Hossacks (A Firm of Solicitors) v The Legal Services Commission [2011] EWHC 2700 (Admin)

Tuesday November 22nd, 2011
Neutral Citation Number: [2011] EWHC 2700 (Admin)
Case No: CO/10438/2010

IN THE HIGH COURT OF JUSTICE
QUEEN’S BENCH DIVISION
ADMINISTRATIVE COURT

Royal Courts of Justice
Strand, London, WC2A 2LL
27/10/2011

B e f o r e :

THE HONOURABLE MR JUSTICE BLAKE
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Between:

HOSSACKS (A firm of Solicitors)
Claimant
- and -

THE LEGAL SERVICES COMMISSION
Defendant

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(Transcript of the Handed Down Judgment of
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Mrs Hossack (in person) for the Claimant
Fiona Scolding (instructed by Legal Services Commission) for the Defendant
Hearing dates: 28 September, 2011

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HTML VERSION OF JUDGMENT
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    The Honourable Mr Justice Blake: 

    Introduction

  1. This is the hearing of the claimant’s application for judicial review of a decision of the defendant Commission rejecting the claimant’s tender for the provision of legal services in the field of community care following a competitive tendering exercise in 2010. Permission was granted on limited grounds by the Court of Appeal on the 8 July, 2011 and a succinct statement of the background to the case is contained in the judgement of that court to which the curious observer is referred see [2011] EWCA Civ 788.
  2. The essential facts that underlie this claim are as follows:- i) The claimant is a specialist provider of community care services based in Northamptonshire with a small number of staff under the supervision of its principal, Mrs Hossack.ii) The claimant bid in 2010 in a competitive tender for the award of community care legal services contract in 125 geographical areas of England and Wales.

    iii) It did so even though it was a requirement of the competition that the bidder would at least have a part-time office in each area where services were services were to be delivered.

    iv) For each contract area for which the claimant made a bid it submitted a pro forma containing identical information.

    v) Each tender was completed using a invitation to tender form specific to Wiltshire and that was accordingly pre-populated in the defendant’s electronic tendering form with the title Wiltshire, albeit this was not known to the claimant. She should have chosen the tender form for each specific area, there may have been different requirements for different areas.

    vi) There were different requirements as to whether the need for an authorised litigator was part of the essential or selection criteria under the terms of the IFA. This depended upon whether the firm was bidding in service areas A or B.

    vii) The claimant did not complete the part of the form requiring her to identify the location of her office, and this was the case even for the form submitted in respect of Northamptonshire where she did have an office.

    viii) The claimant’s office in Northamptonshire was a full time one, but for the Northampton bid (as indeed for every other) the claimant stated that it proposed to operate a part time office. Its intentions were to service claimants throughout the jurisdiction by attending on them as and when necessary. This intention might have been accommodated by a single Northampton bid, which if successful would have enabled her to open cases from outside the county as well if the claimant had the staff capacity to do so.

    ix) The defendant would have been aware that the claimant maintained a full time office in Northamptonshire from extraneous information, namely previous dealings with the firm and the fact that it had submitted its office handbook to the defendant in connection with a quality mark award.

