This article is an excerpt from The Art of Tendering: A Global Due Diligence Guide, which is available for purchase.
In its March 2005 decision in Compass Environmental, Inc. v. Department of the Environment, the Florida Division of Administrative Hearings ruled that an evaluation team member’s conflict of interest rendered a contract award null and void. The case dealt with an Invitation to Negotiate (ITN) process for the award of a contract for the management and closure of a phosphates stack system in Manatee County, Florida. The contract award was challenged by an unsuccessful bidder alleging that a member of the Department of Environment’s evaluation team, who was an external contractor, was in a conflict of interest because his firm had ongoing business relations with a member of a competing bidding team.
The Court noted that evaluation team members were required to sign conflict of interest declarations and to disclose any conflicts to the Department. In fact, one of the evaluators raised concerns over a potential conflict of interest since the president of a named subcontractor in one of the submitted bids was married to a member who served on the board of directors of the evaluator’s company, and the spouse had hiring and firing authority over him. The Department obtained an internal legal opinion advising that the evaluator be removed to protect the integrity of the bidding process. The Department complied with the advice and removed that evaluator from the process.
However, the Court found that the Department failed to implement the same measures in the face of another similar conflict of interest on its evaluation team. In fact, the Court noted that another member of the evaluation team had ongoing commercial relations with multiple members of a bidding team, but that that member failed to declare this conflict. While there was no evidence that the evaluator stood to win more business based on the contract award decision, and no evidence of actual bias in the evaluation, the Court found that “the relationships give rise to an appearance of ethical impropriety so that a reasonable person might question the impartiality” of the evaluator in question and, accordingly, “the Department’s governing statutes, policies, and Instructions were contravened” and that the resulting contract award could not be sustained. As this case illustrates, conflicts of interest on government evaluation teams can undermine the legal validity of any resulting contract awards.
