This article is an excerpt from The Art of Tendering: A Global Due Diligence Guide, which is available for purchase.
As evidenced by recent bid dispute rulings and audit reviews, public institutions are coming under increasing scrutiny regarding their record-keeping practices. When institutions are unable to produce proper records in support of their contracting and spending decisions, this tends to result in adverse rulings by review bodies and compromises the defensibility of any resulting contract awards and expenditures.
By way of example, in its January 2010 decision in the matter of C&B Construction, Inc., the U.S. Government Accountability Office (GAO) ordered the Department of Agriculture to conduct a re-evaluation in a solicitation for steam restoration work after finding that the Department maintained inadequate records during its original evaluation of bids. More specifically, the GAO found that there was no record of how the non-price factors that informed the ultimate selection were evaluated:
The award justification document states that Aquatic was selected based on its key personnel, including a heavy equipment operator with significant experience operating a walking excavator for stream restoration, availability of back-up personnel, and similar past performance. Id. However, the contemporaneous record has no other information on the evaluation of Aquatic’s quotation, and no information at all (other than the point scores above) on the evaluation of C&B’s quotation. In other words, the record lacks any details concerning the merits of the quotations under each non-price evaluation factor.
The GAO also stated that “the evaluation must be documented in sufficient detail to show that it was not arbitrary” and that “the contemporaneous record here is inadequate for our Office to determine whether the Forest Service had a reasonable basis to select Aquatic at its higher price.” The GAO therefore ordered a re-evaluation.
As this case illustrates, in order to be defensible, the evaluation criteria should be clearly disclosed in a solicitation document and the evaluation records should also clearly document how those criteria were applied in order to arrive at the final ranking and selection of competing bidders.
In its January 2012 decision in the matter of ITT Systems Corporation, the GAO ordered the Department of the Army to conduct a re-evaluation after finding that the Department’s original evaluation record failed to document changes to the selected bidder’s staff pricing models. The case dealt with a bidding process for logistics support services and, as the GAO noted, the pricing model that was ultimately selected varied from that in the original bid yet:
Despite these significant changes in the offerors’ proposed staffing for cost evaluation purposes, the record contains no explanation of why the changes were made. In particular, the changes are memorialized in Excel spreadsheets that reflect the agency’s mathematical calculations of the changes, but these spreadsheets include no narrative explanation of the reasons for the changes. AR, exhs. 16a-16e. Additionally, although the record includes a separate narrative cost report, the report makes no mention of the reasons underlying the agency’s staffing adjustments for cost evaluation purposes, and instead simply describes the agency’s approach to making the changes.
The GAO found the lack of proper record-keeping highly problematic since it appeared to show that evaluators made unilateral changes to the complainant’s proposed staffing when calculating costs and failed to justify the evaluation outcome:
In sum, the record shows that the agency made significant changes to the offerors’ proposed staffing in the overwhelming majority of their proposed labor categories when conducting its most probable cost evaluation, but the underlying basis for these changes is not memorialized in the record. In addition, the record shows that the agency failed to reconcile its evaluation in a manner that demonstrates consistency between its cost and technical evaluation findings. We conclude that the agency’s evaluation of proposals is unsupported in the record and, thus, is unreasonable.
The GAO therefore upheld that complaint and ordered the Department to conduct a re-evaluation.
As this case illustrates, the failure to conduct demonstrably fair evaluations by keeping accurate evaluation records can be fatal to the ultimate defensibility of a government contract award decision. To better ensure the soundness of their contract awards, public institutions should therefore ensure that they conduct bid evaluations that are consistent with properly designed and disclosed evaluation procedures, and that they carefully document those bid evaluations.
