Supreme Court allows appeal against public tender award due to lack of transparency in IT hub criteria.

THE SUPREME COURT

No. 062/2005

McGuinness J.

Hardiman J.

McCracken J.

Kearns J.

Macken J.

BETWEEN

ADVANCED TOTES LIMITED

APPELLANT/APPLICANT

AND

BORD NA gCON

RESPONDENT

AND

AUTOTOTE WORLDWIDE SERVICES LIMITED

NOTICE PARTY

Judgment of Mrs Justice McGuinness delivered the 23rd day of March 2006

1. This appeal concerns the public procurement rules of the European Union as applied to a contract for the provision of totalisator

services at a number of greyhound racing stadia operated by the respondent. The appellant appeals against the judgment and order

of the High Court (Murphy J.) made and delivered on the 20th December 2004.

2. The appellant, Advanced Totes Limited, is a private limited company registered in the United Kingdom which engages in the

business of providing hardware, software, consultancy and other services needed to install and operate a totalisator service. The

respondent was established under the Greyhound Industry Act 1958 and is a commercial semi-state body having responsibility for the

control, regulation, management and development of the Irish Greyhound Industry. Pursuant to its responsibilities and powers the

respondent is licensed to operate totalisator facilities at the various greyhound stadia which it operates within the State. The notice

party, Autotote Worldwide Services Limited, is the company to whom the respondent decided to award the contract the subject

matter of these proceedings in or about September 2003.

FACTUAL BACKGROUND

3. The factual background to the proceedings is set out in detail in the judgment of the learned trial judge. It may be summarised as

follows. Owing to the status of the respondent as a public body and the value of the contract in question, the respondent, under E.U.

Council Directive 18th June 1992 relating to the co-ordination of the award of public service contracts (“The Services Directive”), was

obliged to advertise the contract in the Official Journal of the European Union. This advertisement was published in the Official Journal

on 15th May 2003. Intending tenderers for the provision of this totalisator contract were furnished with Invitation to Tender

documentation. The appellant in fact had received this document by e-mail initially on 11th April 2003. Clause 4 of the Invitation to

Tender document set out the respondent’s requirements. Since the nature of these requirements is a major issue in this appeal they

will be referred to in detail later in this judgment. Four parties tendered for the contract:

(I) The appellant, Advanced Totes Limited;

(II) Amtote;

(III) Autotote (the Notice Party);

(IV) Data Tote Limited.

4. The respondent board established an Award Committee to adjudicate upon the tenders. The members of that committee were Mr

Michael Foley, Mr Martin Doolan and Ms Patricia Griffin. Prior to the awarding of the main contract, at a date before 29th July 2003,

the respondent had previously awarded the totalisator contract for the Galway Greyhound Racing Stadium to the appellant on a

“purchase” basis. Between 29th July 2003 and 5th August 2003 each of the four tenderers made a presentation to the Award

Committee of the respondent in respect of the tender which it had submitted. A meeting of the Award Committee was held on 14th

August 2003 to evaluate the four tenders received. Somewhat differing accounts of the following events were given in both affidavit

and oral evidence before the High Court. It appears to be common case that the members of the Award Committee were in agreement

that the tender by Amtote was the most technically suitable but that it could not be accepted because of its high price. It appears

from the evidence both of Mr Paul Simpson, Managing Director of the appellant, and of Mr Martin Doolan of the Award Committee that

in or about 2nd September 2003 Mr Doolan telephoned Mr Simpson and informed him “off the record” that a decision had been made

to recommend the award of the contract to the appellant and that this decision was to be conveyed to Mr Pascal Taggart, chairman

of the respondent. Mr Michael Foley, however, particularly in his oral evidence in the court below, denied that any such decision in

favour of the appellant’s tender had been made. On 4th September 2003 Mr James Gilmore, managing director of Autotote, wrote a

letter to Mr Foley informing him, inter alia, that Autotote was willing to review the pricing element of its tender with a view to

increasing its competitiveness. A number of days later, Mr Foley, who had been away, was made aware of this letter. He then

telephoned Mr Gilmore. The appellant in its proceedings alleged that in the course of this telephone call Mr Gilmore was given

information about the pricing element of the appellant’s tender; this was forcefully denied by Mr Foley.

5. The Award Committee apparently sought legal advice as to whether it could negotiate on price with an individual tenderer and was

advised that it would be necessary to seek a re-tender on price from all four tenderers. By letter dated 11th September 2003 the

respondent accordingly sought such re-tenders, which were provided by all four tenderers. The Award Committee evaluated the re-

tenders at a meeting on 25th September 2003 and at a further meeting on 26th September 2003 the Committee decided to award the

contract to the notice party, Autotote. This was notified to the appellant. The appellant made enquiries as to the reason why the

contract was not awarded to Advanced Totes Limited. By letter dated 7th October 2003 Mr Foley on behalf of the respondent

informed Mr Simpson of the appellant company that the respondent had regard to a number of considerations in rejecting the

appellant’s tender, as follows:

“(1) The fact that your system has not been fully tested for ITSP compliancy.

(2) That your proposal involved the Board hosting and managing the IT infrastructure.

(3) That you did not have operating self-serving terminals.

(4) The fact that you had no loyalty card system in operation.

(5) The fact that your hand-helds did not have a GPRS Strategy.”

6. It was also stressed that the system put forward by the appellant would “create additional management resource issues for the

Board”.

