This article is an excerpt from the 2021 edition of The Art of Tendering: A Global Due Diligence Guide, which is available for purchase.
In its February 2011 decision in Traffic Signs & Equipment Ltd v. Department for Regional Development, the High Court of Justice in Northern Ireland, Queen’s Bench Division, rejected a losing bidder’s bias claim but upheld the challenge based on the government’s use of undisclosed evaluation criteria. The dispute dealt with a tendering process for the award of a contract for the supply of road signs and posts. The complainant challenged the composition of the evaluation panel since its members included individuals who had participated in past evaluations of the bidder that had resulted in prior complaints. The complainant asserted that these past events gave rise to bias concerns regarding those evaluators.
As the Court summarized, the evaluators in question were evaluation panel members in a prior evaluation process involving the complainant, in which the site visit rough notes were destroyed and only the final formal notes were kept as records. While the record-keeping in the prior process was flawed, the Court determined that, contrary to the complainant’s assertions, this did not constitute a deliberate attempt on the part of those evaluators to improperly conceal parts of their evaluation or fabricate the evaluation results. In fact, as the Court noted, those allegations were refuted in a prior investigation. The Court determined that there was no basis to conclude that this resulted in actual or apparent bias on the part of the evaluators in question.
The Court then considered whether a prior association between two of the evaluators and an individual who was associated with a competing bidder gave rise to bias. Those concerns stemmed from prior work by one of the evaluators as the Secretary of the Institute of Highway Engineers, during which time he interacted with the member of a competing bidding team at a trade show and accepted a small donation from that company to sponsor the organization’s annual golf tournament. The Court rejected the plaintiff’s characterization of this relationship as inappropriate and found that it did not give rise to either actual or apparent bias.
While it concluded that the plaintiff failed to make its case regarding actual or apparent bias, the Court agreed with the plaintiff regarding the allegations of unfair evaluation criteria. The Court concluded that the government employed a flawed evaluation process since it could not explain why non-price factors were weighted at 40 percent of the overall evaluation since bidders were also required to obtain a prescribed “sector 9A: industry quality accreditation” as part of the bidding process:
The balance between relevant criteria must be capable of justification as appropriate to the determination of the most economically advantageous tender. The prospect of significant impact of one criterion or a number of criteria on the overall assessment may require explanation if there is to be compliance with the obligations of objectivity and transparency. It is necessary to ensure that the tenderers are reasonably informed of the criteria and arrangements which will be applied to identify the most economically advantageous tender. It may not be sufficient merely to state the criteria and their weightings. The potential impact of a qualitative criterion may require particular attention as it includes a subjective element in the assessment. In the circumstances of the present case the allocation of 40% of the marks to the quality assessment requires justification if the criteria are to be seen to be objective and transparent. No justification was offered for the conclusion that 40% of the marks be allocated to quality, other than it was left to Mr Maxwell to make the assessment and exercise his judgment. Ultimately this is indeed a matter of judgment but not one that is bereft of explanation.
Given the history of the traffic signs contracts and of concerns about quality assessment and subjectivity and the introduction of sector 9A accreditation as a measure of quality and the assurance by CPD that sector 9A accreditation had effectively removed quality assessment and the potential impact of the marking arrangements when 40% of marks are accorded to quality, the final adoption of a 40% measure of quality requires explanation and justification. The failure to do so is compounded when it is demonstrated that the arrangements for quality assessment effectively determined the allocation of the contracts and secured the award of those contracts to the tenderer who in broad terms was submitting higher prices. The adoption of the 40% quality measure does not accord with the obligations of objectivity and transparency.
In coming to its conclusion, the Court was careful to note that the 40 percent weighting to quality may have been appropriate, but that the government’s failure to show that it had engaged in any rational analysis to arrive at that weighting constituted a manifest error in its evaluation process:
The plaintiff contends that the adoption of the 40% quality mark constitutes a manifest error. The plaintiff accepts that the three quality elements are appropriate and contends that the quality measures should be some 10% to 20% of the total. Accordingly the debate is in effect to establish where in the range of 20% to 40% the quality assessment should be measured. No attempt has been made to assess the appropriate relationship between price and quality and the impact of a higher quality assessment on a lower price assessment. In the absence of an exercise that determines where the balance should lie it is not possible to determine that the Department’s adoption of a 40% quality measure constitutes a manifest error. 40% may turn out to be justified as the measure of quality. I have found the defendant’s failure to be that no proper analysis has been undertaken in this regard.
The Court therefore set aside the government’s evaluation results due to this manifest error in the allocation of weightings. As this case illustrates, project teams may be called on to justify their evaluation weightings against allegations of bias or unfairness and should therefore be prepared to defend the internal decision-making process that led to the allocation of those weightings. If those weightings are subsequently challenged and there is no evidence of a rational decision-making process behind how those weightings were initially set, this could expose the resulting evaluation to a successful legal challenge.
