This article is an excerpt from The Art of Tendering: A Global Due Diligence Guide, which is available for purchase.
The England and Wales High Court decision in Energy Solutions EU Limited v. Nuclear Decommissioning Authority in July 2016 serves as an excellent case study highlighting the common pitfalls present in managing group evaluation processes in procurement projects. It exposes the systemic defects in industry practices involving consensus scoring, record-keeping, and the oversight of evaluation teams, and illustrates why public institutions should be doubling down on their evaluation-stage due diligence practices.
In the decision, the Court found that the Nuclear Decommissioning Authority (NDA) had improperly awarded a contract to a bidder that should have been disqualified based on threshold requirements and, in any event, would have been outscored by the plaintiff if the rules had been followed. In this case, the resulting damages award made by the Court was reportedly in excess of £200 million. This discussion provides a countdown of the ten critical defects found by the Court in how the NDA managed its bid evaluation process.
- Inadequate Resourcing
The procurement involved the decommissioning of twelve Magnox nuclear facilities. The maximum term of the contract was approximately 14 years, with funding for the first seven years set at approximately £4.2 billion. As the Court observed, “it would be difficult to envisage many cases…involving greater amounts of public funds, than this one.” Given its size and complexity, the Court found that the NDA had failed to adequately resource the project, which put an inordinate amount of pressure on its evaluation team.
- Significant Time Pressures
As the Court noted, when the NDA’s subject matter experts (SMEs) were given advance training prior to the evaluation process, they were informed that “personal demands on you will be high” and that “very limited schedule contingency is available”. As the Court observed, this “meant that there was little room in the programme for any overrun in terms of how much time was available for the SMEs to accomplish the evaluation.” The Court found that this created a significant “degree of time pressure upon the SMEs.”
- Excessive Workloads Causing Mistakes
As the Court observed, the evaluators were “continuing their day jobs during the evaluation process.” While the NDA maintained that “the SMEs had sufficient time, and avoided becoming stressed or under pressure”, the Court disagreed and concluded that “the mistakes that were made could be at least partly explained by excessive workload.”
- Evaluators “Doing their Best”
While the NDA maintained that its evaluators were “all doing their best” under difficult circumstances, the Court found that the NDA’s decision to impose a heavy workload on its employees did not lower its duty to run a proper evaluation process. As the Court stated, “I do not consider that the correct test is to be diluted because some of the evaluators found their task difficult, or because some evaluators…were given an excessive and extraordinarily heavy workload by the NDA.”
- “Defensive” Record-Keeping
The Court was critical of the NDA’s “overly defensive” approach to record-keeping, which discouraged evaluators from creating records and encouraged the shredding of notes. The Court noted that the NDA was “acutely aware that an unsuccessful bidder might challenge the outcome of the competition” and that “this sensitivity to potential challenge led to the NDA adopting a defensive approach to how the evaluations would be performed.” As the Court stated, “restricting note taking by the SMEs” and “considering whether to shred notes” was “part of that overly-defensive approach.”
- Interference with Evaluation Scoring
The Court also noted flaws in “the way that the SMEs were to reach consensus in the correct scores” and found that the pre-established procedures “were breached on a number of occasions.” While the evaluators used an electronic bid evaluation tool to record their scores, the Court found that the “scores were changed after evaluation was completed” and that “changes were made to the scoring and/or rationale following unrecorded conversations” with senior managers who were not part of the evaluation team.
- Introduction of Hidden Evaluation Stage
By interfering with the evaluators, the Court found that the NDA inappropriately introduced a hidden evaluation stage after the consensus scoring had been officially closed. As the Court stated, this “new, separate and informal stage” was “not part of the process of evaluation as it was designed” but was “an extra stage fraught with danger for the NDA” since it “may not have been applied equally to the different bidders” and was “also not transparent because no records are available of it.”
- No Records of Dialogue Stage
The Court also found flaws in the dialogue stage of the NDA’s evaluation process. As the Court observed, “given that no records were kept of this important period which lasted several months, the only way…the SMEs would achieve consistency would be by memory, as there were effectively no notes kept.” The Court noted that it was “difficult to see how consistency was going to be achieved in those circumstances”. It also stated that “recording what was said would not have been too difficult” and would have ensured better consistency than relying on the memory of the evaluators.
- Fudging the Score of a Non-Compliant Bid
The Court also found that the NDA “fudged” the evaluation to avoid disqualifying the winning bidder, a consortium known as CFP, after CFP originally failed to meet a minimum threshold score in a mandatory technical category. For clarity, the Court described “fudging” as “choosing an outcome, and manipulating the evaluation to reach that outcome. This was by choosing a score high enough to avoid that undesirable outcome, rather than arriving at a score by properly considering the content of the tender against the scoring criteria.”
- Errors and Inconsistencies in Scoring
The Court also found multiple errors and inconsistencies in the scoring performed by the NDA evaluation team. While the initial scores were 86.48 percent for the winner CFP and 85.42 percent for the plaintiff, a consortium known as Reactor Site Solutions, or RSS, upon rescoring the Court determined that the scores should have been 91.48 percent for the plaintiff RSS and 85.56 percent for CFP. As this illustrates, serious evaluation flaws can prompt a court to reconsider the outcome of an evaluation process and conclude that the contract should have been awarded to the complainant.
Lessons Learned
In summary, when conducting group evaluations:
Evaluation teams should be adequately resourced and should not be subjected to excessive workloads or time pressures.
Proper records should be maintained of the entire evaluation process.
There should be no interference with evaluation team members or manipulation of their scores.