7. Following various further communications between the appellant and the respondent, the appellant issued the present proceedings

pursuant to the European Communities (Review Procedures for the Award of Public Supply, Public Works and Public Services

Contracts) (No. 2) Regulations 1994 S.I. 309/1994 and the European Communities (Award of Public Services Contracts) Regulations

1998, S.I. 378/1998.

THE PROCEEDINGS

8. By Notice of Motion dated the 22nd December 2003 and returnable for 26th January 2004 the applicant sought the following reliefs:

1. A declaration that, in making the decision to award the contract the subject matter of the proceedings herein to Autotote

Worldwide Services Limited (“Autotote”), the respondent failed to comply with the requirements of European Union Law on

Public Procurement and in particular Council Directive of 18th June 1992 relating to the co-ordination of procedures for the

award of Public Service contracts (92/50EEC) as amended;

2. A declaration that in making the decision to award the contract the subject matter of the proceedings herein to Autotote the

respondent failed to comply with the requirements of Irish Law on public procurement and in particular the European

Communities (Review Procedures for the Award of Public Supply, Public Works and Public Services Contracts) (No. 2)

Regulations 1994 as amended and the European Communities (Award of Public Service Contracts) Regulations 1998 as amended;

3. A declaration that the contract the subject matter of the proceedings herein is void;

4. An order of certiorari quashing the decision of the board to award the contract which is the subject matter of the

proceedings herein to Autotote.

9. The applicant also sought damages but this issue does not appear to have been pursued to any great extent in the court below.

The details of the contract in question and the grounds upon which the applicant relied in seeking relief were set out extensively in

the grounding statement of the applicant also dated 22nd December 2003. A Statement of Opposition was filed by the respondent on

4th February 2004.

10. The matter was at hearing before the High Court for some six days between 19th and 27th October 2004. In addition to copious

affidavit evidence a number of witnesses were cross-examined at length on their affidavits.

11. The evidence before the court is set out in some detail in the judgment of the High Court. A majority of the evidence dealt firstly

with Mr Doolan’s telephone call to Mr Simpson in early September 2003 informing him that the committee was to recommend that the

applicant should be awarded the contract and secondly with the issue as to whether Mr Foley in his telephone conversation with Mr

Gilmore had revealed sensitive information to him regarding the price of the appellant’s tender.

12. The evidence also raised issues concerning the formulation of the respondent’s Invitation to Tender document and in particular

whether the respondent failed to list the criteria for the awarding of the contract in descending order of importance in an appropriate

way. The applicant claimed that an important and indeed crucial factor in the awarding of the contract to Autotote was that

Autotote in its tender offered to host the central communications hub of the computerised tote system, whereas the applicant’s

tender envisaged this hub being hosted by the respondent itself. The applicant alleged that this criterion appeared to have been of

central importance but was not specifically listed in the award criteria. The respondent’s evidence was that the general phraseology

of the tender documentation was sufficiently clear for the position to have been understood by all tenderers.

THE DECISION OF THE HIGH COURT

13. In his judgment the learned trial judge, having summarised the evidence, set out the relevant provisions of the Council Directive of

18th June 1992 relating to the award of Public Service contracts (92/50/EEC) and of the Regulations made thereunder. He then

referred to both European and Irish Case law, concluding in particular that the core principles which emerged from the legislation and

case law were those summarised in the case of SIAC v Mayo County Council [2001] E.C.R. 1-7725 and SIAC v Mayo County Council

[2002] 2 I.L.R.M. 401. The correctness of this view was accepted by the parties.

14. Prior to dealing with the law under the Directive, however, the learned trial judge dealt with the factual issues which had arisen

between the parties. He pointed out that the role of the Award Committee was not to decide but to recommend a tenderer to the

respondent Board which was the Contracting Authority. He did not find it necessary to resolve the conflict of evidence between Mr

Foley, Mr Doolan and Mr Simpson, but felt that the conflicts in their evidence “would not appear to be critical” (page 43 of judgment).

He concluded:

“There was no evidence of any decision to recommend much less of a decision to accept the applicant’s tender.” (Page 43 of

judgment).

15. The decision that was made was to invite a re-tender on price. The learned judge was also satisfied that there had been no

improper disclosure regarding price by Mr Foley to Mr Gilmore. Mr Simpson’s allegation in that regard was “un-substantiated and

speculative” (page 44). The judge felt that the amount of contact between the Board and the parties tendering during the tender

process was to some extent imprudent and lacking in propriety but that “any such imprudence or impropriety (if such there was) was

resolved by the subsequent invitation to re-tender.” (Page 45). The Board had received legal advice concerning the re-tendering and

was correct in following that advice.

16. Finally the learned trial judge dealt with the issues arising from the Award criteria set out in the tender documents. At page 47-48

of his judgment he stated:-

“The letter of 7th October 2003 listed five considerations which had been advised to the applicant who argued did not

correspond with the invitation to tender of 15th May 2003 (sic). The respondent had argued that all of these were expressed

or, at least implied in paragraph 4.4 of the invitation to tender. The court accepts that, while it is difficult to reconcile the

considerations with the criteria, as the tender was for a totaliser service to be provided rather than a specific specified

hardware product, some flexibility in design and implementation was, not alone understandable, but may also have been

desirable. The invitation to tender required proposals to be ‘forward looking’ as well as having certain specific capabilities. Any

proposed system was to have been ‘robust and functional at all times’.”

17. The judge continued:

“In this regard, while the location of the hub was not specified and no preference was indicated it is clear that the proposals

on streamlining the existing infrastructure would have to be costed and would be assessed and evaluated by the respondent.”

