This article is an excerpt from The Art of Tendering: A Global Due Diligence Guide, which is available for purchase.
In its October 2018 decision in Sanofi Aventis Ireland Ltd v. Health Service Executive, the High Court of Ireland found that the government failed to fully honour its debriefing duties after conducting a bidding process, but the Court ultimately concluded that the breaches did not warrant voiding the resulting contract award. The dispute dealt with a debriefing provided by the government to a losing bidder in connection with a procurement process for the supply of approximately 1 million doses of six-in-one vaccine (diphtheria, tetanus, acellular pertussis, hepatitis B, inactivate polio vaccine, haemophilus influenza Type B conjugate) over a five-year period. The complainant was an unsuccessful bidder who argued that the government failed to provide it with a proper debriefing after the contract was awarded to a competitor since the government failed to give adequate reasons as to why the competitor was awarded the contract.
The Court summarized the following governing principles from the Irish case law regarding the transparency duties that apply when providing a debriefing to unsuccessful bidders:
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Insofar as the substantive obligation to provide reasons in concerned, both parties are agreed on the principles to be applied in relation to how that obligation is to be discharged. Those principles were very usefully and comprehensively summarised by Humphreys J. in RPS Consulting Engineers Ltd. v. Kildare County Council [2017] 3 IR 61 at p. 86 as follows:
(a) Where the award turns on quantitative criteria such as price . . . it may be sufficient to give the scores alone in relation to such. . . criteria.
(b) Where the award turns on qualitative criteria, there is a heightened obligation to give reasons, particularly where the unsuccessful tenderer offered a more competitive price. In such situations, scores alone are insufficient.
(c) The awarding authority must give reasons as to the relative advantages of the preferred tenderer. That involves a comparison between the preferred tenderer and the particular unsuccessful tenderer to whom the statement of reasons is addressed. To that extent there is a legal requirement for a bespoke statement of reasons.
(d) While brief statements or succinct comments may be sufficient in particular circumstances, it does not follow that because a statement is succinct it will therefore be sufficient.
(e) The contracting authority’s comments must be sufficiently precise to enable the applicants to ascertain the matters of fact and law on the basis of which the contracting authority rejected their offer and accepted that of another tenderer.
(f) In order to set out the characteristics and relative advantages of the successful tender, the contracting authority must at least mention the matters which should have been included in the applicant’s tender or the matters contained in the successful tenders. The statement of reasons must therefore be sufficiently detailed to explain how the preferred tender was advantageous by reference to particular matters, respects, examples or facts supporting a general assertion of relative advantage.
(g) Separately from the general requirement to give reasons, an unsuccessful tenderer may request additional information about the reasons for their rejection in writing. That request must be responded to positively unless specific listed exceptions apply.”
The Court also cited the following European Union case law standards that applied to the debriefing duties of public institutions:
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Relying on a number of other propositions by the General Court in Case T-299/11 European Dynamics Luxembourg SA v. Commission, at para. 87, Case T-461/08 Evro Paiki Dynamiki v. EIB at para. 108 and Case T-165/12 European Dynamics Luxembourg SA v. Commission at para. 87, Sanofi also submits (in my view correctly) that:
(a) The obligation to provide reasons presupposes that the contracting authority will take particular care to ensure that the grounds communicated to a disappointed tenderer, will set out the factors on which its decision is based. This seems to me to be entirely consistent with the approach taken by Humphreys J. in RPS.
(b) To ensure the requirement of effective judicial oversight, the statement of reasons must be sufficient in order to ensure that the unsuccessful tenderer (who so requests) will be given sufficient detail to enable a decision to be made as to whether there is any point in applying to the court. Without an adequate statement of reasons, the unsuccessful tenderer’s right to an effective remedy will be undermined.
(c) Information on the “characteristics and relative advantages of the successful tender” will be all the more necessary when the price offered by the unsuccessful tenderer is lower than that offered by the successful tenderer. Again, this has been encapsulated in the decision of Humphreys J. in RPS .
(d) The adequacy of reasons can only be assessed on the basis of the reasons provided prior to the commencement of proceedings. This is clear from the decision of the General Court in the VIP Car Solutions case and, in a domestic context, from the decision of Kelly J. (as he then was) in Deerland Construction Ltd. v. The Aquaculture Licenses Appeals Board [2009] 1IR 673.
The Court noted that there was no obligation to provide reasons in areas where the losing bidder scored higher than the winning bidder:
At this point, however, it is important to note that there is, in fact, no obligation on a contracting authority to provide reasons to a disappointed tenderer in respect of any criterion where the tenderer scored a higher mark than the successful candidate. This is clear from the decision of the Court of Appeal in Word Perfect Translation Services Limited v. Minister for Public Expenditure and Reform (No. 3) [2018] IECA 156. Thus, in the present case, there was no requirement to provide any information in relation to the ” Presentation ” sub-criterion. Sanofi secured a higher mark than Glaxo in relation to presentation.
Although not expressly so decided in the Word Perfect case, it would seem to follow, as a matter of logic, that the same principle should apply where both the unsuccessful tenderer and the successful candidate scored the same marks.
