13/02/2019

This series of articles draws on our disputes experience and identifies 7 common Procurement Pitfalls.   When we advise on procurement challenges we tend to find the same types of problems, irrespective of the sector in which they arise.   Often these are problems which emerge from the content of the tender documents, and which lead to problems for evaluators.  The objective of these articles is to forewarn so that early thought can be given to avoiding these issues.  

We will be focussing on:

  • Price/evaluation methodology
  • Waiving requirements
  • Imposing unreasonably high requirements
  • Debriefing

 

Procurement Pitfalls 2 – Debriefing

There has been a raft of recent cases highlighting the need for authorities to keep transparent records about their evaluation and moderation process[1]. With this in mind, authorities should also be paying close attention to their audit trail demonstrating how final contract award decisions are reached.  

A related question, but one which carries different risks, is when and how an authority ought to disclose the reasons for the contract award decision.  On the one hand, authorities will want to ensure full compliance with PCR 86[2] and the associated transparency principles.  On the other hand, authorities must balance the need to protect commercially sensitive or confidential information from disclosure.  Doing so ensures that the authority does not expose itself to a claim from a bidder who alleges that its confidential information has been disclosed to a competitor who will use it in a future procurement (or indeed in any rewind of the current procurement). 

The starting position:  Under PCR 86, authorities are required to give notice in writing to ‘candidates and tenderers’ setting out the information listed below. This notice is commonly known as the ‘contract award decision notice’ or ‘standstill letter”.

Information to be provided to candidates and tenderers under PCR 86

  1. The award criteria;
  2. The name of the successful tenderer(s);
  3. The score obtained by the successful tenderer;
  4. The score obtained by the tenderer to whom the notice is being sent; and
  5. The reasons for the decision, including the characteristics and relative advantages of the successful tender.

 

Whilst the first two items listed are hopefully relatively straightforward to provide, it is less clear the extent to which authorities should disclose the score against each of the criteria and/or sub-criteria beyond simply providing just the headline score.  In one case[3] the Judge commented, in passing, that it was “certainly arguable” that scores ought to be provided against detailed sub-criteria and claimants would generally push for this level of disclosure under transparency principles.   

Potentially the most difficult requirement to get right is providing the ”reasons for the decision, including the characteristics and relative advantages of the successful tender”. We examine below two scenarios where this has proved problematic.

 


Example 1

In our first example the authority has differentiated between the bids on price rather than quality and has provided only limited debrief information.  

A Council sends contract award decision notices to all candidates and tenderers in relation to a grounds maintenance contract. The first and second placed bidders scored equally on quality but the winner offered a better price. The contract award decision notice sent to the second placed bidder states that the reason it did not win was that its price offer was not as competitive. No further details of the characteristics or relative advantages of the winning bid are given on the basis that the suppliers scored equally on quality.

It is now day 4 of the 10-day standstill period. The Council receives a letter from the second placed bidder requesting more information about the successful tender and claiming that the Council has not complied with the requirements of PCR 86.

Question: what should the Council do? Part of the purpose of the contract award decision notice is to enable unsuccessful bidders to determine whether there are grounds for challenge. Here it may be that the second placed bidder could legitimately argue that it has been under-scored and/or the winning bidder over-scored on quality. It cannot formulate those points, however, where no information is given and so there is a good argument that unsuccessful bidders are entitled to more information. The authority should consider providing further information as to the characteristics and relative advantages of the winning bid and consider extending the standstill period to allow the unsuccessful tenderers time to consider the further information.

What would resolve this problem in the future?

Careful consideration needs to be given to the balancing act between withholding commercially sensitive/confidential information where appropriate to do so (as to which see further below) and providing an insight into the reasons for the decision.  Unless robust arguments to the contrary exist, there is a good argument that bidders should be given reasons against all questions, including those in which their score was equal to the winning bidder’s.

 

A Scottish Court considered this type of situation in the Lightways[4] case, which concerned an award procedure run by North Ayrshire Council for a lighting maintenance contract. One of Lightways’ allegations was that the Council had not provided it with sufficient information in response to its request for “the characteristics and relative advantages” of the winning tender.

In this case the council had provided the score of both tenderers; a statement that all aspects of Lightways’ tender were satisfactory but suggestions for areas that could most usefully be improved further; and a list of areas in which the winning tender was better (7 out of 17 matters), with details being given on each of these 7 matters.

