Insights into evaluating tenders

A London council recently defended a procurement claim over a housing repairs and maintenance contract worth some £177m. Colin Ricciardello analyses the Technology and Construction Court's ruling and considers the importance of careful debriefing.

On 9 October 2014 an action brought by Willmott Dixon Partnership Ltd (“WD”) against the London Borough of Hammersmith & Fulham [1] (“H&F”) was dismissed in the Technology & Construction Court. 

Interestingly the grounds of the challenge largely came from comments about WD’s tender made post submission of WD’s final tender and after the award decision. 

Background

WD were the incumbent contractor for H&F’s housing repairs and maintenance services. They came second to Mitie. 

The ITT stated that:

(i) The contract was to be awarded to the most economically advantageous tender;

(ii) There was 40% weighting for quality and 60% weighting for price;

(iii) Quality was evaluated on the basis of method statements, including one for gas safety in respect of which 100% compliance was emphasised;

(iv) The criterion of quality for ICT was specified in a table with weightings;

(v) The quality criteria scores were to be decided by way of consensus.

Before award decision letters were sent rumours circulated that Mitie had been awarded the Contract and that led WD to contact H&F about these rumours. During a telephone conversation H&F told WD that they had come a “fighting second”; they were cheapest on price but had lost on quality, particularly on its ICT proposal. Further; H&F said it had been looking for a “sea change” in the approach to the delivery of the services and that had not come across in WD’s submission that; there were concerns about WD’s current performance.

Also before sending award decision letters H&F issued a press release commenting on some dissatisfaction with the current service provided by WD and that these problems would be reduced by “… teaming up with Mitie …”.

When the award decision letter was received WD saw that its total score was 85.32 and Mitie’s 86.15. 

Shortly after that letter a debrief meeting was held during which WD were told that their late decision to include a particular subcontractor in their tender submission was seen as a “big negative”. Also, the importance to see a “sea change” in delivery was again mentioned as being important to H&F. 

Also, in the course of a current contract performance review meeting, the failing subcontractor was again mentioned as was WD’s proposed use of a “weak manager”.

In summary this feedback included:

(a) Concerns about WD’s current performance;

(b) WD proposed to use a particular poorly regarded subcontractor;

(c) WD had proposed to use a weak manager;

(d0 WD’s bid had failed to show a “sea change” in delivery.

At the trial of liability there were many issues and sub-issues before the Court but in relation to (a)-(c) above, it was argued that they were essentially selection criteria and not award criteria intended to identify the most economically advantageous tender – the principle being that a contracting authority must not evaluate tenders by reference to a tenderer’s ability to perform the contract [2].

The case built on (d) above was that it was evaluation criteria that was either not specified or not specified with sufficient clarity. 

The overall point was that these factors at (a)-(d) were irrelevant factors which should not have influenced the evaluation [3].

Evaluation influenced by irrelevant considerations which would not identify the most economically advantageous tender

(i) The poorly regarded subcontractor

WD’s proposed use of this subcontractor in its supply chain was a late change post-PQQ. The evaluators’ discussion and e-mail traffic about whether this late change suggested a weakness in WD’s supply chain was held to be a legitimate (permitted under the published evaluation criteria) discussion that was not concerned about past performance but was about how WD explained it would perform the Contract in the future. 

Further, the Judge held that the evaluators were entitled to read the proposal concerning the subcontractor as offering a 99.75% compliant gas servicing by reference to its performance under the current Contract. That was held not to be 100% compliance required by the ITT. On that basis, alone the Judge held that there was no manifest error which gave the Court jurisdiction to interference.

Whilst members of the evaluation team had said that they thought that WD had made a mistake in tying in with this subcontractor, the Judge held (by reference to the scores actually awarded) that was not a matter that had any impact on the scoring.

(ii) Proposed use of the weak manager

Again, whilst the evaluators considered that WD had made a mistake in relying on this manager, it was not in fact a matter which affected the scoring. As with the sub-contractor point, this was decided by reference to the scores actually awarded. 

(iii) Evaluation influenced by criteria that were either not specified or not specified with sufficient clarity

This issue largely centred on indications given in the debrief that a “sea change” in the delivery of the service was required. However, that was not part of the disclosed evaluation criteria. 

It was held that a decision to seek a radical change was something which H&F were perfectly entitled to take but it did not follow that H&F necessarily were looking for a new contractor. 

What is more, on the facts of this case, even though the phrase “sea-change” had not been used all tenderers knew from the tender documents that the council wanted a “radical change” to the previous service. 

Further, WD’s tender referred to its past performance as a means of explaining or evidencing what it proposed for the new contract: “Having done so it could have no complaint if H&F looked at what WD had said and expressed its own view about it”. Also; “If a bidder included responses to particular sub-criteria in a manner which did not recognise the need for change but suggests the future performance based on what had happened before, there is nothing objectionable about saying that this did not represent a good response to the sub-criteria.”

On the basis of the above matters the Judge held that H&F did not impermissibly evaluate WD’s tender by reference to criteria that were not specified in clear and precise terms. 

There were also a number of e-mails between the evaluators which mentioned WD’s performance under the original contract but the Judge saw nothing “… intrinsically objectionable” about those comments. “They may reflect only what might have been discussed orally before the advent of e-mail systems. There is nothing illegitimate about the robust expression of views”. 

(iv) “Undisclosed” ITT award criteria

This argument was based on an evaluator marking WD down because it did not “… use a specialist interfacing software tool and did not have a financial interface” and these “criteria” were not set out in the ITT or specification. That argument failed because there was no requirement to disclose every standard by which a bid is to be evaluated, no matter how minor or subsidiary they were. As per Varney [4]  it was held that it was not necessary for a contracting authority to spell out anything and everything which might improve a bid if it is included or credit will be lost if it is omitted. 