18. The learned judge concluded:-

“It is not clear that all of the strict requirements of the Directives have been met. There would appear to be no ranking of

criteria in descending order of importance, for example. It does not seem to breach the principle of equal treatment or of

transparency.”

19. In the light of these conclusions the court refused the relief sought by the applicant.

THE NOTICE OF APPEAL

20. The applicant filed a notice of appeal on 16th February 2005. Sixty four somewhat repetitive grounds of appeal are set out in the

notice. The first ground set out summarises many of the more detailed grounds as follows:-

“The learned trial judge erred in law and/or in a mixed question of law and fact in refusing to grant the relief sought despite

the manifest breaches of the requirements of public procurement law on the part of the respondent, a number of which

breaches are clear from the findings of the trial judge.”

21. In a number of later grounds emphasis is placed on the question of the internal or external communications hub and the failure to

set out the award criteria in descending order of importance in accordance with the Directive. A number of other grounds claim that

the trial judge erred in the manner in which he dealt with the evidence concerning the contacts between the parties during the

tender process. In particular Ground 34 states:-

“The learned trial judge erred in fact and/or in a mixed question of law and fact in concluding that the statements of fact and

belief in paragraph 50 of the first affidavit of Mr Simpson are unsubstantiated and speculative.”

THE APPLICABLE LAW

22. The Council Directive 92/50/EEC of 18th June 1992 relating to the co-ordination of procedures for the award of public service

contracts (“the Services Directive”) sets out mandatory procedures governing public service contracts which are defined as being

contracts for pecuniary interest concluded in writing between a service provider and a contracting authority. Contracting authorities

are defined as meaning the State, regional or local authorities, bodies governed by public law, associations formed by one or more of

such authorities or bodies governed by public law. (Article 1)

23. Chapter 3 of the Services Directive deals with criteria for the award of contracts. Article 36 provides as follows:

“1. Without prejudice to national laws, regulations or administrative provisions on the remuneration of certain services, the

criteria on which the contracting authority shall base the award of contracts may be:

(a) where the award is made to the economically most advantageous tender, various criteria relating to the contract:

for example, quality, technical merit, aesthetic and functional characteristics, technical assistance and after-sales

service, delivery date, delivery period or period of completion, price; or

(b) the lowest price only.

2. Where the contract is to be awarded to the economically most advantageous tender the Contracting Authority shall state in

the contract documents or in the tender notice the award criteria which it intends to apply, where possible in descending

order of importance.”

24. The European Communities (Award of Public Service Contracts) Regulations 1998 (S.I. 378 of 1998) (the 1998 Regulations) give

effect to the Services Directive in Irish law. Article 2 of the Regulations provides:

“2(1) In these Regulations ‘Council Directive’ means Council Directive No. 92/50/EEC (as amended by European Parliament and

Council Directive No. 97/52/EEC).

A word or expression that is used in these Regulations and is also used in the Council Directive has, unless the contrary

intention appears, the same meaning in these Regulations as it has in the Council’s Directive.”

25. Article 4 provides:-

“4.(1) In awarding Public Service contracts, a Contracting Authority, where appropriate, shall apply procedures adapted to the

provisions of the Council Directive, and shall follow the relevant procedures, if any, set out in the Council Directive….

26. Council Directive of 21st December 1989 on the Co-Ordination of the Laws, Regulations and Administrative Provisions relating to

the application of review procedures to the award of public supply and public works contracts (89/665/EEC) (“the Remedies

Directive”) deals with the establishment of “effective and rapid remedies” in the case of infringements of Community Law in the field

of public procurement or national rules implementing that law. The Remedies Directive was given effect in Irish law by the European

Communities (Review Procedures for the Award of Public Supply, Public Works and Public Services Contracts) ( No. 2) Regulations

1994 (S.I. 309 of 1994). Article 3 of these Regulations makes it clear that decisions taken by the Contracting Authorities shall be

reviewed in accordance with the conditions set out in the Remedies Directive. Article 4(1) provides that the review procedures

referred to in the Remedies Directive are to be carried out and exercised by the High Court.

27. As noted by the learned trial judge the core principles which emerge from the legislation and the case law concerning Public

Service contracts are summarised in the case of SIAC Construction Limited v Mayo County Council E.C.R.1-7725 and [2002] 2 I.L.R.M.

401. This is accepted to be the position by the parties. That case concerned a dispute where the County Council had advertised for

tenders for a Public Works contract to be awarded by open procedure and involving, inter alia, the laying of sewers, storm overflows,

ventilating columns, stone water drains, rising mains and water supply pipes. SIAC Construction Limited had submitted the lowest

price tender. The County Council appointed a consulting engineer to judge the tenders. The engineer, while accepting that the three

lowest tenders were equal from the point of view of their technical merit, expressed a number of reservations concerning SIAC’s

tender. In his report he concluded that another tenderer, Mulcair, had submitted a tender that was “more balanced” than that of

SIAC, and that Mulcair’s tender might give better value for money and might even cost less. The County Council accordingly entered

into a contract with Mulcair.

28. SIAC instituted two separate proceedings in the High Court. Both sets of proceedings were dismissed by the court. SIAC

appealed, submitting that the County Council was required to accept the lowest priced tender. Since the County Council had

accepted that all tenderers had the requisite technical merit the only relevant criterion could be cost which had to be understood as

synonymous with the tender price. Against this the County Council claimed that it was entitled to exercise a discretion and to award

the contract on the basis of a recommendation from its consulting engineer as to which tender the latter judged to have been most

advantageous in respect of costs and technical merit.

