"… meetings of contract procurement evaluation panels are something considerably greater than merely formal events. They are solemn exercises of critical importance to economic operators and the public and must be designed, constructed and transacted in such a manner to ensure that full effect is given to the overarching procurement rules and principles."
(McCloskey J in Resource NI v Northern Ireland Courts and Tribunals Service)
However, although procurement legislation sets out broad structures for public sector purchases of works, goods and services (competitive dialogue, competitive procedure with negotiation, open, restricted procedures, and more recently the innovation partnership); issues such as governance structures, marking schemes, approaches to bidder clarification are left to the discretion of individual contracting authorities, who must work within the EU Treaty principles of transparency, equal treatment and proportionality. Very little guidance exists on how to apply those principles in practice. This month's Procurement Pulse therefore looks at evolving case law, in particular the Energy Solutions case published on 29 July 2016, which provides guidance in the context of a high capital value and complex procurement process.
Where a bidder challenges the outcome of a procurement, the Lion Apparel line of case law makes it clear that there are only grounds for contesting the decisions and final scoring of a contracting authority, where it has made an obvious or "manifest" error. Where no obvious error has been made, the courts will not question the way in which an authority has chosen to run its procurement. This broad discretion does not however extend to the transparency or equal treatment principles, or to the rules the contracting authority itself designed for the procurement process. To determine whether a manifest error has been made, the courts look very closely at the facts surrounding the process.
There are a number of lessons to be taken away from the courts' deliberations in these areas:
Calibrate the scoring system (numbers and explanatory wording) before it is published to bidders
As a procurement progresses, it may become clear to the evaluation team that the scoring mechanism is producing adverse outcomes. The points thresholds for "pass/fail" criteria developed to measure fundamental bidder attributes, may with hindsight appear overly harsh, and mandate elimination of certain bidders, thereby diminishing the competitive process. There is no discretion for an authority to adjust certain aspects of the rules of its own competition, and an argument that it is proportionate to bring a bidder's score within threshold, when the facts do not support the requirements of the relevant evaluation criteria, was not supported by the court in the Energy Solutions case.
Manifest error relates to the process of reasoning, not just the final score
In a complex procurement that requires bidders to indicate how they would respond to a particular scenario/case study, it might be argued that such an "evaluative" process is not capable of manifest error. Courts will, however, look to objective guidance and standards applying in the particular industry sector involved, which may indicate that the evaluation team's reasoning was obviously wrong - which in turn led to them allocating the wrong score. The Energy Solutions case held that the test of manifest error is not confined to consideration of the score but also that evaluation criteria have been interpreted correctly, and that the reasons given for the score can be justified. All three must be correct for the decision to have been reached without manifest error.
Diverging from the evaluation methodology may prejudice transparency and equal treatment
A competitive dialogue procedure, designed in phases to cumulatively produce the desired outcome, may lead to the evaluation team wishing to revisit scores already finalised pursuant to the rules of the evaluation methodology. New issues which arise may be pertinent to some bids but not to others. Opening up scores originally agreed through a formal consensus process, on an ad hoc basis, risks prejudicing a transparent process.
Keeping records is fundamental to a transparent process
Record keeping is key to any procurement and the Public Contracts Regulations of 2015 make it clear that contracting authorities should "document the progress of all procurement procedures, whether or not they are conducted by electronic means" and "ustify decisions taken at all stages of the procurement procedure". Seeking to argue that keeping records, particularly in a competitive dialogue process, is too logistically demanding will therefore not wash in terms of a court's interpretation of the transparency obligation, or the legislative background. It is the duty of a contracting authority to keep comprehensive records. If it fails to do so, it only has the memories of individual members of its evaluation team to rely upon - which may be inconsistent. As the judge said in the Energy Solutions case - "inconsistency in treatment of bidders can amount to unequal treatment."
Electronic note taking may not be the best way to ensure transparency
When using procurement evaluation software some behaviours, such as "cut and pasting" evaluation criteria wording from the procurement documents into the software's notes function, and restricting note taking to electronic input to the software system, may impair transparency. In Energy Solutions, the court noted that copy and pasting may introduce errors of the original wording into the scoring system. The judge also felt that "it is not necessarily easy to keep sensible or comprehensive notes on such a system" and considered that any evaluation team should be allowed to make manuscript comments on the bid documents, as well as in notebooks - all of which should be made available to the court.
Witness bonus payments contingent on a successful challenge are contrary to public policy
Commercial organisations may justifiably award bonuses to their personnel as a result of winning a bid. But what if another bidder wins, and there are strong grounds to believe that there were manifest errors in the scoring of its bid? There is no basis for awarding the original bonus, but it is not an unreasonable line of thinking to offer bonuses if a challenge to the authority's decision is successful. Care needs to be taken here - monetary reward may introduce temptation for a witness to give untruthful evidence - to ensure a successful outcome. Reimbursement of time spent in preparation of the case and appearing as a witness is enforceable, but otherwise take advice on the drafting of this type of arrangement and always disclose it to the court.
Third party involvement in scoring process may cause gaps in the court's analysis
The courts have a role to determine whether or not an aggrieved bidder is correct in its analysis that a public contract has been wrongly awarded. It is frustrating to the court if the evidence which would enable proper consideration of the case is not available. This can happen where lawyers are appointed to assist in the evaluation process, and the client contracting authority claims legal professional privilege over communications between itself and its legal team. In interim proceedings before the Energy Solutions case went to full trial, Akenhead J approved NDA's decision to claim privilege over communications with its lawyers. At full trial Mr Justice Fraser stated "I am not asked by Energy Solutions to consider whether the assertion of privilege amounts to a breach of the … obligation of transparency," indicating that there could be further developments in the law on transparency, should an economic operator choose to raise the issue in future proceedings.