By: Paul Emanuelli
This article is an excerpt from The Art of Tendering: A Global Due Diligence Guide, which is available for purchase.
As highlighted by a series of recent audit reports and successful bid protest challenges, government institutions continue to face pressure to ensure that they maintain appropriate records of their evaluation processes since the failure to maintain proper records can undermine the downstream defensibility of any resulting contract award decisions.
For example, in its August 2020 report entitled Establishment and Use of ICT Related Procurement Panels and Arrangements, Australia’s Auditor-General made a series of record-keeping recommendations in connection with the award of $2.8 billion in information technology contracts under supplier roster panel arrangements. The report concluded that the government agencies “could not fully demonstrate that the arrangements supported the achievement of value for money outcomes” due to, among other things, a lack of adequate documentation. As the report warned, “when planning to procure from an existing arrangement, it is useful to document why the arrangement, and the individual supplier, were selected.” The report also noted that proper record-keeping assists in demonstrating that the “arrangement and supplier selected are likely to result in a value for money outcome.”
Similarly, in its October 2020 report entitled Defence’s Procurement of Offshore Patrol Vessels — SEA 1180 Phase 1, Australia’s Auditor-General once again identified the need to enhance record-keeping in support of procurement-related decision-making. In its review of an offshore patrol vessel procurement program, the Auditor-General stated that “the establishment of an evaluation plan that sets out the framework and criteria for tender evaluation provides a strong foundation for the conduct of a competitive procurement process to support the achievement of a value for money outcome” and that “evidence and advice should be retained and documented at all stages of a procurement and related advisory processes.”
Finally, in its May 2021 report entitled Probity of the processes for the heavy rail service contract, South Australia’s Auditor-General found weak record-keeping practices in relation to the probity of the government’s award of a heavy rail services contract. For example, the report found that “records of matters discussed for some specific meetings with proponents were not maintained”. The report also found that the project team failed to maintain a record of how it dealt with probity recommendations and that the “level of information in the probity register was insufficient and/or incomplete”. While the Auditor-General concluded that these record-keeping gaps “did not compromise the overall probity of the procurement”, the report made a series of recommendations to improve future record-keeping practices and serves as a useful reminder of the need to maintain proper documentation to enhance the defensibility of a procurement process.
Recent rulings have also shown how the failure to maintain such records can undermine the defensibility of contract award decisions when those decision are legally challenged. For example, in its July 2020 decision in Northstone (NI) Ltd v Department for Regional Development (Transport NI), Northern Ireland’s High Court of Justice found that the government failed to clearly define the rules that would apply to contract awards in a multiple award solicitation and failed to maintain a proper record of its contract award decisions. The dispute dealt with a tender call issued by the Department of Regional Development (DRD) for eight road resurfacing contracts across Northern Ireland. One of the bidders, referred to as McQuillans in the decision, scored first across six of those eight areas. However, as the Court noted, McQuillans had enough resources to service only four of those eight areas and was allowed to cherry-pick which awards it would accept based on an undefined process. A competing bidder challenged the award process.
However, the Court noted that, when challenged, the DRD failed to provide any minutes of the meetings where the award decisions were made. The Court questioned whether minutes were taken but then not disclosed or, alternatively, “the decision to keep no minutes was a deliberate one because DRD was fearful of creating a hostage to fortune.” The Court concluded that “neither of these explanations reflect well on DRD.” In response to DRD claims that it “did not have any policy for when meetings should be minuted”, the Court stated that “it is about time such a policy was drawn up”.
Furthermore, the Court rejected the DRD’s assertions that minutes were not taken since the award decisions were made during an “informal meeting”, stating that “I do not accept that this is an adequate or acceptable explanation.” As the Court observed, the DRD should be accountable as a public body to the taxpayer and its decisions should be transparent and lawful. As such, “the records of its meetings, especially where they relate to the award of contracts worth millions of pounds, should be accurately minuted as a matter of course.” The Court therefore concluded that DRD had committed a “manifest error” in its evaluation and award decisions that entitled the complainant to damages.
Similarly, in its September 2020 decision in Hoover Properties, the U.S. Government Accountability Office (GAO) ordered a re-evaluation after finding weak evaluator recording-keeping in a flawed price evaluation process. The dispute dealt with a request for lease proposals for office space in Frankfort, Kentucky. The complainant asserted that the agency’s price evaluation was unreasonable and inadequately documented. The GAO agreed, finding that the agency’s after-the-fact explanation of its evaluation process did not serve as a substitute for the creation of real-time evaluation records. As the GAO stated, “when an agency’s post-protest defense of its evaluation is not supported by the contemporaneous record, or is inconsistent with the record, such explanations are unpersuasive and will be afforded little weight.” Noting the lack of proper records, the GAO concluded that it was unable to determine that the agency reasonably evaluated the complainant’s pricing. The GAO therefore sustained the protest and directed the agency to perform a properly documented re-evaluation.
Further, in its October 2020 decision in HomeSafe Alliance, LLC, the GAO found that government evaluators failed to properly document the scoring of oral presentations and ordered that those presentations be repeated. The dispute dealt with a solicitation for staff relocation services for the Department of Defense (DOD). The GAO determined that the DOD failed to maintain proper records to support the evaluation of that stage, finding that the worksheets that were created after the presentations did not constitute contemporaneous records since they were produced after the presentations. After concluding that the scoring of the oral presentations was not supported by real-time records, the GAO ordered the DOD to perform a new round of oral presentations with proper record-keeping.
Finally, in its January 2021 determination in Falcon Environmental Inc. v Department of Public Works and Government Services, the Canadian International Trade Tribunal (CITT) ordered a re-evaluation after finding flawed evaluation records. The dispute dealt with “a Request for Proposal for the provision of aerodrome wildlife control services at Canadian Forces Base Trenton and Canadian Forces Detachment Mountain View.” The complainant challenged the evaluation process, alleging that the contract was awarded to a non-compliant competitor who lacked the required experience. The CITT determined that the government failed to keep adequate records of its prior experience assessment, noting that “it is not permissible for government institutions to give bidders the benefit of the doubt where compliance cannot be clearly established from the information in a bid” and that the evaluator score sheets “do not reveal a rigorous consideration of the issue of the experience” of the winning bidder’s proposed project team. The CITT therefore ordered a re-evaluation and directed the government to create proper records during that re-evaluation.
As these recent case studies illustrate, the failure to maintain proper records can result in the failure to defend resulting procurement decisions. Since no records means no defence, purchasing institutions should double down on their due diligence by ensuring that their evaluations are supported by thorough real-time records.