29. This court stayed the appeal proceedings and submitted a question to the Court of Justice for a preliminary ruling. In summary the

question submitted was whether the County Council was entitled to act as it did. The Court of Justice held that the procedure used

by the County Council was permissible, but only “on condition that the transparency and objectivity of the procedure are respected,

which presupposes that the criterion is mentioned in the contract document or contract notice, that it is there formulated in such a

way as to allow all reasonably well informed and normally diligent tenderers to interpret it in the same way, and that the

adjudicating authority must keep to that interpretation throughout the procedure and apply the criterion in question objectively and

uniformly to all tenders.”

30. On page I.7727 at paragraph 39 to 42 of the Judgment of the Court it is stated:

“39. The court has already ruled that reliability of supplies was one of the criteria which may be taken into account in

determining the most economically advantageous tender (Case C-324/93 Evans Medical and MacFarlan Smith [1995] E.C.R. I.

– 563, paragraph 44).

40. However, in order for the use of such criterion to be compatible with the requirement that tenderers be treated equally, it

is first of all necessary, as indeed Article 29(2) of Directive 71/305, as amended, provides, that that criterion be mentioned in

the contract documents or contract notice.

41. Next, the principle of equal treatment implies an obligation of transparency in order to enable compliance with it to be

verified…

42. More specifically, this means that the award criteria must be formulated, in the contract documents and the contract

notice, in such a way as to allow all reasonably well informed and normally diligent tenderers to interpret them in the same

way.”

31. Related questions arose in the case of Concordia Finlandia Oy Ab v Helsingin Kauunki [2002] E.C.R. 1-11617. In that case the

Public Transport Authority sought tenders for the provision of bus services and included in its criteria ecological conditions such as

the reduction of nitrogen oxide emissions and the noise level of vehicles. Concordia contended that in a public tender procedure the

criteria for the decision must always be of an economic nature.

32. The Court of Justice held that in the context of a public contract for the provision of urban bus transport services the contracting

authority may take into consideration ecological criteria such as the level of nitrogen oxide emissions or the noise level of the buses

provided that they are linked to the subject matter of the contract, do not confer an unrestricted freedom of choice on the authority,

are expressly mentioned in the contract documents or the tender notice, and comply with all the fundamental principles of community

law, in particular the principle of non-discrimination.

SUBMISSIONS OF THE PARTIES

33. Comprehensive written submissions were provided to the court by both the applicant and the respondent. In oral argument before

this court senior counsel for the applicant delineated two key issues:

1. The circumstances in which the re-tender on price was sought.

2. The failure clearly to state the criteria for the award of the contract.

34. In regard to the first issue Mr Hogan argued that the original decision to award the contract to the applicant, as stated by Mr

Doolan, had been overturned due to the letter of 4th September 2003 from Mr Gilmore to Mr Foley, the subsequent telephone

conversation between Mr Gilmore and Mr Foley, and the implied improper disclosure of price information regarding the applicant’s

tender to the notice party. Mr Hogan presented a detailed analysis to the judgment of the High Court and was critical of what he

described as the failure of the learned judge to resolve the conflict of evidence between the various parties and to make findings in

that regard. Mr Hogan contended that the contact between the parties during the tender process was indefensible in public

procurement terms.

35. In regard to the second issue Mr Hogan submitted that the actual criteria on which the contract was awarded were in the main

those set out by Mr Foley in his letter of 7th October to the applicant explaining why the applicant was not awarded the contract.

These criteria had not been clearly stated, and in some cases had not been stated at all, in the award criteria in the tender

document. Counsel laid particular stress on the question of the internal or external communications hub. Mr Foley had given as a

reason that the applicant did not get the contract “that your proposal involved the Board hosting and managing the IT

infrastructure”. The applicant, Mr Hogan said, would have been quite capable of providing an external hub; Mr Simpson’s evidence was

to this effect and in addition his evidence was that in the course of the business relationship which already existed between the

applicant and the respondent the respondent had indicated a preference for itself operating the hub infrastructure.

36. Senior counsel for the respondent, Mr McCann, submitted that while minor criticisms might be made of the judgment of the High

Court, the learned trial judge had made the findings necessary to decide the case and that these findings were soundly based on the

evidence before the court. It was clear that in fact no decision to recommend the award of the contract to the applicant had been

made by the award committee as a whole. The third member of the committee, Ms Griffin, who was in fact the member with the

greatest expertise in the practical side of the technicalities involved, had no knowledge of any such decision.

37. There was in fact no evidence that Mr Foley had given information to Mr Gilmore concerning the pricing of the applicant’s tender

and the learned trial judge was fully justified in dismissing that allegation in the way he did. In his submissions on these aspects of the

case Mr McCann relied on the well-known decision of this court in Hay v O’Grady 1 I.R. 210.

38. Mr McCann also pointed out that the applicant had raised no objection to the re-tendering procedure at the time.

39. As regards the award criteria, Mr McCann accepted that the external hub was a preference for the respondent but argued that

the evidence was that it was merely a factor in the decision. The matter of external or internal infrastructure could be implied or

inferred from the criteria as set out in the tender documents. The tender documents set out the award criteria, as was stated by the

Court of Justice in the SIAC case, “in such a way as to allow all reasonably informed and normally diligent tenderers to interpret them

in the same way.”