  3. 124 out of the claimant’s 125 bids were rejected by the defendant because the claimant had not provided the information necessary to establish eligibility for award of a contract. In fact, the claimant was offered a contract for Wiltshire on the basis of the inaccurate statement that a part-time office would be maintained there, but this was subsequently cancelled when the true facts were realised and no issue arises in these proceedings relating to the cancellation of that contract.
  4. These proceedings were originally directed to all the defendant’s decisions in respect all the claimant’s bids, on the basis that the defendant’s bid criteria did not take account of the claimant unique business model that was Northampton based but delivered specialist services to clients in need throughout the jurisdiction. This claim was rejected by both the Administrative Court and on renewal to the Court of Appeal because it was essentially a challenge to the bid criteria themselves which should have been made, if at all, promptly when the criteria were published. Nevertheless, permission was granted in respect of the failed bid for Northamptonshire, on the basis that on of the information actually supplied, the defendant should not have rejected the bid. Lord Justice Richards giving the judgement of the Court recognised that there were real difficulties in the claimant succeeding on such a basis but could not castigate the application as hopeless.
  5. Another factor in the grant of permission was emerging information about the extent to which the defendant in similar competitions for legal services contracts had been prepared to contact bidders pointing out errors, omissions and ambiguities in their bid application forms. The question whether the defendant had been and or should have been willing to use any powers it had to clarify ambiguities had been the subject in part of debate in at least four previous decisions of the High Court namely JR Jones v LSC [2010] EWHC 3671 (Ch), Hoole and Co v LSC [2011] EWHC 886 (Admin), Harrow v LSC [2010] EWHC1087 (Admin), R (All About Rights) v LSC [2010] EWHC 964 (Admin). What has emerged since the judgments in these cases is recognition that some of the evidence previously relied on by the defendant was inaccurate and incomplete when describing its practices and the extent to which clarification had been sought were inaccurate and a complete audit of all such occasions was being undertaken. One case has been remitted to the Administrative Court is AAR v LSC for re-hearing. An appeal in the case of Harrow was due to be heard in the Court of Appeal in the first week of October 2011 and some permission applications in other cases have been listed to follow on. Lord Justice Richards anticipated that the outcome of that audit would be known before the substantive hearing was determined.
  6. Shortly before the hearing of this claim a large volume of material was served upon the claimant by the defendant with a number of witness statements and supporting documentary exhibits. Similar material was served on the appellant in the case of Harrow (above) and it led the Court of Appeal to adjourn the hearing of the at appeal. The claimant declined the defendant’s invitation to adjourn the present application and no one has suggested that this court should await the decision in Harrow before giving judgment in this matter.
  7. It is common ground that the judgement of the Court of Appeal granting permission identifies three issues for resolution in this claim. These are:- i) Was it unreasonable/disproportionate for the defendant to reject the claimant’s tender for Northamptonshire?ii) Was it unreasonable/disproportionate for the defendant not to seek to clarify the claimant’s tender given the nature of the mistake made?

    iii) Has the defendant acted inconsistently in refusing to permit amendments of the claimant’s tender while permitting clarification in other respects of the civil tendering process?

    The Tender Specifications

  8. Before the competition was opened on the 26 February, 2010 the defendant published a 62 page document called Information for Applicants (IFA) that set out the detail of the invitation to tender to deliver publicly funded services in this field. This document is of central significance in explaining how applicants could bid for such tenders; what electronic tender forms they need to complete in order to apply, what a completed tender consisted of and other material provisions that set out the terms of the bid.
  9. The overview of this document indicated that any applicant might submit a tender whether a current contract holder with the LSC or not. There were 135 separate invitations to tender (ITT) each covering a separate procurement area in England and Wales. Successful tenderers automatically had a passport to undertake licensed work if they obtained Matter starts. Applicants would be tendering for allocation of cases known as matter starts and, if applicable a licence to represent clients, in separate geographic areas in England and Wales. 135 ITT’s would be published on the defendants’ e-tendering system and for tenders to be complete a response to the pre-qualification questionnaire (PQQ) must also have been submitted. A completed tender consists of a completed PQQ and a response to the ITT including the mandatory form.
  10. Other aspects of the IFA material to the present challenge include the following:- i) The application process for a specialist quality mark (SQM) is dealt with separately to the tender process as it is a condition of contract award and not part of the PQQ or the ITT response (IFA 6.6 and 10.2).ii) An individual bid means the services in a category of law that an applicant of has tendered to deliver from a particular office in a procurement area or access point (10.3 IFA).

    iii) The relevant form should be downloaded and completed with details of each supervisor who is currently in post to deliver the services of the applicant that is tendering to deliver in the procurement area (12.6 IFA).

    iv) The bid must provide for information on the number of matters starts the applicant will deliver from each office in the procurement area; each office must tender for at least a minimum number of matter starts meeting the essential criteria; bids could not be for more than the maximum capacity of the applicant calculated by reference to the number of matter starts that could be processed weekly by a full time equivalent (FTE) member of staff delivering the service. One FTE equated to approximately 35 hours per week (12.20 and 13.9 IFA).

    v) Applicants must certify that the declarations they have completed and submitted contain accurate information and are up to date (12.29 IFA).