Also, on the facts of this case the Judge held that the tenderers were asked to provide an overview of their full IT solution and how their systems would interface with H&F’s financial requirements. That general requirement was sufficiently wide to suggest that it was not necessary to specify something as detailed as the use of a specialist software tool and financial interface in order to receive higher marks if they were specifically included in a tender.

Another point against WD was that the other tenderers recognised the importance of describing such software and that helped to establish that there was sufficient clarity. 

(v) Was there a failure to score quality submissions in accordance with the disclosed consensus scoring methodology?

This argument was based on the fact that either scores were adopted without discussion or awarded as a result of a majority vote. It was held that the ITT required a decision by consensus but that did not necessarily require a specific discussion on every score and it followed that if the evaluation panel knew what the scores were (however they were arrived at) and were content to adopt them, then there was a consensus through that adoption. Importantly, there was no suggestion that this approach to consensus scoring for WD’s tender was not adopted equally for every other tenderer.

(vi) Expert evidence and the Court’s function in procurement challenges

WD sought to put forward evidence from its Director of Operations which reviewed Mitie’s bid. The purpose of this evidence was to show that the award criteria had not been applied objectively and uniformly so that the scores awarded to Mitie and WD did not properly reflect the difference in equality between their bids. As such, an error in the scoring had been made. 

Counsel for H&F did not accept this review exercise was permissible because this involved the Court engaging in a re-marking of tenders and that was not its function. That argument was accepted [5]  and it was not the Court’s task to embark on a re-marking exercise and to substitute its own view but to ascertain if there was a manifest error “… which is not established merely because of on mature reflection a different mark might have been awarded”. For scoring to amount to a manifest error something quite drastic must have occurred without rational foundation, something which no reasonable authority could conclude if it exercised legitimate judgment. So a Court would look at scores awarded to see if it suggested something irregular or untoward as was the case in DWF v SoS for Business [6]  where an aspect of the scoring appeared inexplicable and anomalous.

Also, in BY Development Ltd and Others v Covent Garden Market Authority [7] it was held that whilst it could not be said that expert evidence would never be admissible in public procurement cases concerned with manifest error, such evidence would not be generally admissible or relevant as the Court’s function was a limited one, namely reviewing to see whether there was a manifest error and/or whether the process was in some way unfair. “The Court is not undertaking a comprehensive review of the tender evaluation process; neither is its substituting its own view as to the merits or otherwise of the rival bids for that already reached by the public body”.

(vii) Implied term

The well-known argument that the relationship in a tender process creates an implied contract that the contract would be awarded in accordance with the 2006 Regulations was again run in this case. This argument was advanced in order to deal with H&F’s case that the claims based on breaches of duty occasioned by the ITT were time barred because the date of knowledge of those breaches arose from the date when WD knew or ought to have known about the content of those documents. There is quite a substantial body of case law to the effect that where the Regulations apply in full there is no room to imply a contract. The Judge comfortably followed that line of authority.

Conclusions

What is clear is that H&F’s references to things which they did not like about WD’s tender fuelled this litigation, even though those dislikes did not relate to any evaluation criteria and, (on the facts and evidence of this case) they did not influence the award decision. However, things might go quite differently in another case and the message should be to tightly manage all debrief explanations and internal discussions as to why a decision was made/marks awarded are by reference to evaluation criteria only. In cases where a contracting authority wishes to help a losing tenderer in its future tendering opportunities by providing constructive criticism, it should be emphasised that those observations actually did not affect the marking of the tender but were being supplied as observation only pointers for the future.

This decision also usefully reminds of:

1. the distinction between selection and award criteria. In particular, the points at (a)-(d) in the Background section have no place in the award process;
2. where the contracting authority has some specific requirements or features in mind (however minor) it would help to avoid a lack of transparency claim if that is spelt out in the invitation document;
3. the Court’s limited review function in procurement challenges. 

It also provides useful guidance as to what process the Court considers constitutes scoring decided by way of consensus. It would be a good discipline to have the evaluation team actually sign up to the consensus score and ensure that the record of decisions, scoring notes are all linked and can be referred back to the evaluation criteria. 

Colin Ricciardiello is a partner at Sharpe Pritchard. He can be reached on 020 7405 4600 or This email address is being protected from spambots. You need JavaScript enabled to view it..

[1] HT 13 166

[2] Lianakis v Alexandroupolis Case C- 532/02

[3] Environmental Waste Control Ltd v Lancashire County Council [2010] EWCA Civ 1381 where the Court similarly considered evaluators taking into account irrelevant criteria. It was held at first instance that the evaluators took into account the financial standing of the claimant and that “subconsciously infected their evaluation”. They should not have done so as they were irrelevant selection criteria. That decision was reversed by the Court of Appeal because it was satisfied that the irrelevant factor of financial standing actually did not influence the evaluator’s final decision.

[4] Varney & Sons Waste Management Ltd v Hertfordshire County Council [2011] EWCA Civ 708. See also ATI EAC v ACT Venezia [2005] ECR I-10109 which sets out certain limited conditions when a contracting authority could be entitled to withhold sub-criterion weightings/where that sub-criteria would not have affected the preparation of tenders.

[5] See Letting International Ltd v Newham London Borough Council [2008] EWHC 1583 (QB).

[6] [2014] EWCA Civ 900.

[7] [2012] EWHC 2546 (TCC).