This article is an excerpt from The Art of Tendering: A Global Due Diligence Guide, which is available for purchase.
In June 2015, a bid dispute panel released its report In the Matter of An Appeal by Dynalife, a bid dispute involving an Alberta Health Services (AHS) laboratory services RFP that had resulted in a contract award valued at $3 billion. The panel was constituted pursuant to the AHS vendor bid appeal procedure, which contained a number of procedural (non-monetary) remedies available when a panel finds that a vendor complaint has merit. Those remedies included the potential cancellation of the challenged procurement process.
The panel found multiple significant irregularities in the RFP evaluation process. The panel report essentially nullified the results of the initial evaluation process by recommending that AHS revisit its process and conduct contract negotiations with the other two proponents who, like the awardee, had submitted compliant proposals. In August 2015, in the aftermath of the panel report, the Alberta Minister of Health announced the cancellation of the contract award and stated that the Alberta government would be revisiting its outsourcing strategy for the acquisition of laboratory services in Alberta. The panel report serves as a useful case study for all public institutions conducting evaluation processes in major high-profile projects. Highlights from the report included the following:
- Retroactive Fairness Principles
The panel used the six “fairness principles” (transparency, integrity, equality, neutrality, consistency and compliance, and objectivity), introduced by the fairness advisor who was retained for the RFP process as the standards to measure AHS’s compliance with its fairness duty. This underscores the importance of carefully managing the use of external fairness advisors since the standards that they introduce into a government procurement process can later be used as benchmarks to measure that process in future bid disputes. This is particularly significant since those externally introduced fairness standards may not be consistent with existing institutional policies and procedures or with prevailing legal and audit standards.
- Process Transparency
The panel emphasized the need to maintain thorough and accurate evaluation records. The failure to clearly document the process details was a major reason why the panel was unable to conclude that the AHS process was conducted fairly and why the panel ruled against the resulting evaluation process. The panel found a need for greater transparency in AHS’s overall evaluation, ranking, selection, and award process path, and also stated that the ultimate contract award announcement “could have been handled better”. As these findings underscore, the overall process map in a public procurement evaluation needs to be clearly and transparently established to avoid creating proponent expectations that are contrary to actual process paths followed and that undermine the defensibility of that process.
- Causal Connection
Notwithstanding the complainant’s assertions, the panel appeared to reject the concept that a breach of a fairness duty automatically compels a public institution to cancel and start its process over. The panel’s reasoning implicitly accepted that if an institution can show a process breach to be immaterial to the outcome, a remedy may not be appropriate. However, based on this principle, the burden clearly shifted to the public institution to show that the irregularity did not impact the outcome. In this case, due to the above-noted gaps in recordkeeping, AHS was unable to show that it had contained the impact of the breach of its fairness duties. This “causal connection” concept, which has been applied in numerous bid protest challenges, underscores the importance of a well-documented process that adopts watertight compartments between evaluation categories and evaluation sub-teams in order to contain the negative impact of any irregularities in an evaluation process. The failure to implement these mitigation measures can undermine the defensibility of an otherwise salvageable process.
- Subjectivity is Problematic
The panel was highly critical of the apparently subjective “Good Fit Question” used by AHS evaluators (referred to by the complainant as “choosing your own evaluation”). This finding highlights the need to avoid any criteria or process rules that appear to introduce an element of subjectivity or arbitrariness into a government procurement process. The panel found that the lack of clarity in the evaluation process was exacerbated in the AHS evaluation by the application of a “pencil and pen” process, whereby evaluators were directed to revisit and change their scores. The panel found this to be problematic, particularly in light of the parallel finding that one of the individuals involved as an “advisory panel” to the evaluators was in a conflict of interest due to prior dealings with a particular proponent.
- Conflict of Interest
The panel’s finding that the conflict of interest of a single individual in the process compromised the fairness of the overall outcome reinforces the importance of establishing sound screening processes to prevent any risk of conflict of interest or unfair advantage, even if the individual in question may be playing a relatively minor role in the overall process. Institutions should adopt a zero-tolerance approach to the participation in evaluations by any individuals with an identified conflict or perceived bias.
- Undue Influence
The panel also took issue with the use of non-scoring assessors more generally. The panel was particularly critical of any type of scoring that relied on second-hand information that was not directly collected and assessed by evaluators during what was referred to as the evaluation “due diligence” processes conducted by AHS. The panel found that the non-scoring assessors could unduly influence the evaluators and that an evaluator’s scoring could be undermined by a lack of direct involvement in each aspect of assessing a proposal.
- Due Process Standards
The strict procedural standards applied by the bid protest panel reflects a broader administrative law trend in recent cases that hold government evaluation teams to the same standards of procedural formality that apply to administrative tribunals. Reconciling these strict standards with the need to include non-scoring subject-matter experts within an evaluation process will remain an ongoing challenge in future government procurement.
- Evaluation Team Numbers
The panel referred to expert evidence introduced by the complainant that challenged the use of large evaluation teams and maintained that five- to ten-member teams are the appropriate size for government procurement. While small evaluation teams may be impractical for large complex projects requiring a broad range of different types of specialized knowledge, this criticism of evaluation team size highlights the need to thoroughly document the rationale for using larger teams. It also underscores the need to establish clear mechanisms to sequester evaluation team members from unduly influencing each other or being influenced by other team members or evaluation sub-teams.
- Training Evaluators
The panel’s findings clearly illustrate the importance of ensuring that all evaluation team members are properly briefed and trained to participate in the evaluation process, particularly when involved in major high-profile projects. This would include the need to properly brief and train evaluators to avoid bias and to avoid making biased statements or taking biased or controversial written notes. The panel’s findings also underscore the importance of ensuring that all evaluators have all the required information before final scoring, and of ensuring that time pressures and scheduling logistics do not lead to variations from the planned evaluation process.
- “Correctness” Standard of Review
The panel report found that the appropriate standard of review for assessing the AHS evaluation process was the strict administrative law standard of “correctness”, rather than the more deferential standard of “reasonableness”. This finding had significant practical implications since the vast majority of administrative law decisions before the courts and the Canadian International Trade Tribunal (CITT) had to that date adopted a more deferential “reasonableness” standard in the review of government procurement evaluation decisions. Introducing a “correctness” standard to government procurement evaluations opens the potential floodgates to increased levels of intervention where courts, tribunals, or panel members can substitute their own views for those of technical subject-matter experts when reviewing the details of an evaluation. A broader adoption of a “correctness” standard in government procurement would inevitably increase the complexity of defending an evaluation against bid protests and call for greater due diligence measures for ensuring the defensibility of government procurement decisions.
