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 2012 decision in Easycoach v. Ltd Department for Regional Development, the High Court in Northern Ireland, Queen’s Bench Division, struck down a government evaluation after finding multiple evaluation errors. The dispute dealt with a tendering process for the provision of transportation services to disabled and elderly passengers. A losing bidder challenged the evaluation process, alleging multiple irregularities, including the use of subjective evaluation criteria, lack of transparency in the evaluation criteria, and the failure to reject non-compliant competing bids.
The Court agreed with the complainant on the first ground of complaint, finding that while purchasing institutions have a margin of discretion in creating their evaluation criteria, those criteria must ultimately be reasonable and transparent. In this case, the Court found that the government’s evaluation criteria left too much discretion to the evaluators and therefore breached applicable transparency standards:
The essence of the argument advanced by Mr. Dunlop (of counsel) on behalf of the Plaintiff was that the selection criteria were unlawful per se on the ground that they were subjective, rather than objective, in nature; they lacked clear and specific thresholds, they were couched so as to confer excessive discretion on the part of the evaluation panel and, further, their terms encouraged the provision of unreliable and unverified information by bidders; the selection criteria invited a surplus of evaluative judgment on the part of panel members, rather than the application of a simple pass/fail approach. Stated succinctly, it was argued that panel members had too much freedom of choice. Mr Dunlop submitted, in the alternative, that the nebulous nature of the selection criteria gave rise to a breach of the Department’s duty of transparency. As highlighted in Public Interest Lawyers v Legal Services Commission [2010] EWHC 3277, paragraph [60], the contracting authority must formulate its criteria in a manner which enables it to “verify effectively” whether they are satisfied by the tenders submitted.
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It is clear from Regulations 15 and 25 that the adoption of selection criteria in a given competition is a matter of choice for the contracting authority concerned. It is well established that where selection criteria are adopted, they must focus particularly on the technical knowledge and ability of bidders, while conferring some discretion on procuring authorities as to how these qualities are to be demonstrated. In Embroiders –v- The Netherlands [1990] 1 CMLR 287, the ECJ held that the purpose of Articles 25 – 28 is “… to determine the references or evidence which may be furnished in order to establish the contractor’s financial and economic standing and technical knowledge and ability …”, thereby conferring some discretion on national procuring authorities, provided that they act within the bounds of all relevant EU legal requirements. While an appropriate measure of discretion is permissible, selection criteria will be deemed unlawful where they are formulated so as to confer excessive choice on the part of the contracting authority. The specific legal rules in play here are properly viewed as a reflection of the overarching principles of equality of treatment of all bidders and transparency.
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All four selection criteria invited bidders to provide details of “a relevant project” belonging to the previous three years “similar in nature and scale to the services required by DRD”. This was allied to a requirement to provide several pieces of specific information. In the terms of the selection criteria, the comparator project was given no definition or particularity. Furthermore, the criteria made no clear link between the comparator project/s contained in tenders and the contract region/s for which each tender was bidding. In addition, no benchmarks or minimum thresholds were prescribed. In particular, there was no prescription of project volume, characteristics, duration or value. There is evident strength in the argument that, as a result, panel members were left to form opinions of an intuitive and instinctive nature, applying such experience and expertise as they possessed. This criticism gains momentum when one considers the evidence of the Department’s witnesses about how the selection panel actually went about its business. As this evidence unfolded, I formed the clear impression that the selection panel struggled mightily, but far from successfully, in their efforts to correctly apply these criteria. I consider this to be readily attributable, in material part, to the amorphous terms in which the criteria were formulated and the exaltation of subjectivity and intuition to the detriment of objectivity and, consequentially, transparency. In these various respects, each of the selection criteria is materially indistinguishable from the others. I conclude that these selection criteria were not apt to establish fairly, transparently and objectively that bidders possessed specified minimum standards of technical and professional ability for the purpose of delivering the regional project/s for which they were tendering.
While the Court agreed that the evaluation criteria were too vague and gave too much discretion to the evaluators, it decided against granting a remedy since the complainant was unable to show that there was a causal connection between that breach of the transparency rules and the resulting evaluation outcome:
It is simply impossible for the court, on the basis of the available evidence, to conclude that the shortcomings which I have found in the selection criteria somehow operated to the Plaintiff’s disadvantage in the sense that they were causative of an inappropriate assessment that either or both of the two successful bidders similarly satisfied these criteria. To so hold would be a matter of pure speculation. Furthermore, it is at least equally possible that the Plaintiff was a beneficiary. As a result, the Plaintiff fails to establish that in consequence of the breach of duty in play it has suffered, or risks suffering, loss or damage. Thus this breach of duty is not actionable. Giving effect to this analysis, I conclude that the first ground of challenge must fail.
However, the Court determined that the other grounds of complaint justified a remedy since those flaws could be shown to have impacted the evaluation results. More specifically, the Court found that the government’s use of undisclosed evaluation tools breached applicable transparency standards:
As a result, the Department failed to evaluate any of the tenders in accordance with the competition rule which it had devised and promulgated. While this was inexcusable, I consider that this failure is not a vitiating factor per se. Rather, the question is whether it gives rise to a breach of any of the legal rules or principles in play. I conclude that there has been a clear breach of the principle of transparency: the Department broadcast that it would evaluate tenders by a certain methodology, but failed to do so. Furthermore, the breach of the principle of transparency had one further dimension, constituted by the “in the round”, “lowest common denominator” and “notional regional contract area” approach adopted and applied by the selection panel, as described in Mr. Robinson’s evidence. These evaluation tools were unpublished, inaccessible and, hence, manifestly lacking in transparency. Moreover, having listened carefully to Mr. Robinson’s evidence, I am bound to describe them as nebulous and incomprehensible, an assessment which is unsurprising having regard to the series of inconsistencies and contradictions identified in paragraph [75] above. These evaluation tools appear to have been devised ad hoc. They also suffered from the additional vice of encouraging the formation and application of subjective, intuitive judgment at the expense of clearly formulated objective standards. In summary, for this combination of reasons, I conclude that the approach of the assessment panel at the selection stage clearly infringed the principle of transparency.
The Court also concluded that the evaluators failed to reject non-compliant competing bids and that this constituted a breach of applicable procurement rules. The Court therefore set aside the government’s evaluation decision. As this case illustrates, purchasing institutions are held to high standards of transparency in relation to their evaluation of competing bids. This puts them under a duty to develop and disclose clear evaluation rules and to then enforce those rules consistently so that all bidders are given a fair and equal opportunity to compete for government contracts. The failure to meet these standards puts any resulting contract award decision in peril of a successful legal challenge.
