This article is an excerpt from The Art of Tendering: A Global Due Diligence Guide, which is available for purchase.
It has been repeatedly noted by the courts that the integrity of high-profile projects can be compromised through lobbying and politicization. In addition to being necessary to honour the confidentiality duties owed to competing bidders, confidentiality protocols are also necessary to protect the evaluation and award process from external interference. The following cases illustrate the risk of politicizing the contract award process, particularly in high-profile projects where local contractors are competing against other bidders:
- In its October 1999 judgment in Harmon CFEM Facades (UK) Ltd. v. The Corporate Office of the House of Commons, the England and Wales High Court (Technology and Construction Court) found that the Corporate Office of the House of Commons breached the tendering rules by applying an undisclosed “Buy British” policy to the evaluation of competing bids. The case involved a tender call to build the New Parliamentary Building for the House of Commons in Bridge Street, Westminster, in order to create new offices for 210 Members of Parliament and their staff. The initial projected costs were set at £250 million, making it one of the most expensive buildings ever built in London, England. The Court’s lengthy decision documented a complex series of events, including aggressive lobbying and political pressure in favour of Seele-Alvis (a consortia that included a domestic supplier). The Court found that the evaluation process was “a charade” that was compromised by, among other things, political interference aimed at promoting a hidden preference for a local bidder over a foreign bidder.
- In its June 1997 decision in Hughes Aircraft Systems International v. Airservices Australia, the Federal Court of Australia, General Division, found Airservices Australia liable for conducting an unfair evaluation process based on undisclosed local preference. The Court determined that the aviation authority breached the rules when its board unfairly strayed from the predetermined evaluation rules and bypassed the best bid in favour of a local bidder for “geo-political” reasons.
- In its September 1993 decision in Zutphen Brothers Construction Ltd. v. Nova Scotia (Attorney General), the Nova Scotia Supreme Court found that the government unfairly evaluated the plaintiff’s tender and failed to apply the evaluation criteria stated in the tender call. The Court noted that “the steel industry lobbied the Department to permit them to bid on the final phase of the construction and eventually it was agreed that parties be permitted to tender on a steel alternative.” The Court found that the government ignored internal advice when the Deputy Minister advised the Minister to award to the steel bid. The Court concluded that the contract was improperly awarded and that the integrity of the bidding process had been violated since “the Deputy Minister ignored all recommendations from his Department and, in fact, decided arbitrarily in the face of all advice to award the contract to Maritime Steel and, subsequently, did not apprise his Minister fully of the situation.” The government was found liable to the plaintiff bidder for lost profit damages.
- In its September 1991 decision in Kencor Holdings Ltd. v. Saskatchewan, the Saskatchewan Court of Queen’s Bench held that the provincial Cabinet was not entitled to bypass the best bid in favour of a local bidder for a bridge construction project. The Court found that Saskatchewan Cabinet could not use its privilege clause to bypass the low bidder based on an undisclosed local preference. The Court found Saskatchewan in breach of its fair bidding obligations and awarded the plaintiff bidder damages for its lost profits.
As these cases illustrate, lobbying, political interference, and local preference can undermine the integrity of a public procurement process. To protect against these risks, it is therefore essential to sequester the government evaluation process from actual or apparent political interference and lobbying. Failing to do so in major, high-profile projects can expose the project and the public institution to significant legal, reputational, and operational risks.