CONCLUSIONS

1. The circumstances in which the re-tender on price was sought – the conflict of evidence.

40. The learned trial judge had before him both the comprehensive affidavit evidence and the oral evidence in cross-examination and

re-examination of Mr Simpson of the applicant company, Mr Gilmore of the notice party company, and all three members of the Award

Committee appointed by the respondent Board. Counsel for the applicant in his submissions to this court was strongly critical of the

trial judge’s failure to resolve the conflict of evidence between the two members of the Award Committee, Mr Dooley and Mr Foley,

and of the trial judge’s statement that the differences in their evidence might have been a misunderstanding and did not appear to be

critical (page 43 of judgment).

41. In this context, however, it is essential to have regard to the positive findings of fact made by the learned trial judge together

with the evidence on which these findings were based.

42. Firstly the trial judge held that the role of the three person Award Committee was not to decide on the award of the contract but

to recommend (or decline to recommend) any of the tenderers to the respondent Board. This conclusion was based on the clear

documentary evidence of both the notice advertising the tender in the Official Journal and the Invitation to Tender documents

themselves. Any decision of the Award Committee could not constitute a binding decision in regard to the contract. The position was

also made absolutely clear in the re-examination of Mr Foley by Mr Clarke, senior counsel for the respondent (Day 3 page 64-65,

questions 245-253):

“245. Q.: Mr Clarke: Firstly in the earlier part of your cross-examination by Mr Hogan you made reference to the role of the

Committee and the Board and, indeed, the internal workings of the Committee. Could you just, in case there is any doubt

about it, explain to us in simple terms what the relative roles of the Board, the Committee and the individual members of the

Committee was?

A.: Mr Foley: O.K., well, the Board, we are governed on the executive by a code of corporate governance. The code

empowers the chief executive to make decisions in relation to contracts up to €100,000. All other matters have to be

referred to the Board. So in respect of this particular process, the Board empowered the Committee to make a

recommendation to the Board for sanction by the Board. I or Martin Doolan could not make that recommendation

ourselves. That was to be a recommendation by the Committee. The Committee made that recommendation following

its decision of the 24th and that was ratified by the Board.

246. Q.: So the Committee’s role was to make a recommendation to the Board?

A.: To make a recommendation to the Board.

Q.: But the final decision remained one for the Board.

A.: The final decision remained one for the Board.

248 Q.: Had the matter ever gone back to the Board – sorry, firstly, just to put this in context, when was the Committee set

up, approximately?

A.: Oh well before July, I would say.

249 Q.: And the function of that Committee was to assess the tenders and make a recommendation to the Board?

A.: That is correct.

250. Q.: Did the Committee ever report back to the Board prior to post the 24th September?

A.: No.

Q.: Do you attend Board meetings in your capacity?

A.: I do.

252. Q.: Did the Board ever consider – when I say the Board, I mean the Board in the formal sense of the word, the members

of the Statutory Board, did the Board ever consider anything to do with this tender between the start of the process and

receiving the recommendations of the Committee in late September?

A.: No.

253. Q.: So far as the Statutory Board is concerned, did not do anything during this process at all; is that correct?

A.: That is correct.”

43. It was suggested on behalf of the applicant that any reference from the Award Committee to the Board was a mere formality.

Whether this was true or not it cannot in my view affect the undoubted fact that the respondent Board was the contracting party

and that the learned trial judge’s analysis was entirely correct.

44. Secondly the learned trial judge held that the common position on the Award Committee following its meeting 14th August 2003

was that the Committee favoured the Amtote tender, considered that Amtote’s price was too high and wished to re-negotiate on

price. There had been no decision to recommend any tenderer; the only decision was, subsequent to legal advice, the decision to

seek re-tenders on price from all four tenderers.

45. In holding as he did the trial judge had before him the evidence of Mr Foley, who was firm in his view that the Award Committee

had not met subsequent to the meeting of 14th August and that therefore no decision to recommend had been taken (Day 3 Question

9). He stressed the importance of Ms Griffin in the making of any decision to recommend. At Day 3, Question 35-36 there was the

following exchange between Mr Hogan and Mr Foley:-

“35. Q.: Well, would not you accept, Mr Foley, that leaving aside, if you like, the internal rules of the Committee about the

Committee had actually to meet before making a recommendation to the Board, that if it had been the case that you and Mr

Doolan had actually agreed on ATL getting the award that in practice, that is what would have happened?

A.: In practice, but like, Patricia was an important member of the Committee. She had a significant level of experience

on operational issues, on Tote operational issues. I was not going to make a decision in isolation when considering the

issues that Patricia would have in part during a Committee meeting.

Q.: Although she said, this was her evidence on Friday, that this was essentially a matter of finance and she was going to

leave that to you and to Mr Doolan?

A.: Absolutely. What she stated was that she would leave the financial matters specifically to myself and Mr Doolan, but

never did she refer that she would leave the decision-making process to myself and Mr Doolan. You must remember

that Ms Griffin has far more experience in relation to operational issues, in relation to the hub, the technical difficulties

than Mr Doolan would have.”

46. In Ms Griffin’s own evidence she stated firmly that she did not consider that a decision had been made to award the contract to

ATL (Day 2, Questions 359-360 and 380).

“359. Mr Hogan: Q.: Were you a party to that decision Ms Griffin?

A.: No I was not.

360. Q.: But you accept, nonetheless, that a decision was made in early September to award the contract to ATL?

A.: No.

361. Q.: You do not accept that?

A.: No. I don’t.

380. Q.: But are you saying so far as you were concerned, no decision had been made to award the contract?

A.: That is correct.”

47. Again at Day 2 questions 398-401 the evidence was:

“398. Mr. Hogan: Q.: Now, it may well have been – it is not for me to say – I am quite sure that you would feel aggrieved that

you had not been involved in this or that you had not been told, as you say you were not, but would you not further agree

with me that if Messrs Doolan and Foley, two of the three members of the Committee had made this decision already that, in

all probability, all other things being equal, that ATL would have got the contract?

