This article is an excerpt from The Art of Tendering: A Global Due Diligence Guide, which is available for purchase.
As recent rulings from Malta’s Public Contracts Review Board (the Board) illustrate, price evaluations remain a leading source of bid protests. These cases serve as a reminder to public institutions across all jurisdictions of the importance of defining clear price evaluation rules to better ensure the defensibility of evaluation and award decisions.
For example, in its January 2022 decision in Case 1669 – KLH/TDR/05/2021 – Tender for the Collection of Household Waste from the Locality of il-Hamrun in an Environmentally Friendly Manner, the Board upheld the decision to reject an over-budget bid and cancel a tendering process. The Board confirmed that the low bid was more than double the estimated procurement value and that this variance fell within the parameters of the bid cancellation rules. While the Board upheld the evaluation committee’s cancellation decision, the variance between the original budget estimate and actual bids highlights the bid protest risks created when budget estimates are not in alignment with actual market prices.
Further, in its March 2022 decision in Case 1689 – SPD1/2021/121 – Call for Tenders for the Supply and Installation of Fenders at the Esplora Foreshore Jetty, the Board upheld the rejection of a bid due to errors in the bidder’s price submission form. While the bidder challenged the evaluation committee’s refusal to allow it to adjust its unit price so that those numbers properly reconciled with the rest of its price submission, the Board held that the specific tendering rules did not permit this rectification and that the bid was therefore validly rejected. While the rejection was upheld, broader rectification rules could have salvaged the bid and avoided the legal challenge.
In fact, in its February 2022 decision in Case 1679 – SPD8/2021/096 – Framework Contract for the Supply and Delivery of Diesel EN 590 (or Equivalent), to the Gozo Waste Transfer Station and Vehicles, the Board ordered a re-evaluation after finding that a bid was rejected due to errors in the government’s pricing form. While the form stated that prices would be evaluated exclusive of value-added tax, the formula in the form included the tax and did not allow bidders to alter the numbers to manually exclude the additional amounts. After finding that the price evaluation could be rectified since the required pricing was already included in the original bids, the Board struck down the original evaluation and award results and ordered the government to appoint a new evaluation committee to re-evaluate those bids.
However, in its May 2022 decision in Case 1540 – MF112/2020 – Procurement of Card Services, the Board terminated a tendering process after finding that the evaluation committee applied non-transparent pricing assumptions in its evaluation of bids. As the Board stated, “the evaluation committee made use of assumptions which were not included in the tender dossier, and/or never communicated to economic operators.” The Board ruled that “such actions from the evaluation committee are certainly in breach of the self limitation principle of public procurement” and that “it is crucially important to note that the award criteria, and hence method of evaluation, cannot be altered after bids are submitted.” Since the hidden assumptions denied bidders the right to know the ground rules for price calculations before submitting their bids, the Board stated that “it is useless to order this tender back for re-evaluation” and instead cancelled the entire tendering process.
As these case studies illustrate, the defensibility of evaluation decisions will often turn on the accuracy and transparency of price evaluation rules. Purchasing institutions should ensure that those rules are precisely defined in their solicitation documents.
