This article is an excerpt from the 2021 edition of The Art of Tendering: A Global Due Diligence Guide, which is available for purchase.
In its June 2011 decision in Varney & Sons Waste Management Ltd v. Hertfordshire County Council, the England and Wales Court of Appeal (Civil Division) rejected an appeal after finding that the government was not required to disclose sub-criteria and weightings when that information had no impact on how bidders would prepare their bids. The dispute dealt with an invitational tendering process for prequalified bidders to operate household waste recycling centres. A losing bidder challenged the transparency of the evaluation criteria, claiming that it would not have proposed higher staffing levels at a higher price if it had known the evaluation sub-criteria and weightings that would be applied by the government evaluators. As the Court summarized, pricing was weighted at 65 percent and customer satisfaction at 35 percent:
The Invitation to Tender (“ITT”) was sent to all ten entities by email on 23 June 2008. It consisted of three volumes. Volume I consisted of instructions for tendering together with drafts of relevant documentation and the Conditions of Contract. Volume II consisted of the Return Schedules. Volume III consisted of the various appendices to the new contract. Paragraph 2.1 of the instructions stated:
The tender analysis will be on an individual site basis although the Tenderer must indicate with its Tender its particular requirement for minimum numbers or groups of sites for which he wishes to be considered.
All submissions will be evaluated on the basis of:
2.1.1. most economically advantageous to Hertfordshire County Council (65%)
2.1.2. resources (including staff) to be allocated to the delivery of the Services and the manner in which the Tenderer proposes to provide the Services in order to deliver outstanding customer satisfaction (35%).
The 35 percent qualitative section was assessed by instructing bidders to fill out detailed schedules that set out the service standards in a breakdown of multiple sub-categories:
The Tenderer must also submit with its Tender in Volume II: Return Schedules:
…
2.5.2 details of proposed staffing and labour levels together with details of any qualifications to demonstrate technical competence, health and safety, first aid, customer care etc. Minimum numbers of staff to be permanently employed at each Site must be such that all of the requirements of the Contract are complied with, maximum quantities of material are separated for composting, recycling, reprocessing and re-use and Customers given no reason to complain about the level of service provided.
As the Court summarized, the 35 percent qualitative assessment was broken down into 15 technical schedules, which was accompanied by two pricing schedules and a final schedule that summarized the information requirements:
The Return Schedules were described as follows: 1 Household Waste Recycling Centre Servicing; 2 Customer Service and Staff Training; 3 Controls on Non Household Waste and Adherence to …Council Policy; 4 Dealing with Hazardous Wastes; 5 Increasing and Encouraging Recycling; 6 Health and Safety; 7 Welfare and Amenities; 8 Details of Tenderer’s proposed Plant and Equipment; 9 Staffing Levels at the Household Waste Recycling Centres; 10 Contractor’s Recycling and Reporting Proposals; 11 Contractor’s Re-Use and Reporting Proposals; 12 Incentivisation of Household Waste Recycling Centre Staff; 13 Education of Residents and Added Value for the Council; 14 Dealing With Emergencies and Severe Weather Conditions; 15 Internal and External Site Cleanliness; 16 Preamble to the Schedule of Rates and the Schedules of Rates and 17 Summary of Completed Return Schedules and Other Information. At the front of the Return Schedules were instructions for completion which stated:
Tenderers must complete each of Return Schedules 1 to 15 giving full details of the methods it intends to employ to carry out the particular aspect of the Service provided.
Tenderers must also complete Return Schedule 16, the Schedule of Rates, for each Site for which a tender is submitted giving the tendered Site Management Charge.
Tenderers must also complete Return Schedule 17, the summary of completed Return Schedules and other information required.
Furthermore, as the Court of Appeal noted, the 15 schedules that broke down the 35 percent of the evaluation that went to the quality of service category came complete with detailed service standard expectations that bidders were directed to respond to:
At the beginning of each of the Return Schedules 1 to 15, the Council set out in some detail the standard of Service which it expected and required from tendering contractors. These Return Schedules were to be used and were used by the Council to assess the bids as regards the other criterion, apart from price, of customer satisfaction.
In summary, the 35 percent quality of service category was subdivided into 15 sub-schedules, meaning that on average the breakdown per schedule was 2.33 percent. That smaller percentage was in turn broken down by reference to service standards in the instructions to bidders. The losing bidder’s claim was that this was an insufficient breakdown of the evaluation weightings. The Court of Appeal, as the trial court before it, disagreed with the plaintiff and found that a further breakdown of criteria and weightings was not necessary given the evaluation details that were already provided in the tender call. In fact, the Court of Appeal found that more detail would not have changed how the losing bidder responded to the tender call:
In my judgment, the judge correctly held that they were sub-criteria, and that therefore there was no absolute requirement that their weightings be specified in the ITT. There was no breach of the principles of equality and transparency. Every tenderer was given the same information. It was obvious to Mr Varney that the information required by the Return Schedules would be used to decide on the award of the contracts. The judge found that Varney’s tender was unaffected by the fact that the Return Schedules were not identified as criteria or sub-criteria and he did not know the weightings to be attributed to them. Specifically in relation to staffing levels, which was the subject of his major complaint, he accepted that the staffing levels he put in his tender were unaffected by how the tenders were marked. There was no evidence that any other tenderer’s bid had been affected by the fact that the Return Schedules were not identified expressly as sub-criteria and their weightings not identified in the contract documents. In paragraph 102 of his judgment, the judge said:
… in reality it was perfectly obvious that the award criteria were going to be marked by reference to the information provided in response to the Return Schedules and if any of the tenderers had wanted clarification of that or of what marks would be attached to each Return Schedule, they would surely have asked. Accordingly I am satisfied that this is a case where, within the ATI principle, there was no requirement to disclose in advance the sub-criteria or the weighting attached to each of them, because such disclosure could not have affected the preparation of any of the tenders. In the circumstances, the Council was not in breach of the obligation of transparency in that regard.
The Court therefore dismissed the appeal. As this case illustrates, purchasing institutions remain subject to high transparency standards and to a high degree of scrutiny by the courts in the face of a legal challenge to their evaluation processes. They should therefore strive to ensure that their evaluation criteria and weightings are broken down with as much detail as possible to better ensure the defensibility of their evaluation decisions. To reduce the risk of legal challenge, project teams should err on the side of caution and expressly break down the sub-weightings even in instances, such as this case, where they could otherwise be reasonably inferred.
