006.

  1. Introduction

    1.1 This judgment concerns a preliminary issue which arises in substantive proceedings brought by the plaintiff consortium ("Veolia") against the defendant ("Fingal") arising out of the award of a contract for the survey, design and installation of a water metering system for non-domestic water for the four Dublin local authority areas ("the contract"). Fingal acted as the lead authority in relation to the award process. Veolia was an unsuccessful tenderer and seeks, in the substantive proceedings, to challenge the award on a number of grounds. However it is contended by Fingal that Veolia are out of time for bringing the challenge.

    1.2 In that context by order of the 27th February, 2005, Kelly J. directed the trial of a preliminary issue in these proceedings in the following terms:-"(1) As to whether the applicant has complied with the requirements of O. 84(A) r. 4 of the Rules of the Superior Courts by making this application at the earliest opportunity, and in any event within three months from the date when the grounds for the application first arose;(2) If not whether the applicant has demonstrated that there is good reason for extending such period." This judgment is directed towards those issues. However, for reasons which will become apparent, it is necessary, in resolving those issues, to address, at least in general terms, the issues which arise in the substantive proceedings and in that context it is necessary to turn, firstly, to the background to those proceedings.

  2. Background

    2.1 The contract is designed to insure compliance with Ireland's obligations under E.U. law and the government's water pricing policy framework which, in accordance with E.U. law, and the "polluter pays" principle enshrined in that regime, requires charges to be levied in respect of the supply of water in certain circumstances. Thus local authorities are required to charge non-domestic customers for water and waste water services and to recover the full costs of providing such services to those customers. Local authorities are, therefore, required to achieve metering of the water supply in the non-domestic sector by 31st December, 2006.

    2.2 The contract is concerned with implementing that obligation in respect of the four Dublin local authorities. The contract is of a very considerable value with the successful tender being at a price just under 50 million.

    2.3 The relevant tender documentation required tenderers to price their tenders for a mix of what are described as "drive-by" and "fully fixed" meter reading technologies. In simple terms it would appear that it was anticipated that drive by technology (which involves the use of vehicles driving in the vicinity of the water user concerned and being in a position to pick up meter readings in that fashion) was likely to be less costly in terms of initial capital investment but might well involve higher running costs. There were, apparently, other perceived advantages and disadvantages of both the "drive-by" and "fully fixed" technologies. The principal perceived advantage of a fully fixed system was that it would allow more frequent meter reading without the need for the drive by of the location concerned. In those circumstances tenderers were required to submit what, in their view, amounted to the optimal mix of technologies. However the tender documents also required the submission of a price in respect of what were termed "provisional items" which included a requirement to put a price on the additional costs that would be involved for upgrading the optimal mix tendered on behalf of the tenderer concerned to a fully fixed solution.

    2.4 Tenderers were to be evaluated on the basis of the most economically advantageous tender. Furthermore, and of relevance to the substantive proceedings, the tender documents entitled a tenderer who has submitted a compliant bid (that is to say a bid which was fully compliant with the requirements of the tender documentation) to also submit what was termed an alternative tender. In general terms it would appear that the purpose of permitting an alternative tender was that the tenderer could propose a solution which, at least to some extent, went outside certain of the compliance requirements of the tender documentation. It is, however clear, that, at a minimum, an alternative tender was required to meet the minimum performance requirements specified in the tender documents.

    2.5 It would appear that only two tenderers (the successful tenderer and Veolia) submitted tenders. It would seem that both tenderers submitted a principal tender and two alternative tenders each so that there were three tenders each submitted by both groups. The Veolia tenders were submitted on 17th May, 2005. On 19th May, 2005, Veolia received a list of the total sums in respect of all tenders which specified that there were two compliant tenders (the Veolia tender in the sum of 56,659,877.35 and a competitor tender in the sum of 76,585,403.17.

    2.6 It should be noted that at this time, as part of the tender evaluation process, a document was produced within the Fingal team conducting the evaluation which was called the "Tender Evaluation Procedures" document. This document was produced before the tenders were opened (which appears to have occurred on the 13th May). The document was internal to those involved in the evaluation process and was not made available to the tenderers. No complaint is, understandably, made about this fact in itself. However it should be noted that it was in the Tender Evaluation Procedures document that the decision not to include provisional items in the ranking process was first recorded.

    2.7 The relevant letter also specified the amounts of four alternative tenders being the two additional tenders submitted on behalf of Veolia and two other additional tenders, one in the sum of 49,990,950.68 and the second in the sum of 78,871,911.02.

    Having regard to the requirement that a party could only submit an alternative tender when that party had also submitted a compliant tender it is common case that the only reasonable inference to be drawn from the above communication was that there were, in substance, only two tenderers who had each submitted a compliant tender and two alternative tenders.

    2.8 On the 6th September, Veolia received a letter from Fingal which informed Veolia that its tender had not been successful and that Fingal proposed awarding the contract to another tenderer. The relevant letter contained a table which set out what were described as the marks awarded against each of the award criteria in relation to both the Veolia tender and the successful tender. That table was in the following form:

    Award Criteria Maximum marks availableMarks awarded to your tenderMarks awarded to successful tenderer

    AFinancial Submission4035.4840

    BTechnical Submission6055.8559.57

    Totals 10091.3399.57

    2.9 The table follows the format set out in the tender document which required that each tender be evaluated both in respect of its financial and technical merits. The criteria also required that the best tender in the financial category was to receive 40 marks with the best tender in the technical category receiving 60 marks. Each tender's marks in each category was determined by the relativity between its score in that category and the best tender in that category. Thus, for example, a tender which was evaluated as being at 75% of the best tender on the financial side would have obtained 30(being 75% of 40) marks.

    2.10 It is therefore clear from the table which I have set out above that the successful tender had the best financial submission and had a technical submission which was very close to the best technical submission.

    2.11 Subsequent to the communication to Veolia of the fact that it had not been successful, there followed a lengthy series of communications between Veolia and Fingal. As the state of knowledge of Veolia during that period and, indeed, the responsibility for any absence of relevant knowledge, are key questions in this preliminary issue it will be necessary to return in some detail to that sequence of communication in due course. However the communications continued until a meeting on the 19th December, 2005. Thereafter these proceedings were instituted on 23rd January, 2006, Veolia having complied with its obligation to serve a notice of intention to institute proceedings some seven days earlier on 16th January.

    2.12 Against that background it is also important to identify the issues which arise in the substantive proceedings for it is in relation to those issues that Veolia's state of knowledge and other allied matters needs to be assessed.

  3. The substantive issues

    3.1 In the substantive proceedings Veolia raise a significant number of grounds, for challenging the award of the contract to its competitor but, it is common case, all can be grouped into three broad issues.

    3.2 (a) The first issue - the exclusion of provisional items

    As will be recalled tenderers were required (at least so far as a compliant tender was concerned and, on one view also in respect of alternative tenderers) to submit with their tender a provisional item being the price for an upgrade to a fully fixed system. It is accepted by Fingal that in carrying out the evaluation of the tenderers, for the purposes of determining the most economically advantageous tender, no regard was had to...

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