  11. Section 15 of the IFA set out the terms and condition of tender the following provisions are of relevance to the present application:- i) Submission of a tender which fails to comply with any terms and condition of tender, user agreement or other rules conditions shall without affecting the applicant organisation’s liability for non compliance entitle the LSE to reject a tender. In the case of a contract awarded in breach of these terms the defendant is entitled to cancel the contract or not proceed further with it (15.2).ii) Any conflict between the information given on documents submitted as part of the tender conflict will be resolved by accepting the information answer or document least favourable to the applicant organisation (15.15)

    iii) The applicant must reply to all the questions in order to respond to PQQ and ITT even if it is previously provided this information or if it thinks that the LSE is already aware of it (15.19).

    iv) The applicant must not submit for tender any information which the applicant knows or has reason to be false or misleading if information is subsequently found to be false or misleading it may lead to the applicant tender being unsuccessful (15.20).

    v) A tender will be unsuccessful where following assessment the applicant

    a) Does not pass the PQQ;

    b) Does not pass the essential criteria; and or

    c) Has its tender ranked lower than other tenderers following application of the selection criteria. (15.26).

  12. By contrast with the terms and conditions of similar competitions, section 15 of the IFA made no reference to the defendant seeking clarification of ambiguities. The applicant was solely responsible for submitting the information for the tender. The defendant reserved the right to check the accuracy of information submitted.
  13. It is apparent from the learning set out in the case law cited above that this exercise is governed by the European Union Rules for Public Contract Regulations 2006 that require both transparency and consistency between applicants. Ms Scolding submits that I accurately summarised the law in my judgement in Hoole v LSE at paragraph 30 where I said:-

    “viewed entirely from the point of view of a public law duty to act fairly, it may well be that the exercise of a discretion to grant a benefit should be based on all matters that could or should be known to the authority, and that fairness may well include a reasonable opportunity to correct obvious errors without changing the fundamental nature of bid submitted… However, any such duty is severely circumscribed when there a competitive tender and a over-riding duty to treat all tenderers equally. Here for reasons that were not the responsibility of the defendant, the claimant failed to supply the information that would have led them to being rank in priority were there was competition for the award of NMS. Any general duty to give an applicant an opportunity to correct errors in the absence of fault by the defendant, yields to the duty to apply the rules of the competition consistently and fairly between all applicants, and not afford individual applicant an opportunity to amend the bid and improve his prospects of success in the competition after the submission date has passed”.

    Mrs Hossack did not suggest that this observation was wrong. Nevertheless, I would accept that if in fact the defendant chose to contact tenderers to clarify and amend bids outside the terms of the conditions of contract, a public law challenge could be made if a similar facility was not extended to all other tenderers in the same circumstances.

  14. It is also convenient to set out here a number of issues which had previously been ventilated in this litigation but which now are recognised not to be relevant to the decision that I have to make:- i) The fact that there is an alternative remedy for damages for breach of the Public Contract Regulations in the Chancery Division does not necessarily preclude recourse to judicial review where a public law issue arises, and it was for this reason that the Court of Appeal granted permission where Mitting J would have refused it.ii) The fact that the claimant firm had received an adverse peer review assessment under a previous LSC contract is irrelevant to the present proceedings since it was not a confirmed review that might have made the claimant ineligible for an award of a contract.

    iii) Although the form submitted by the claimant was for a different procurement area, both Wiltshire and Northamptonshire were category B procurement areas and so there was no material difference as to the information to be supplied.

    iv) There is no other provider of community care services in Northamptonshire, and there are a number of new matter starts held in reserve by LSC for that area. If the claimant made out its case that it had been treated unfairly in not being considered eligible for an award on the basis of a part-time office in Northamptonshire, and did not consider that the principle of equality would prevent to the defendant from offering a claimant some new matter starts as a consequence.

    v) A decision dated 5 July, 2010 explaining the rejection of the tender bids indicated that the reasons for the rejection meant that there was no right of appeal under the contract terms. The circumstances where there is or there is not a right of appeal do not appear to be material in this case, as the claimant’s firm was afforded an internal review on receipt of her reasons for dissatisfaction, and the issues of law upon which the claimant relies are being determined in this court.

    With this preamble it is time to address the three questions on which this application depends.

    Question 1 Was it unreasonable for the defendant to reject the claimant’s tender for Northamptonshire?