Similarly, in its January 2016 decision in Castro & Company, LLC, the GAO ordered a re-evaluation in the context of a Request for Quotations (RFQ) for internal controls support services on the grounds that the government had failed to maintain proper evaluation records. The GAO found that the scores of the winning bidder in the technical and past performance categories were not supported in the contemporaneous evaluation records. The GAO found that that the government had failed to document how the selected bid measured up to the competing bids or substantiate how the awardee’s technical scores justified paying a $298,000 premium over the cost of the best competing offer.
Additionally, in its April 2016 decision in Deloitte Consulting, LLP, the GAO once again ordered a re-evaluation in the context of a management support services Request for Proposals (RFP) after finding that the government had failed to properly assess the winning bidder’s prior experience. The GAO found inconsistencies between the government’s defence and its contemporaneous evaluation records and determined that the winning bidder had failed to meet the necessary five-year prior experience requirement. After concluding that the government’s explanations did not line up with its evaluation records, the GAO ordered the government to seek new bid submissions and conduct a new evaluation process.
In keeping with these GAO rulings, in its May 2016 determination in Oshkosh Defence Canada Inc. v. Department of Public Works and Government Services, the Canadian International Trade Tribunal ordered a re-evaluation and possible lost profits after finding faulty evaluations and poor record-keeping in a dispute over a military transport vehicle RFP. The Tribunal found that the government had ignored relevant technical information submitted by the complainant and had failed to keep adequate records to explain the contradictory conclusions reached by government evaluators during technical testing. The Tribunal awarded lost profits in the event that the complainant ranked first after the re-evaluation.
Similarly, in its March 2017 Special Report on Jamaica 50 Celebration Activities, Jamaica’s Contractor General found that government officials breached government procurement rules when they failed to maintain proper contract award records. The report dealt with multiple contract awards relating to events celebrating the 50-year anniversary of Jamaican independence. The Contractor General found that government officials failed to properly document whether or not contracts were transparently awarded and the evaluation criteria for many contract awards. The report also found inconsistent or inaccurate accounting information relating to payments for services for the various contracts.
Furthermore, in its November 2017 Special Report on St. Ann Municipal Corporation Contracts, Jamaica’s Contractor General found widespread contracting irregularities in Jamaica’s St. Ann Parish. The report found an absence of bid evaluation records, a lack of records substantiating work for contract payments, political interference and favouritism, and a general lack of procurement oversight. The report concluded that municipal officials “failed in their statutory responsibilities and obligations to appropriately account for the prudent disbursement of entrusted public funds, in keeping with the fiduciary responsibilities” in Jamaica’s Financial Administration Act.
Further, more recent US examples support the heightened scrutiny over procurement record-keeping, as demonstrated in the April 2017 decision in Verdi Consulting, Inc., where the GAO ordered the re-evaluation of a financial services tender after finding inadequate evaluation records. As the GAO stated, “Although an agency is not required to retain every document generated during its evaluation of proposals, the agency’s evaluation must be sufficiently documented to allow our Office to review the merits of a protest.” The GAO also cautioned that where “an agency fails to document or retain evaluation materials, it bears the risk that there may not be adequate supporting rationale in the record for us to conclude that the agency had a reasonable basis for its source selection decision.”
Finally, in its July 2017 decision in Global Aerospace Corporation, the GAO ordered a re-evaluation after finding that NASA failed to maintain proper records. As the GAO stated, “it is a fundamental principle of government accountability that an agency be able to produce a sufficient record to allow for a meaningful review where its procurement actions are challenged.” However, the GAO found that NASA’s contemporaneous evaluation records were “devoid of any analysis” in support of its contract award decisions and that “the record fails to demonstrate that the award recommendation and decision were reasonable.” It therefore ordered the reassessment with adequate documentation.