The Court explained that the government should provide a losing bidder with enough information to explain why that bidder did not win, which would include a customized case-specific summary of the relative advantages and key characteristics of the winning bid:
The extract from the judgment of Humphreys J. in the RPS case (quoted above) very succinctly and comprehensively sets out what is required. Thus, the contracting authority, in order to show the relative advantages of the successful tender, must provide a bespoke statement of reasons that involves a comparison between the tenders of the successful and disappointed candidates respectively. Humphreys J. expressly acknowledges that (within limits), brief statements and succinct comments may suffice in particular circumstances. In order to pass muster, the reasons given must be sufficient to enable the disappointed candidate to ascertain the matters of fact and law on the basis of which the contracting authority rejected its offer and accepted that of the successful candidate. In order to show the relative advantages of the successful tender, the statement of reasons must be sufficiently detailed to explain how the preferred tender was advantageous by reference to particular matters, respects, examples or facts. Of course, the detail to be provided will be case – specific. The level of detail will depend on what actually motivated the contracting authority in any particular case. There may be some cases where it is necessary to provide a significant level of detail in order to understand the motivating factors but, in other cases, the motivating factors may well be capable of being stated quite succinctly. It is important to bear in mind that the obligation is not simply to describe the relative advantages of the successful tender – there is an obligation to provide reasons which also include the characteristics of the successful tender. Nonetheless, in many cases, there is likely to be an overlap between these requirements in that the important characteristics of the tender are likely to be those characteristics which were considered to be more advantageous and it is the more advantageous aspects of the tender that are likely to have underpinned the reasons why the contracting authority was minded to award a higher score to the successful tenderer.
While the Court determined that the government failed to meet its debriefing duties in two evaluation categories, it found that it would be disproportionate to strike down the contract award over these omissions since the scores in those categories did not impact the final rankings given the large scoring gap between the winner and the complainant:
In my view, it would be disproportionate to set aside the decision of the HSE to award the contract to Glaxo by reason of its failure to provide reasons in relation to these two sub-sub-criteria. In expressing this view, I have not lost sight of the argument made by Mr. McGrath on behalf of Sanofi that Glaxo has already had the benefit of remaining in situ since the expiry of the previous contract. Mr. McGrath submitted that in those circumstances, it would not be in any way disproportionate for the court to decide to set aside the award. However, in my view, the difference in marks between Glaxo and Sanofi in relation to these two sub-sub-criteria would not justify the court taking such a course. As noted above, the divergence in marks as between Sanofi and Glaxo would not be sufficient to make a difference to the award of the contract. The difference in marks was 1.5 in relation to regularity of batch supply and expiry date management. The difference in relation to packaging and labelling was four. That could not have made a difference to the award given that the much larger gap of 41 marks between the final score for Sanofi and the final score for Glaxo. Even if Sanofi were awarded full marks for these two sub- sub -criteria that would only add 11 extra marks to its existing score. The only way in which the scoring could conceivably have made a difference is in the event that Glaxo was awarded a score of zero or close to zero and Sanofi was awarded full marks or close to full marks. However, it is fanciful to suggest that there was any such possibility. In the circumstances, it seems to me that it would plainly be disproportionate to annul the award of the contract on the basis of the failure to provide reasons in respect of these two sub-sub-criteria.
Rather than striking down the contract award, the Court granted a declaration that the complainant’s debriefing rights had been infringed and ordered the government to provide more information to remedy that situation:
As mentioned above, I am mindful of the need to provide effective judicial protection to any tenderer in a procurement contest to ensure that the legal requirements are honoured by contracting authorities. However, it seems to me that this must be balanced against the requirement of proportionality identified by Finlay Geoghegan J. in Gaswise . It seems to me that the appropriate relief to be granted is, first, a declaration that Sanofi’s rights have been infringed and, secondly, an order pursuant to Regulation 9(1)(c) of the Remedies Regulations directing the HSE to provide full reasons (including the characteristics and relative advantages of the Glaxo tender) to Sanofi within a period of time which I will fix after hearing from the parties. I am of the view that such relief will provide an appropriate, adequate and proportionate remedy to Sanofi in respect of these two sub-sub-criteria which will vindicate the infringement of its rights. In para. 38 of his first affidavit Mr. Dempsey stated (and significant emphasis was placed on this factor at the hearing) that it is essential that Sanofi is provided with sufficient information by contracting authorities so that it is in a position to know and properly understand why it won or lost a competition, as the case may be. The provision of proper reasons now in accordance with an order pursuant to Regulation 9(1)(c) will assist Sanofi in improving the overall quality of future tenders.
However, as Humphreys J. stressed in RPS , at p. 94, there can be no retrospective creation of reasons. The new letter of reasons must be confined to the specific facts that existed in the minds of the PEG at the time of their evaluation of the tender. When furnishing the reasons, the HSE must confirm that the members of the PEG have themselves confirmed that these were the specific matters to which they had regard on the date of the evaluation. If any one or more of the members of the PEG is not prepared to make that statement, the HSE must also inform Sanofi of this when furnishing the new letter of reasons.
As this case illustrates, the failure to honour debriefing duties can expose a public institution to legal challenge and, in some circumstances, could compromise the defensibility of a contract award made in relation to that same procurement process. While in this case that remedy was ruled to be disproportionate, had the scores been closer, the debriefing flaws could have been seen as compromising a losing bidder’s process review rights and could have put the defensibility of the contract award in peril.