Ms Griffin: A.: Assuming that the majority made the decision, is that the point you are making?

Q.: Yes, that is the point?

A.: Maybe so, but I feel that I should have been consulted. Resulting from the meeting on the 14th, the position that I…

(interjection).

400. Q.: 14th August?

A.: 14th August. The position was, as far as I was concerned, that meeting concluded with Michael Foley instructing

Martin Doolan to get legal advice to know if we could negotiate with one bidder on price alone, and I had not been made

aware of the result regarding the legal opinion. That is the position that I was still in at that point, the time that you are

referring to now.

401. Q.: So, in other words, as of early September 2003, your personal position, Ms Griffin, was that you knew that a decision

– it was going to be communication with Holmes, O’Malley Sexton as to whether you could have negotiations with an individual

bidder?

A. That was still pending.”

48. In re-examination by Mr Clarke, Ms Griffin reaffirmed this position.

49. Thus, in deciding as he did, the learned trial judge had, it appears to me, ample evidence before him on which he could base his

conclusions.

50. The approach of this court to conclusions reached by a trial judge on the evidence, in particular oral evidence, before him has

been authoritatively set out in the well known judgment of this court in Hay v O’Grady [1992] 1 I.R. 210, on which Mr McCann has

correctly relied on behalf of the respondent. In that case in a much quoted passage McCarthy J. articulated the position of this court

on a trial judge’s findings of fact as follows:

“The role of this court, in my view, may be stated as follows:-

1. An appellate court does not enjoy the opportunity of seeing and hearing the witnesses as does the trial judge who hears the

substance of the evidence but, also, observes the manner in which it is given and the demeanour of those giving it. The arid

pages of a transcript seldom reflect the atmosphere of a trial.

2. If the findings of fact made by the trial judge are supported by credible evidence, this Court is bound by those findings,

however voluminous and, apparently, weighty the testimony against them. The truth is not the monopoly of any majority.

3. Inferences of fact are drawn in most trials; it is said that an appellate court is in as good a position as the trial judge to

draw inferences of fact (see the judgment of Holmes L.J. in “Gairloch” The S.S., Aberdeen Glenline Steamship Co. v Macken

[1899] 2 I.R. 1, cited by O’Higgins C.J. in The People (Director of Public Prosecutions) v Madden [1977] I.R. 336 at page 339]. I

do not accept that this is always necessarily so. It may be that the demeanour of a witness in giving evidence will, itself, lead

to an appropriate inference which an appellate court would not draw. In my judgment, an appellate court should be slow to

substitute its own inference of fact where such depends upon oral evidence or recollection of fact and a different inference

has been drawn by the trial judge. In the drawing of inferences from circumstantial evidence, an appellate tribunal is in as

good a position as the trial judge.”

51. It is clear that in the present case the learned trial judge’s finding that no decision to recommend an award had been reached by

the Award Committee either at its meeting of 14th August or in the period prior to the issuing of the invitation to re-tender on price

and his conclusion that the only decision reached was the decision to seek re-tenders on price were based on amply sufficient

credible evidence. In my view this court should not interfere with these conclusions.

52. Similarly I would not disturb the conclusion of the learned trial judge that there was in reality no credible evidence to support the

allegation that Mr Gilmore of Autotote wrongly received confidential or sensitive information about the pricing of the applicant’s tender

from Mr Foley. This allegation was based on pure suspicion arising from the fact that Mr Gilmore and Mr Foley had a telephone

conversation in early September 2003 in which there may have been a fleeting reference to price and from the fact that the eventual

tenders of Autotote and the applicant appear to be similarly priced. On behalf of the applicant it was alleged that this could not have

been a coincidence but other equally credible evidence suggested that the range of possible competitive pricing of such a contract

was in fact quite small and that a coincidence of pricing was by no means peculiar. There was, in fact, as was held by the learned

trial judge, no substantive evidence of improper disclosure regarding pricing. As a general rule, however, I would also entirely agree

with the opinion of the learned trial judge that it would have been more prudent to decline any contact during the tender period

except for the purpose of clarification (at page 44 of judgment).

2. The criteria for the award of the contract – the "Hub" issue

53. The respondent Board’s requirements under the proposed contract were set out in section 4 in the Invitation to Tender

documentation as follows:-

“The Board is seeking proposals for the provision of totaliser services at each of the stadia listed above. A schedule giving

details of each of these stadia and likely hardware requirements are given in the attached Appendix 1. In submitting proposals,

tenderers should take account of the following:

1. A new stadium at Green Park, Limerick is expected to be completed by 2005. Tenderers should quote for the installation of

a totalisator system based on an estimate of the likely hardware requirements in the attached appendix.

2. The totes at each of the tracks not included as part of this tender will continue to be owned and operated by the Board. It

is a requirement that these totes continue to interface with whatever tote operates at Shelbourne Park and Harolds Cross for

the purposes of facilitating inter-track betting. Similarly, the system at these Dublin tracks must be capable of co-mingling

pools from the Euro-Off Track hub and from other tote providers.

3. As part of this tender the Board is open to proposals and suggestions on how its existing tote infrastructure over the

seventeen stadia may be streamlined.

4. Proposals should be forward looking and the technology specified should be easily adaptable to enable the Board to develop

its existing markets and expand into new markets. Specifically any system proposed should be capable of the following:

(I) Enabling a track to act as a host or a guest.

(II) Interfacing with the totes of other providers.

