This article is an excerpt from The Art of Tendering: A Global Due Diligence Guide, which is available for purchase.
In its November 2007 judgment in Aquatron Marine (t/a Quatron Breathing Air Systems) v. Stratchyde Fire Board, the Scottish Court of Session awarded lost profit damages to an unsuccessful bidder after the purchasing institution used undisclosed criteria in the evaluation of the bidder’s tender. The case involved a tender call issued by the Stratchyde Fire Board for the supply and repair of firefighting equipment. The plaintiff, Aquatron Marine, submitted a bid but was rejected. It sued, alleging improprieties in the tender evaluation process. The Court agreed, finding that the vaguely stated “quality standards” criteria failed to sufficiently disclose the specific factors relied on by the evaluators in rejecting the plaintiff’s tender:
The reasons given for the exclusion of the pursuers were twofold. First it was that the pursuers “did not supply evidence of quality standards achieved by its workforce and on enquiry it appeared that personnel would be employed if [the pursuers’] tender was successful”. There are several difficulties with this reason. They stem from the phrase used in the Specification. In the context of a paragraph dealing with the competence of the staff undertaking the work, Clause 11 calls for “copies of any evidence of quality standards achieved by their workforce”. The clause does not set down any minimum requirement which a tenderer requires to meet in order to proceed to the evaluation stage. It simply asks for evidence of quality standards to be forwarded with the tender….
[T]he next difficulty is the construction of the phrase “quality standards achieved by their workforce”. The impression gained from Mr McKnight was that he had not fully thought out just what he was asking for and had taken this phrase from another, perhaps previous, contract and simply pasted it into this clause. The phrase has to be construed according to what the well informed tenderer would think it to mean, rather than what the drafter intended it to mean. The evidence of what Mr McKnight thought he was doing, the manner in which the defenders sought to implement the clause and the views of an expert in the processing of public procurement contracts may not be entirely irrelevant to the Court’s assessment, even if any relevance may be peripheral. I will accordingly repel the objection to that evidence. However, I do not consider that the well informed tenderer could have thought that this phrase was intended to require him to include the curriculum vitae of individual staff or any similar documents. As is often said in these situations, if that is what had been intended then it would have been simple to say so in plain unambiguous terms.
After determining that the stated criteria were too vague and imprecise to permit the application of the specific factors relied on by the evaluators, the Court found the Board in breach of the tendering rules and awarded the plaintiff lost profit damages.
As this case illustrates, purchasing institutions should ensure that their evaluation criteria are drafted with enough precision to capture the specific factors that will be relied on to accept, reject, and rank competing bidders.
