EU Procurement Contract Award Criteria... No More Tweaking
Below is an article written by Allan Donovan on the subject of EU procurement contract award criteria.
With apologies for the paraphrasing, the above appears to be the thrust of a recent High Court decision handed down by Silber J. that has important implications for all local authority officers concerned with procurement exercises.
In Letting International Ltd v LB Newham [2008] EWHC 1583 (QB) it was held that local authorities who are proposing to undertake a procurement exercise to which the EU procurement regulations apply must, at the outset, disclose all the criteria, including any sub criteria, together with all the weighting attaching thereto, that is to be used during the evaluation and award process.
The Invitation to Tender (ITT) for a framework agreement stated that the award criteria would be broken down so that "Compliance with Specification" to be evaluated by reference to submitted method statements, attracted 50% of the marks available. Pricing, evaluated by submission of pricing schedules attracted 40%, and Suitability which was evaluated by site visits attracted 10%.
What the ITT didn't say was that the criteria itself would be broken further into sub criteria that would attract varying weighting. There was some 28 sub criteria with varying weighting that had not been disclosed in the ITT. There was no dispute that the same information had been given to all tenderers and, to that extent, all were treated equally. Further, the court concluded that the claimants did not need to show that the decision to award the contract would have been different had there been proper and full disclosure. It was sufficient that the failure to disclose all the relevant criteria and weightings merely resulted in "the loss of a significant chance of obtaining the contract", i.e. that the result could have been different. This case was all about Transparency and the failure to mention in the ITT all of the criteria, including the sub criteria and the respective weightings was a breach of the 2006 Regulations, in particular, the requirement of Transparency.
This note is not intended to be a detailed analysis of the decision. Nigel Giffin QC and Jason Coppel (both of 11 King's Bench Walk) appeared for the successful claimants and very informative notes can be found on their website at www.11kbw.com where it is also possible to download the full judgement. An equally thought provoking commentary may be found on the website of Monckton Chambers at www.monckton.com albeit, from a different perspective. I am more concerned with the implications of the decision both for local authority officers and prospective tenderers.
The implication of getting it wrong for local authorities is obvious. The Letting case was heard over 4 days. There were preparation and appearance costs of a leading QC plus junior counsel in addition to solicitor costs. And of course, the costs involved with officers dealing with and responding to requests for information and clarification, gathering of evidence, preparation of witness statements, and court appearances. Consider also the cost of interim hearings in this matter and it all adds up to a frightening chunk out of anyone's budget.
But, does this judgement make it any easier for local authorities to get things right? And what can be done to avoid the pitfalls that were identified?
In many cases, officers responsible for procurement are going to have to completely rethink the way they approach procurement exercises. The bulk of the work will need to be done at the front end of the exercise. That is, the planning and preparation stages. This will represent something of an about face, judging from numerous exercises that I have witnessed. No longer will it be permissible to merely state the broad contract award criteria in the ITT, safe in the knowledge that there is plenty of time for fine tuning and tweaking.
In the present case, Newham had stated that compliance with the specification would carry 50% of the total marks and be evaluated by reference to the method statements. They also stated that the method statements should address 5 specific areas but failed to disclose that those 5 areas themselves were to carry a specific proportion of the overall marks, each with a different weighting. The reason that the weighting attaching to those 5 matters had not been disclosed, it transpired, was because the decision to attach those weightings had not been made until after the ITT had been sent out but prior to any tenders being returned.
The above scenario is probably beginning to look very familiar to a number of local authority officers. Indeed, it may well be the case that there wasn't a great deal of difference between the Newham tender process and the procedure that many other local authorities adopt. However, failure to disclose, at the outset, all the criteria and all of the weighting was sufficient for the court to find there had been a breach of the Regulations and in particular, the requirement of transparency.
I suspect, also, that many local authorities will empathise with Newham's further argument that the 5 areas of the method statements weren't criteria at all but merely the "machinery" to assist in reaching the conclusion and, as such, did not fall to be disclosed. Such semantics were swept aside with the effect that it would be wise to err on the side of caution and treat the consideration of any matter that may impact upon the award decision as criteria to be disclosed at the outset, regardless of the label attached.
Neither will it assist you to argue that even if full and proper disclosure had been made, it would not have affected the result because all the other tenderers would also have used such disclosure to ensure that their tender was more focussed, just as the claimants would have done. Nor, that because this was a framework agreement, there was never any guarantee of a minimum level of work and therefore, the claimants are unable to establish a quantifiable loss.
The result appears to be that if you deviate from the evaluation award criteria that you have stipulated at the time that you invited tenders, the procedure will be open to challenge. To that extent, there are distinct similarities with the Blackpool v Fylde Aero Club line of cases. That begs the questions; would principles of EU procurement regulations be brought into play where they never existed before? Can you introduce EU principles where, for example, the value of the contract is below the threshold? Or, in those circumstances, would a decision be made by reference to the Blackpool line of cases without reference to EU principles at all? Would the Commission's view on contracts falling marginally below the threshold introduce the full rigours of EU procurement regulations? And, one for the students; Does Freedom to Contract still exist within public procurement? Discuss.
There remain many questions. Are the answers out there?
Allan J. Donovan © 2008
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