In its July 2018 report on the District Council of Robe entitled Full investigation pursuant to referral under section 24(2)(a) of the Independent Commissioner Against Corruption Act 2012, the South Australia Ombudsman found that weak record-keeping practices resulted in breaches of applicable procurement standards in the municipality’s vehicle procurements. As the Ombudsman concluded, “My view is that the council, in failing to retain official records, acted in a manner that was contrary to law within the meaning of section 25(1)(a) of the Ombudsman Act.” The Ombudsman made a series of recommendations to address this issue, which included developing a template for recording contract award reasons, as required by section 49(2)(c) of the Local Government Act, and reminding all council officers that the failure to retain official records was a violation of the Ombudsman Act. The Ombudsman also recommended that all council officers be reminded of their obligations to follow their procurement policies and requested that council report back within a year to detail the steps it had taken to address the recommendations. A copy of the Ombudsman’s report was also sent to the Minister for Local Government as required by the Ombudsman Act.
As this case study illustrates, in addition to being enforced through formal legal proceedings, the expectation of maintaining proper evaluation and award records is also a broadly recognized audit standard that is enforced through the public audit process in various jurisdictions.
In its November 2018 determination in KPMG LLP v. Department of Public Works and Government Services, the Canadian International Trade Tribunal dismissed a complaint after determining that the government maintained proper records of a re-evaluation process. The dispute dealt with a Request for Proposals (RFP) for advisory services transformation planning, implementation, management, and oversight at Employment and Social Development Canada. The complainant, an unsuccessful proponent, challenged the re-evaluation process that led to the contract award. However, the Tribunal ruled that the Department of Public Works and Government Services had the right and duty to conduct a re-evaluation of all proposals after discovering that it had initially misinterpreted the RFP during the initial evaluation. The Tribunal rejected the assertion that the government failed to maintain proper evaluation records during the re-evaluation. The Tribunal found that the initial evaluation results and corrected evaluation results were maintained in both individual evaluator scoresheets and in the consensus scoresheet. The Tribunal also found that there were sufficient records maintained to allow for a proper review of the record to support the bid protest. The Tribunal therefore upheld both the re-evaluation process and the record-keeping practices maintained during the re-evaluation and accordingly rejected the losing proponent’s complaint.
In its December 2018 decision in Barbaricum LLC, the U.S. Government Accountability Office (GAO) upheld a bid protest after finding that the government failed to maintain proper evaluation records. The dispute dealt with a Request for Quotations (RFQ) issued by the Department of the Air Force for opinion research support services. The protestor challenged the evaluation of a competing bidder’s technical compliance. The GAO sustained the protest. It found that the evaluators failed to engage in a sufficiently detailed and documented evaluation process, noting that “the evaluation of technical acceptability contemplated by the solicitation anticipated a more comprehensive review than can be found in this record”.
While the RFQ contemplated a mix of personnel and relevant personnel resources and skill sets that would be required to perform the contract, the GAO found that the “cursory technical evaluation performed by the agency contained no analysis of competing bidder Fors Marsh Group’s (FMG’s) staffing plan. Rather, the GAO found that the evaluation notes simply stated that the proposed team “includes a solid mix of social scientists, statisticians, survey methodologist as well as experts in marketing and public policy,” that the proposed team had “a vast amount of experience supporting the military in the field of communication research,” and that the plan was “robust and includes a contingency plan for surge requirements.” The GAO ruled that these notes were insufficient since they failed to demonstrate an assessment of the proposed pricing of FMG, the winning bidder,or a consideration of whether that proposal met minimum performance requirements:
The RFQ contained specific requirements for vendors’ staffing plans. The solicitation advised vendors that the agency would review and rate each subfactor before assigning an overall technical rating of acceptable or unacceptable. The RFQ further advised vendors that the technical rating of their quotations would reflect the degree to which the proposed approach met or did not meet the minimum performance or capability requirements through an assessment of the quotation’s strengths, weaknesses, deficiencies, and risks. The record fails to show that the agency considered the reasonableness of FMG’s quoted labor hours. Nor does the record demonstrate that the agency performed any analysis of FMG’s staffing plan to determine whether FMG’s proposed approach met the minimum performance or capability requirements. Given the lack of an evaluation record, we have no basis on which to conclude that the agency reasonably evaluated the awardee’s quotation as technically acceptable, and we sustain this ground of protest.
