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:
The plaintiff’s grounds of challenge are as follows:
(a) The DRD discriminated against the plaintiff and/or including engaging in bias actual or apparent against the plaintiff by:
Having on its 2010 evaluation panel two individuals from within the DRD, David Compston and Michael McKendry, who should not have sat on the 2010 evaluation panel on the grounds of bias or apparent bias because:
(1) They had in the course of the 2005 procurement process marked down the predecessor company on the basis of a purported inspection of their premises not actually undertaken by David Compston and Michael McKendry.
(2) They had wrongly represented in the course of the 2005 procurement process (along with Jackson Minford) to the Central Procurement Directorate that the predecessor company had failed to complete satisfactorily the tender relating to schedules OPQ and R in the 2005 process thereby obtaining an advice from the Central Procurement Directorate which permitted the DRD to sub divide each of the schedules to the material detriment of the predecessor company and to the material advantage of PWS Ireland Limited.
(3) They had a professional and collegiate association with Jackson Minford who had an inappropriate and undisclosed relationship with PWS Ireland Limited during and subsequent to the 2005 and 2009 procurement processes and who as a consequence of that relationship was removed from 2010 procurement process.
(4) They were aware of being complained about by the plaintiff and David Connolly and of being the subject of an internal and external investigation on foot of a series of serious complaints that struck at the heart of their professional integrities. In those circumstances even if there was no substance to those complaints their presence on 2010 procurement process constituted an actual and apparent bias against that complainant who was the plaintiff.
(5) They failed to consider the plaintiff company between 2006 and 2010 for any works previously awarded to the predecessor company which had fallen into liquidation notwithstanding that the plaintiff company was established in 2006 and performed the same work as the predecessor company.
(6) Failed to consider the plaintiff company for the temporary supply of road signs on 30 June 2010 when he advised that there were 4 other companies from whom road signs could be sourced temporarily.
(7) David Compston was the contract administrator on another school traffic signs contract which required him to work closely and continuously with PWS over a number of years. In those circumstances and in order to avoid the appearance of bias to the reasonable man he should not have been asked to or have agreed sit on the 2010 evaluation panel assessing tender bids which included PWS.
The Court then summarized the governing procurement case law principles regarding discrimination, actual bias, and apparent bias in government evaluations:
The test to be applied in relation to apparent bias has been modified by the House of Lords in Porter v Magill [2002] 2 AC 357. At paragraph 103 Lord Hope stated the test that is to be applied:
The question is whether the fair-minded and informed observer, having considered the facts, would conclude that there was a real possibility that the tribunal was biased.
The application of the test to the present case may be adapted from the wording in Gillies v Secretary of State for Work and Pensions [2006] 1 WLR 781 at paragraph 17:
The critical issue is whether the fair-minded and informed observer would conclude, having considered the facts, that there was a real possibility that the [defendants would not evaluate the tender] objectively and impartially against the other evidence.
In relation to the concept of the “informed” observer it is stated:
“The fair-minded and informed observer can be assumed to have access to all the facts that are capable of being known by members of the public generally, bearing in mind that it is the appearance that these facts give rise to that matters, not what is in the mind of the particular judge or tribunal member who is under scrutiny.
In relation to the “fair-minded” observer it is stated:
… that the observer is neither complacent nor unduly sensitive or suspicious when he examines the facts that he can look at. It is to be assumed too that he is able to distinguish between what is relevant and what is irrelevant, and that he is able when exercising his judgment to decide what weight should be given to the facts that are relevant.
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 Balfour Report investigated this issue as Allegation 8, recording the complaint as being that members of the 2005 site visit panel had fabricated parts of the site visit records and assessed parts of the factory they had not visited. The Report found no evidence to substantiate the allegation. The Balfour investigation never identified the precise allegation made by Mr Conway in relation to the site visit. However all those present at the 2005 site visit were interviewed during the investigation and each confirmed their presence at all parts of the site visit so the complaint was not upheld.
After the site visit the four visitors made fair copies of their record sheets and destroyed the rough copies made during the visit. All four met the following Friday and the three members of the Panel agreed a moderated record sheet of the visit, which was written up by Ms Denyer at the meeting and later typed. The handwritten version was then destroyed. A freedom of information request for the contemporaneous notes of the site visit produced the fair copy record sheets. The rough notes made during the site visit were not retained and their previous existence was not disclosed in response to the freedom of information request. While there were shortcomings in the retention of records I am satisfied that there was no wilful attempt to conceal the existence of relevant information.
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:
Ground (a)(i)(3) – Jackson Minford
There are three steps in the plaintiff’s complaint about the connection of the two Panel members with Mr Minford. First that the two members had a professional and collegiate association with Mr Minford, secondly, that Mr Minford had an inappropriate and undisclosed relationship with PWS and thirdly that as a consequence of that relationship Mr Minford was removed from the 2010 process. Mr Minford visited the PWS trade stand in Amsterdam and visited other stands at that trade fair. I am satisfied that there was no impropriety arising from his visit to the PWS trade stand. During the Balfour investigation it emerged that Mr Minford, in his capacity as Secretary of the Institute of Highway Engineers, had secured from PWS and other work connections, sponsorship for the Institute’s annual golf tournament of sums in the region of £50 to £100. This connection was not disclosed by Mr Minford to the Balfour investigation when he was being asked about his relationship with PWS. He stated that he did not consider it to be relevant. However the connection was disclosed by PWS when they were interviewed by the Balfour investigation. The result was that Balfour recommended that Mr Minford should not be involved in further traffic signs procurement. Accordingly Mr Minford was removed from the 2010 Panel.
The defendants circulated conflict of interest forms to all those potential members of evaluation panels. Mr Minford, who completed a conflict of interest form, did not disclose any conflict of interest arising from the golf sponsorship connection with PWS. He did not consider that it constituted a conflict of interest. The defendants might be clearer as to what should be declared on conflict of interest forms. However I do not accept the plaintiff’s characterisation of this relationship as “inappropriate”. That a conflict of interest might arise between members of an evaluation panel and those being evaluated does not render the relationship inappropriate. That such conflicts of interest might arise in relation to members of evaluation panels in any area of procurement or recruitment is not uncommon.
In any event the essential nature of this ground of complaint is that there was actual bias on the part of Mr Compston and Mr McKendry, or in the alternative that the circumstances gave rise to apparent bias, arising from their professional and collegiate association with Mr Minford and in their reaction to his removal from the 2010 process. I am satisfied that there was no actual bias on the part of Mr Compston or Mr McKendry. Similarly I am satisfied that in all the circumstances there is no basis for a complaint of 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.
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 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.
