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From the Clapham Omnibus to the Eurostar: Public Procurement and the reasonable man

Healthcare at Home Limited -v- The Common Services Agency [2014] UKSC 49

Lord Reed handed down the judgment in this case on 30 July 2014.

The case concerned a public sector tendering process carried out by The Common Services Agency (CSA) in 2010. Healthcare at Home Limited (HHL) were the incumbent health services provider to CSA. Following tender they were replaced by a new services provider. HHL complained about the tender process on the basis that:

(a) The invitation to tender was insufficiently clear; and
(b) The reasons given by the CSA for rejection of HHL’s tender were unclear and lacking in detail.

Although this is a Scottish case specifically related to the relevant Scottish Regulation on public procurement, the case is important in relation to the law of public procurement generally, as the Regulation implemented certain European Directives which are also applicable in England and Wales.

Lord Reed provided a useful review of the objective test of reasonableness when applied to the principle of transparency in public procurement. That test has been drawn from the often referred to “passenger on the Clapham Omnibus”. Lord Reed explained that “In recent times some additional passengers from the European Union have boarded the Clapham Omnibus…[including]the reasonably well informed and normally diligent tenderer” (the RWIND).

In his judgment Lord Reed explained that the reasonable man and the RWIND are a means of describing the standard to be applied by the Court. The standard to be applied is objective. It is misconceived for a party to seek to lead evidence from actual passengers on the Clapham Omnibus or (as in this case) actual tenderers, as to how they would have acted in a given situation or how they interpreted the tender document. Lord Reed noted that an objective standard to be applied by the Court is essential to ensure equality of treatment and to ensure that decisions can be taken with the efficiency required within the context of commercial tendering.

In this particular case, evidence had been led in the Court of Session in Scotland before Lord Hodge. That Proof (the Scottish equivalent of a Trial) lasted for 8 days. Lord Reed clarified that evidence to assist the Court in putting itself in the position of the RWIND may be appropriate and necessary for matters such as technical terms, and perhaps the context in which a document had to be construed.

Lord Hodge’s original Decision relating to giving of reasons to an unsuccessful Tenderer was also upheld: The tenderer had been left in no real doubt as to why it had been unsuccessful, and as to the relative characteristics and advantages of the successful tenderers.

In summary, and quoting from Lord Reed: “The horse-drawn bus between Knightsbridge and Clapham…was real enough.” But its most famous passenger[s] are legal fictions. They belong to an intellectual tradition of defining a legal standard by reference to a hypothetical person.”

The reasonable man is alive and well but no longer simply commuting in Victorian London. He has become a European.