  15. The claimant submits that the error in the ITT was both and trivial and obvious and could have been corrected without prejudice to other bidders and without the need to restructure the application. Admittedly, the ITT was headed Wiltshire when it was intended for Northamptonshire; it did not contain the address and post code of the claimant’s office in Northamptonshire, and it inaccurately stated that the tender bid would be serviced by a part-time office to be established there. The claimant relies on 15.15 of the IFA that in the event of any conflict of information the conflict would be resolved by accepting the information favourable to the applicant organisation. On that basis the claimant could have been awarded matter starts appropriate to a part-time office even though it maintained a full-time office there.
  16. The defendant submits that the error with the claimant’s ITT was fundamental rather then marginal. In particular, the ITT for Northamptonshire cannot be read in isolation from the other ITTs’ for the other areas bid for. The defendant makes an assessment of the ratio of new matter starts to staff employed based upon the information supplied by the tenderer as a whole. Taking the bids as a whole the claimant was bidding for far too many matter starts than they have staff to service. If alternatively, the number of staff that the claimant proposed to employ (four), was used as the minimum basis for the calculation of the maximum number of new matter starts that could be taken on, then on the basis of the claimant’s application in 125 areas, there would be insufficient new matter starts at each of the regions bid for to qualify for a tender. There was no ambiguity or inconsistency in the application in the tender bid made by the claimant but even ignoring the misleading header Wiltshire on their face and read as a whole the application was incomplete and the information provided insufficient for the claimant to be eligible for a contract under the tender terms. As the Court of Appeal had recognised the defendant could not use information it had about the claimant firm extraneous to the tender itself to benefit them in assessing the bid.
  17. In my judgement there is no answer to the submissions of the defendant. The defendant’s approach to accessing eligibility of bids accords with what it said it would do in the IFA. It means that Northamptonshire cannot be separated from the other bids on a stand alone basis. To do so would not be to cure an ambiguity in the application or correct an obvious unintended error but fundamentally to reconstruct the tender bids that the claimant made.
  18. It is common ground and if it were not it is in any event clear on the authorities, that making a fresh application after closure of the tender period in April, 2010 is not permitted under the applicable legal principles. Equally, whatever else the defendant may be able to do without offending the principle of equality and transparency in the tender terms, it is not permitted to give a tenderer an opportunity to improve a bid by supplying information in the ITT that it had previously completely omitted.
  19. Deleting Wiltshire and substituting Northamptonshire would not have cured the defect in the claimant’s application and rendered it eligible for a contract. It is undoubtedly the case that the claimant failed to provide an office address in Northamptonshire and that part of the ITT was deliberately left blank because she was adopting the same approach for all the areas in which the firm was bidding. The IFA makes plain that information must be supplied even if it is already known to be LSC extraneously. Having premises in the relevant contract area is clearly an important part of the criteria for award of a contract at all. On either of these bases and both of them, therefore, the defendant was entitled and indeed bound to reject the application.
  20. In addition, I consider there is substance in the defendant’s further point that as the application form for Northamptonshire contained no ambiguity as to whether a part-time or a full-time office was intended there, it would be wrong for the claimant to be awarded a contract on a fundamentally false premise. It was for the claimant to warrant the accuracy of the information provided, and although it is apparent that the means by which this error came about was an unintended consequence of the claimant’s approach to bidding for all areas by the same form, it is nevertheless unrealistic for the defendant to award a contract on a false basis. I therefore conclude it was reasonable and proportionate for the defendant to reject the claimant’s tender for Northamptonshire made as it was as part of a great many other bids containing in fact the same information. Question 2: Was it unreasonable for the defendant not to seek to clarify the claimant’s tender given the nature of the mistake made?
