This article is an excerpt from The Art of Tendering: A Global Due Diligence Guide, which is available for purchase.
In its March 2007 decision in Natural World Products Limited v. ARC 21, the Northern Ireland High Court of Justice, Queen’s Bench Division, ordered the re-evaluation of tenders after the initial evaluation process strayed from the pre-established criteria. The case involved a tender call issued by eleven local authorities (“the Authority”) in Northern Ireland for the provision of organic waste services and the construction of at least one waste compaction facility.
The plaintiff, Natural World Products Limited, launched a legal challenge after its tender was rejected in the late stages of the evaluation process over what it alleged to be unsubstantiated concerns about its ability to handle the anticipated volumes of waste. More specifically, Natural World maintained that the Authority relied on volume estimates as certainties when evaluating competing bidders and failed to take into account the fact that Natural World had a second facility available to address the anticipated volume surges.
The Court agreed. It found that the Authority failed to clearly set out the volume estimates in the tender call. It also found the Authority’s treatment of future volume estimates as mathematical certainties to be problematic:
I observe that even at the hearing the various estimates of the shortfall in capacity and any need to refer tonnage elsewhere were not categorically set out. In a way of course that is a pointer to an aspect of the matter which the defendants tended to overlook, in my view. As their own documents clearly show the tonnage of organic waste from kitchen and garden which the plaintiffs were undertaking to deal with relates to a process of collection which, with limited exceptions, has not even commenced in Northern Ireland. The Defendants own documents correctly refer to these tonnages as “forecasts” and qualify even that term with the word “estimated”. (File 1/319). It seems to me relevant in dealing with the tender bid to bear that in mind. It may have been legitimate to test the bids against the final year of the contract when the inflow of such waste was expected to be at its height, and even against, to a degree, the three month seasonal peak for such inputs. At the same time it did seem to me that the advisors to the Defendants and the Defendant itself tended to treat as mathematical certainties what were, in truth and on their own earlier documents, merely estimated forecasts.
In addition to finding that the Authority improperly relied on undisclosed volume estimates, the Court also found that the Authority failed to consider relevant information, provided by Natural World during the evaluation process, about the existence of a second facility. As the Court noted, while caution should be exercised in accepting new information after the submission of bids, the Authority acted unfairly and unreasonably when it ignored that relevant, fresh information and instead opted to reject Natural World’s bid. The Court set aside the contract award made to a competing bidder and ordered the Authority to re-evaluate Natural World’s bid.
This case demonstrates that evaluators can seriously undermine the fairness of their process by relying on unclear evaluation factors and ignoring critical bidder information. Purchasing institutions should therefore disclose their evaluation criteria and ensure they consider all relevant information during their evaluations.