(III) Data from the system should be able to electronically interface with the Board’s tote database.

(IV) Tracking player details to enable the Board to offer a royalty reward scheme.

(V) Logging all meeting activity.

(VI) Providing a management information system (MIF) to monitor a real time activity.

(VII) Providing detailed analysis reports for each meeting.

(VIII) Offering a full complement of betting pools excluding exotics and jackpots. A list of pools covered should be

provided.

(IX) Complying fully with totaliser regulations operated by the Irish Greyhound Board.

(X) Offering hand-held and stand-alone self-serve units.

(XI) Offering individual betting terminals for selected customers.

(XII) Facilitating credit betting.

(XIII) Offering a web interface to a betting platform.”

54. In section 20.2 of the Invitation to Tender documentation Award Criteria were set out as follows:

“Tenders which fulfil the above mandatory criteria, will be evaluated on the basis of the most economically advantageous

tender which fully complies with the requirements set out in the tender documentation. Bord na gCon does not bind itself to

accept the lowest price tender, any tender or all of any tender. The award of any tender will be subject to contract.”

55. As noted earlier in this judgment it is common case that the tender process was governed by the Services Directive (92/50/EEC)

and the regulations made thereunder. At this point it is worth repeating the terms of Article 36 of the Services Directive as follows:-

“1. Without prejudice to national laws, regulations or administrative provisions on the remuneration of certain services, the

criteria on which the Contracting Authority shall base the award of contracts may be:

(a) Where the award is made to the economically most advantageous tender, various criteria relating to the contract;

for example, quality, technical merit, aesthetic and functional characteristics, technical assistance and after-sales

service, delivery date, delivery period or period of completion, price;

or

(b) the lowest price only.

2. Where the contract is to be awarded to the economically most advantageous tender the Contracting Authority shall state in

the contract document or in the tender notice the award criteria which it intends to apply, where possible in descending order

of importance.”

56. In the case of the tender in question, therefore, there was a mandatory requirement to set out the award criteria. Paragraph 1(a)

of Article 36 indicates the type of criteria that are envisaged under the Directive; they indicate a detailed and comprehensive list.

The criteria are to be set out “where possible” in descending order of importance. There seems to be little reason why it would not be

possible for the proposed criteria in the present case to be set out in descending order of importance.

57. As was pointed out earlier in this judgment, Mr Foley on behalf of the respondent wrote to Mr Simpson of the appellant company

on 7th October 2003 informing him of the considerations to which the respondent had regard in rejecting he appellant’s tender. Those

were listed as follows:

“(1) The fact that your system has not been fully tested for ITSP compliance.

(2) That your proposal involved the Board hosting and managing the IT infrastructure.

(3) That you did not have operating self-service terminals.

(4) The fact that you had no loyalty card system in operation.

(5) The fact that your hand-helds did not have a GPRS Strategy.”

58. The letter went onto state:-

“We also specifically advised you that you would create additional management resource issues for the Board. I should put on

record that the saving to the Board in the Autotote proposal is significantly in excess of €300,000 over the life of the contract.

Your assertion that this was mainly attributable to staff savings is without foundation and incorrect.”

59. In the appellant’s submissions both to the High Court and to this court reference was made to a large number of aspects of the

Award Criteria as set out in the Invitation to Tender documentation. It was alleged that these were significantly different from the

criteria actually applied by the respondent in awarding the contract. The whole procedure, the applicant argued, was lacking in

transparency and was neither in accord with the requirements of Article 36 of the Directive nor in accordance with the principles set

out in the SIAC case. The greatest emphasis, however, was placed on the issue of the management of the IT infrastructure – the

internal or external hub. This was particularly so in the case of the applicant’s oral submissions to this court.

60. From Mr Foley’s letter it is clear that the fact that the applicant’s tender did not provide for the external hosting of the IT

infrastructure played an important part in the rejection of the applicant’s tender. From the oral evidence before the court below it

became very clear that the “management issues” referred to in Mr Foley’s letter were management issues that would arise from the

operation of an internal hub by the respondent. In addition it became clear that the “savings to the Board” in Autotote’s proposal

arose because Autotote had proposed an external hub.

61. The issues arose in the cross-examination and re-examination of a number of witnesses, in particular of Mr Doolan and Mr Foley.

On Day 2, page 157 (questions 798 to 808) Mr Clarke S.C. re-examined Mr Doolan as follows:-

“798 Q. Now, in relation to the reasons given in the letter of the 7th October – I don’t think we need to refer to them in detail,

they have been gone through a large number of times and I think Mr Hogan has asked you most of the questions about them,

but there is just a couple of additional matters I would like you to tell us about, the hub questions has been the subject of

considerable debate.

A. Yes.

799 Q. What is your view on the financial consequences to the Board of accepting a proposal, such as the applicants’, where

the Board had to host the hub?

A. Well, if the Board were to host the hub, then it would incur additional costs. First of all, there would be

communication costs which were discussed this morning in terms of lease, telephone lines and the use of those lines.

There would also be a requirement to man the hub. Mr Simpson made comment this morning that we already had IT

staff in Limerick, but those people already had jobs. They worked in the day time. The hub would need to be manned at

night, so there would be an additional requirement there. There would also need to be some capital costs in terms of

actually fitting out a hub centre and putting the necessary security in place.

800 Q. Leaving aside the headline price, which I think is how Mr Hogan described it, I am happy to use it as a phrase, of 1.5,

you have identified that in your view at least there was going to be a cost to the Board, an extra financial cost to the Board of

accepting Mr Simpson’s proposal that you would host the hub?