The GAO therefore granted a re-evaluation order so that the evaluators could conduct a proper re-evaluation.
In its January 2019 decision in Soft Tech Consulting, Inc., the U.S. Government Accountability Office (GAO) ordered a re-evaluation after finding an inconsistent assessment of proposed personnel in competing bids and the absence of proper contemporaneous records of the evaluation process. The dispute dealt with a Request for Quotations (RFQ) issued by the Department of Homeland Security for software development services. The GAO sustained the protest after finding an inconsistent evaluation of competing proposals and a lack of records to support the reasons behind the evaluation inconsistencies. The GAO also found that the government’s after-the-fact attempts to explain the evaluation irregularities were inadequate. As the GAO concluded, while subsequent explanations of an evaluation record may be accepted to explain an evaluation outcome, retroactive rationales cannot be relied on to plug holes in the original evaluation record. The GAO therefore recommended that the government re-evaluate the quotations and properly document its re-evaluation prior to making a new contract award decision.
As this case illustrates, retroactive explanations are no substitute for properly conducting and documenting an evaluation process in the first instance.
In its February 2019 decision in Apogee Engineering, LLC, the U.S. Government Accountability Office (GAO) ordered a re-evaluation after finding that the government failed to maintain proper evaluation records. The dispute dealt with a Department of Transportation Request for Proposals (RFP) for the provision of security assessment services. The complainant argued that the contract award went to an abnormally low bid and that the government failed to conduct a proper price realism analysis. The GAO agreed with the complainant, finding that the government’s contemporaneous evaluation records failed to show that the evaluators had conducted any meaningful analysis of the elected bidder’s pricing against that bidder’s proposed technical approach. The GAO therefore ordered a re-evaluation and directed that the originally awarded contract be terminated and awarded to the complainant if the complainant’s submission proved to be the best bid after the re-evaluation.
In its March 2019 determination in NavQSys, LLC, the U.S. Government Accountability Office (GAO) ordered a re-evaluation after deciding that the lack of records nullified a government’s decision to take corrective action and revoke a contract award. The dispute dealt with a Request for Proposals (RFP) issued by the Department of the Army for systems engineering and technical assistance support. While the GAO confirmed that the government was within its rights to take corrective action to address flaws in its evaluation and award processes, it also confirmed that any corrective actions must be properly documented to provide evidence of due process.
In this case, the GAO found that the government failed to meet these due process standards since it did not maintain a proper reviewable record of its corrective action decisions.
In its July 2019 decision in ATA Aerospace, LLC, the U.S. Government Accountability Office (GAO) ordered a re-evaluation after finding that the government evaluators were unable to support the conclusion of their price realism analysis with proper evaluation records. The case dealt with a bid protest in relation to a Request for Proposals (RFP) issued by the Department of the Air Force for research and development services in relation to space experiment programs. In its RFP, the Air Force stated that it would conduct a price realism analysis to assess the reasonableness of proposed pricing prior to making a contract award decision. While the GAO determined that a price realism analysis need not achieve scientific precision, it held that those assessments should not be arbitrary and should be reasonably adequate in assessing the proposed rates. The GAO found that there were significant unreconciled discrepancies regarding proposed work hours in the two bids competing for the contract and it did not find evidence that the Air Force conducted a proper price reasonableness analysis of those bids. In fact, the GAO found that there were no evaluation records to substantiate the conclusions made in support of the contract award decision. The GAO therefore ordered the Air Force to conduct a re-evaluation and maintain proper records of that re-evaluation.
As these recent global rulings illustrate, no records means no defense when public institutions face contracting challenges since those institutions bear the onus of maintaining proper records to demonstrate that their procurement decisions were conducted in a manner that is consistent with government due diligence standards.
