MoD hit with indemnity costs for disclosure failure

MoD: Should have known it had to disclose documents

The Ministry of Defence (MoD) has been ordered to pay indemnity costs after the High Court ruled that it “has not begun to grapple with its obligations in terms of disclosure” in a procurement challenge.

Serco is challenging the outcome of a £1.1bn MoD procurement for certain fire and rescue services that took four years to complete.

Following a hearing at which the MoD succeeded in striking out one aspect of the particulars of claim but failed in another, the High Court then had to deal with the costs of an application by Serco for specific disclosure which had only just been compromised.

Since June 2018, Serco had sought disclosure of the contemporaneous evaluation records of Serco and the successful tenderer Capita, and for other decisions taken during the evaluation.

Mr Justice Fraser pointed to the overriding objective, but also “mountains” of authority relating specifically to procurement challenges that said the challenger ought to be provided promptly with the essential information and documentation relating to the evaluation process.

This was what Serco wanted and he said “there can be no sensible grounds” for the MoD not to have disclosed it earlier.

“It is obvious to me the MoD has not begun to grapple with its obligations in terms of disclosure, either generally or in the context of this application, until an extraordinarily late stage.

“I should also say that until yesterday, the MoD, having accepted that it needed to provide this documentation, was still maintaining that the correct order for costs should be costs in case. That is not a sensible position and it was helpfully abandoned yesterday afternoon.

“However, this application should never have been required. The MoD should have voluntarily provided this documentation months ago.”

Serco sought nearly £80,000 in costs for the application. The MoD pointed out that Serco was awarded £50,000 in costs for the strike-out applications, which was a “much more difficult and lengthy” hearing, and that its own costs for the disclosure hearing were £16,000.

Fraser J rejected the comparisons. “The sum of £50,000 in Serco’s costs which were awarded was reached after an exercise done by me, whereby there was a 20% reduction to Serco’s costs to reflect the MoD’s success on one of the two limbs of its strikeout application….

“Also, yesterday’s application was an entirely arguable and sensible one, as reflected by the comparative success and failure of each of the parties on each of the two separate issues.

“Secondly, the MoD appears, and if properly advised, should always have realised, that it could not possibly to argue before the High Court with any degree of seriousness that Serco is not entitled to these documents.

“The fact that the MoD devoted rather fewer resources to an application which they probably never intended to contest with any seriousness, is probably a point against the MoD in this respect.”

He also rejected the MoD’s challenge to the amount of time Serco spent on the disclosure issue. “It was also entitled to take all necessary and proportionate steps to ensure that an application for specific disclosure, which should not have been necessary in the first place, actually succeeded.

“I am going to award, on a summary assessment basis, the following sum to Serco in respect of today: £79,274.68.

“The astute will notice that that is the exact figure on the summary assessment schedule that Serco are seeking by way of its costs.

“It should therefore sensibly be concluded that my award on costs is made on an indemnity basis against the MoD, and I am doing that because, as far as I am concerned, its conduct in respect of the disclosure has fallen well outside the norm and is entirely suitable for, and justifies, an award of indemnity costs.”

    Readers Comments

  • Hector Stamboulieh says:

    I would be interested to know who was advising the MOD in this case ?

  • admin says:

    It was the Government Legal Department.
    Neil Rose, Editor

  • David Forsyth says:

    It appears to me that several Ministers in the current and previous Administrations disregard professional advice where it does not suit their political agenda.

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