Despite the provision of this detailed information, the judge concluded that there was a prima facie case of violation of the Scottish PCR in limiting the information only to the areas in which the winning tenderer had performed better and not providing further information on other areas. The judge appeared concerned about the provision of information on a selective basis. He considered that there was “room for argument” that this did not comply with a requirement[5] that the unsuccessful tenderer should be able to identify why it was unsuccessful.

 


Example 2

There is a difficult balance to strike between giving adequate debrief information and ensuring that confidential information about the winning bid is not given to the winner’s commercial rivals. PCR 86 provides that information may be withheld from the contract award decision notice where releasing it would prejudice the legitimate commercial interests of a particular economic operator.  Further, PCR 21 requires authorities not to disclose information that a bidder has designated as confidential, as do general duties of confidence.

In our second example we consider the situation where an authority has to try to strike the right balance between providing compliant debrief information and preserving the confidentiality of the winning tender.

An NHS Trust sends contract award decision notices to all candidates and tenderers in respect of a competition for a clinical diagnostics solution. The notices contain detailed information about the winning bidder (“Company A”)’s proposed IT/clinician interface. The second placed bidder (“Company B”) raises concerns during the standstill period. The Trust contemplates rewinding the process to address those concerns, but is worried about its ability to run a fair process the second time around bearing in mind that Company B has now received information about Company A’s solution. 

Question: what should the Trust do? The Trust will need to consider

  • the extent to which it has disclosed any genuinely sensitive information about Company A’s solution to Company B. For example, did Company A designate the information that was disclosed in the contract award decision notice as confidential when submitting its tender? and
  • whether any advantage Company B has received through debrief can be neutralised so Company A and B can both compete in the re-wind tender on a level playing field. One way of achieving this could be, for example, by giving information about Company B’s solution to Company A. Plainly that would not be a sensible option if doing so would simply exacerbate the situation by giving Company B grounds for complaint that its sensitive information had been disclosed.

Comment: Part and parcel of competing for public sector contracts is the expectation that some information about the winning tender will be shared with the losing bidder(s). The Trust will need to weigh up the merits of the current complaint against it from Company B, the benefits of a re-wind, and the potential for Company A to complain if there is a re-wind.  Could the re-wind procurement be redesigned such that the disclosed information does not assist Company B?

What would resolve this problem in the future?  Generalising the content of debrief notices where sensitive information is concerned will help – for example rather than detailing exactly what the answer or solution was, explain instead what outcomes it helped demonstrate or achieve.  In this example, rather than giving specifics of Company A’s solution, reference instead to the outcomes the solution will achieve (such as faster diagnostic times/less paper and administration time) may assist.  When considering the information to be given in debrief the authority should have one eye on the possibility that the procurement may need to be re-run and stress test its contract award decision notices with that in mind.

 


Our specialist procurement litigation team frequently bring and defend court challenges, both for suppliers and contracting authorities.  In the past year alone, we have advised on a range of disputes including: health and social care, infrastructure and development, waste collection and disposal, pathology, defence and telecommunications.

 

More resources and information to assist with getting debrief right or challenging and inadequate debrief is available here.

 

This is the second in our series of articles on Procurement Pitfalls. If you would like to read the previous article on pricing formulae then please follow this link.

 


[1]               http://www.bevanbrittan.com/insights/articles/2016/lessons-to-be-learned-from-the-case-of-energysolutions-eu-ltd-v-nuclear-decommissioning-authority-record-keeping-in-procurement/

                http://www.bevanbrittan.com/insights/articles/2018/moderation-meetings-in-the-spotlight-new-high-court-public-procurement-law-case/

[2]               Regulation 86 of the Public Contracts Regulations 2015 no.102 (as amended).

[3]               Mermec UK Limited v Network Rail Infrastructure Limited [2011] EWHC 1847 TCC, para 20

[4]               Lightways v North Ayrshire Council June 20 2008 [2008] CSOH 91. The procurement was conducted under the Public Contracts (Scotland) Regulations 2006.

[5]               The judge referred in this context to T-183/00 Strabag Benelux v Council of the European Union a decision of the Court of Justice of the European Union (General Court)

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