  21. The answer to this question has been foreshadowed by the discussion of the first. The problems with the claimant’s tenders were not ambiguities or inconsistencies between two sets of data. The clarification that the claimant submits should have been made goes beyond clarification of an ambiguity and extends to reconstructing the essence of the application made.
  22. In any event if the claimant had been contacted to ask to clarify whether it was indeed bidding for 125 areas the answer would have been yes with the consequence that the application would have been considered ineligible. If the claimant was seeking an opportunity to withdraw the 124 applications apart from Northamptonshire on the basis of an indication to what the fate of the application would be without withdrawal, this would be something different from clarification of ambiguity.
  23. I accordingly conclude that it was not unreasonable or disproportionate for the defendant not to seek to clarify the claimants tender given the nature of the mistake made. Question 3: Has the Defendant Acted Inconsistently?
  24. It was this head of the claim that was the focus of Ms Hossack’s submissions at the Oral Hearing. On the 23 September, 2011 Melena Ward the Project Manager in the Central Commissioning Team of the defendant Legal Services Commission prepared a third statement in the remitted litigation in All About Rights v Legal Services Commission. In paragraphs 37 to 106 of this witness statement she explains in considerable detail the approach taken by the defendant other tenders and present tender to clarification and documentation. Attached to the statements were a considerable number of exhibits demonstrating the points made. Five bundles of material were served on the claimant, shortly before the hearing of the present application containing all three witness statements of Miss Ward in the other litigation and statements by others.
  25. The Court was referred to material parts of that witness statement in the course of argument but it was unclear how far the claimant had been able to review all the exhibits before commencing her submission. Given the constrictions of time before and during the hearing, I was anxious that the claimant had full opportunity to deploy any material that she considered appropriate that related to a legitimate comparison with her circumstances. Given the problems that had arisen in other cases the Court was also concerned that Counsel for the defendant should be satisfied that the claimant had been given data relevant to that head of her challenge. This was not a judicial order that the defendant make disclosure of further unspecified documents. It was simply an endeavour to give the claimant and the Court some further assurance that through inadvertence or pressure of time relevant material was not found by the Claimant or lay unanalysed in some file. In the event the Court understands that the defendant had identified no further material and has commented on the approach set out in the witness statements in a note of 7 October 2011. The claimant has made post-hearing submissions about the effect of the Miss Ward’s statement and the exhibits contained therein upon representations previously made by the defendant in other cases. However, that is not what the Court is concerned with in the present case.
  26. Under this limb of the challenge, the claimant avers that it has not been treated equally with other tenderers in similar competitions where flawed or ambiguous submissions were made. It is trite law that the application of the principal of equal treatment or a claim not to have been fairly treated by reason of discriminatory conduct depends upon a comparison between the claimant and the treatment of another who is in the same relevant circumstances. The claimant in her submissions intimates that the relevant comparator is any tenderer who has been previously contacted by the LSC with a view to clarification of their bid. From the materials provided to her by the defendant, Mrs Hossack selected a number of extracts that she submitted made good her case of unequal treatment.
  27. She pointed out the following:- i) A letter of the 18 March, 2010 to a firm of solicitors in the Immigration Services tender seeking clarification of inconsistencies between answers given in the essential criteria question and the tender information form as to the post code for a permanent presence in the London area.ii) A letter of the 16 March, 2010 to different solicitors in the same tender inviting observations on two different expressions of the number of the new matters starts being bid for between the TIF and Commercial response.