A. Yes.

801 Q. Were there any other financial differences between the two proposals on matters that had a direct financial impact, if

you like?

A. Apart from the ones I just mentioned?

802 Q. Apart from those, yes.

A. No, I would say that would include them. Obviously if we were to have the hub hosted outside by a third party, such

as the existing racing office system with EIRCOM in City West, then that would be another way of doing it and that would

add significant costs as well.

803 Q. Yes, but as I understand it, the basic facts were that Autotote was prepared to host its own hub and pay the costs of

posting its own hub?

A. Yes.

804. Q. The Advance Totes bid required you to host the hub?

A. Yes, it did,

805 Q. And you have said to us that you felt that would have been a cost to the Board?

A. That would have been a cost to the Board.

806 Q. And, therefore that that would have to be factored into determining which was the most – the best financial deal from

the Board’s point of view?

A. It would.

807 Q. Of what order of magnitude did you consider these costs to be. The cost of hosting the hub yourself?

A. I think we worked it out at something in excess of €300,000.

808 Q. Now that figure, I think, is mentioned in your notes of the telephone conversation and it varies – and in the letter of

the 7th October, that is where that figure came from?

A. Yes.”

62. Mr Foley was both cross-examined and re-examined in relation to the issue of the hub. He argued that all the necessary award

criteria were either specifically stated or necessarily implied, but accepted that two of the tenders proposed an internal hub and two

an external hub (Day 3 questions 148-149). He was asked by Mr Hogan how important was the fact of an external hub so far as the

Board was concerned. He replied (question 151):

“It was not specifically important. What was relevant was you had to weigh up two things – if it was external and if it was

internal. If it was internal, there was going to be added costs in terms of resource requirements, in terms of staffing

requirements and, to some extent, some elements of commercial risk by taking on board something and managing it. But it

was not important per se to have it internal or external. It was a case of weighing up the advantages both and taking the one

which was more economically advantageous. So, therefore, if a proposal came in to me, if it was to be an internal hub and

was significantly cheaper and so much cheaper that I could put in the labour, put in the IT infrastructure, put in a clean room,

then, of course, I would have considered it.”

63. Mr Foley went on to suggest that Mr Doolan had underestimated the cost of maintaining an internal hub as he had omitted to

include the costs of the necessary “clean room” and a full-time IT programmer. He accepted that if everything was equal the Board

had a preference for an external hub. In reply to re-examination by Mr Clarke (Day 3, questions 283-287) Mr Foley reiterated his view

that Mr Dooley’s figure of €300,000 was an under-estimate on the grounds of the two factors that a clean room would have to be

provided and that at least one full-time IT person would have to have been employed.

64. The criterion of the external or internal hub was referred to in the evidence of other witnesses, but it seems crystal clear from the

evidence of both Mr Doolan and Mr Foley, who themselves constituted a majority of the Award Committee, that this issue was of very

considerable importance on grounds of both convenience and cost, and that it played a large part in the respondent’s decision to

award the contract to Autotote. While Mr Foley asserted that if a tenderer proposing an internal hub had proffered a sufficiently low

price to off-set the cost of the internal hub all things might have been equal, this proposition has, in the light of the financial figures

and the physical requirements, a distinct air of unreality. Taking both the documentary and the oral evidence into account, it appears

to me that the location of the IT communications hub was a criterion of considerable importance in the award of the contract.

65. Both counsel for the respondent and the respondent’s witnesses argued that Clause 4 in the Invitation to Tender documentation

which required that “proposals should be forward looking and the technology specified should be easily adaptable to enable the Board

to develop its existing markets and expand into new markets” would have made the IT criteria clear to “reasonably well informed and

normally diligent tenderers”. In this context, however, this court must have regard to the entire of the condition set down in the

judgment of the Court of Justice in the SIAC case. The condition laid down by the Court of Justice was:

“That the transparency and objectivity of the procedure are respected, which pre-supposes that the criterion is mentioned in

the contract document or contract notice, that it is there formulated in such a way as to allow all reasonably well informed

and normally diligent tenderers to interpret it in the same way, and that the adjudicating authority must keep to that

interpretation throughout the procedure and apply the criterion in question objectively and uniformly to all tenderers.”

66. In his judgment the learned trial judge accepted, in regard to the letter of 7th October 2003, that it was “difficult to reconcile the

considerations with the criteria”. He went on to note that while the location of the hub was not specified and no preference was

indicated, he felt that it was clear that the proposals on streamlining the existing infrastructure would have to be costed and would

be assessed and evaluated by the respondent (page 48 of judgment). Despite the fact that in the learned judge’s view it was not

clear that all the strict requirements of the Directives had been met and that there appeared to be no ranking of criteria in

descending order of importance, he concluded that the tender procedure did not seem to breach the principle of equal treatment or of

transparency.

67. For the reasons set out above I consider that the learned trial judge erred in this conclusion. The necessary requirements of

Article 36 of the Services Directive were not met in the Award Criteria set out in the Invitation to Tender documents. The criterion of

the internal or external IT communications hub was not even mentioned, yet alone listed in its proper ranking of importance. Neither

do I consider that, as laid down in the judgment in the SIAC case, the criterion was mentioned in the contract document or contract

notice or was formulated in such a way as to allow all reasonably well informed and normally diligent tenderers to interpret it in the

same way. In my view the procedure was in this aspect seriously lacking in necessary transparency.

68. I would allow the appeal on this ground. It is unnecessary to deal with the matters raised by the applicant in connection with

other criteria of the Award.