    iii) A letter of the 21 May, 2010 to a firm tendering in the Social Welfare and Law and Family Services tender as to inconsistencies in the number of matter starts being bid for between the essential criteria and the TIF and the absence of details of staff members in the particular post code area by which such services would be delivered.

    iv) Some examples where the defendant communicated with tenderers seeking clarification of answers suggested that they did not meet the regulatory conditions for being eligible to tender under the PQQ, for example by reason of financial irregularity or disciplinary measures when other information suggested that they were so qualified.

  28. Of these specific examples the closest to the present problem was the letter of the 21 May, 2010 referred to above. However, the bundle of material supplied to the claimant revealed that the answer to the query was that the firm concerned had started to complete a form with a view to tender in Community Care but then decided not to but found that the electronic form did not omit deletion of the number of matter starts. Accordingly this was not a case where the defendant permitted a firm to tender for a Community Care contract when they had failed to provide details of case workers that were necessary to sustain the contract in the tender information form. Whether the fact that the omission had resulted in an enquiry rather than a rejection demonstrates some lack of precision in the answers previously given in other cases about the limits of the use made to clarify ambiguities is not the issue in the present case. The question is whether advantageous treatment permitting correction of an errors in a bid had been afforded to others but denied to the claimant.
  29. Ms Scolding for the defendant submits that the closest comparison between the claimant situation and others where the treatment of five other applicant organisations that submitted tender forms that did not correspond with the ITT for which they submitted a tender. The evidence is that no clarification was sought from any of these organisations and all five had their tenders rejected on the basis that they were incomplete. It is therefore submitted that the defendant has acted consistently in treating all those organisations that submitted the wrong tender form in the same way. The claimant points out that these firms are still conducting legal services in the field of Family Law, but that is because for different reasons the whole tendering processes was quashed and had to start again with the consequence that the existing arrangements had been extended until new arrangements had come into place (The Family Law contract is still being operated under the old system.
  30. The claimant also submits that the defendant’s instruction manual makes provision for clarification of ambiguities and missing data from tender forms and that is some indication of how her firm should have been treated.
  31. Clearly there is evidence of the defendant seeking clarification of matters on a great many occasions in the civil contract tenders. It does seem some greater flexibility has been afforded in respect of ambiguities or apparently erroneous answers in the PQQ form where the tenderer had to give information indicating that they were eligible to complete the tender. By contrast, failure to give any mandatory information in the tender information form itself or use of the wrong form or non supply of a completed form at all, have been treated as rejections. Ms Ward’s statement also gives examples in the immigration tender process, one of the first in the sequence of e-tenders were firms were contacted to see whether there were technical faults with the defendant’s equipment that had led to non-receipt of completed forms.
  32. None of these classes of enquiry is, in my judgement, comparable to the problem with the claimant’s bid described above. There was no ambiguity in the bid. It was an incomplete bid on the wrong form that also happened to contain wrong information. Moreover the bid could not be assessed in isolation from the other bids being made by the claimant and that in itself rendered them ineligible in terms of proportion staff to new matter starts. This was not a case of a simple mistake that could have been perceived as such on the face of the application form.
  33. In the light of the claimant’s representation on review and the original ambit of claim in the present case, I see no reason to anticipate that she would have withdrawn all the other bids in the other areas if she had been asked for clarification as to her intention. She was indeed intending to bid for those other areas to rather than having had a mistake in submitting the same bid inadvertently to the other areas. This inevitably means that even if fairness or the defendants then practice required to make contact with the claimant’s firm any response that would have put claimant’s bid back into compliance with the eligibility criteria. It would have been a fundamental reframing of the application and affording an opportunity to improve it on the basis of information not submitted or intended to have been submitted at the original tender date. There is no evidence that the defendant organisation ever approached other tenderers for that purpose or awarded them contracts following such a contact. The evidence as a whole suggests it did not.
  34. I therefore conclude that whatever the information contained in the witness statement supplied in the All About Rights litigation may say for the accuracy of previous witness statements in other litigation, it does not provide material upon which the claimant can found a submission that the firm has not been treated equally by comparison with others in like situations. On this ground also this claim fails. Conclusion
  35. It is apparent from the way in which the claimant has marshalled the evidence it relies upon and the way that Mrs Hossack has advanced the claimant’s case orally, in writing and in the subsequent communication that she made to the Court, is passionately committed to her client base and believes she provides a unique and highly valued service. There is nothing in the present application to contradict those propositions, but that does not of itself found any basis for relief.
  36. Tempting as it may be in this, or other cases, where experienced litigators have not been awarded LSC contracts to continue to do that which they have done in the past with the consequent loss of their future services to a client base, it is simply not the function of the court to interfere in an essentially objective and transparent commercial bidding operation. Although fairness plays some role in the judicial assessment of the legality of the defendant’s decision making, whether on a judicial review, or normally given the subject matter by way of appeal in the Chancery Division provided for by the regulations, that role is constrained by the terms of the contract bid that must be adhered to. The problems with the claimant’s bid were fundamental. They were not caused by any error by the defendants whether as respect for technology they required the tenderers to use, or the terms of the bid they stipulated in the information for applicants.
  37. Whilst there remains some role for the defendant to both enquire into and permit clarification by way of amendment, in my judgement the present case falls outside anything that the defendant is either entitled to do under the terms of the Regulations or the IFA or required to do by application of the principle of equality and non-discrimination and proportionality. I therefore dismiss this application for judicial review.

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