selection and award criteria – handle with care
1 February 2012
The dilemma for contracting authorities when taking the decision
to award a contract being procured under the EU procurement regime
is how to ensure that it is not only the best bid which wins but
the best bidder. The split between selection and award criteria is
meant to ensure that by the award stage of the process the best
potential contractors have been selected through the PQQ evaluation
or other previous rounds.
However, contracting authorities struggle from time to time to
evaluate at the award stage purely on the strength of the bid as
set against the criteria in the tender documents and this is
understandable given how closely linked some of the bidders
qualifications and experience are to the contract itself. Two
recent cases have shown some of these difficulties, firstly in
applying the correct criteria and secondly, in understanding when
information from a bidder must be rejected.
The cases
In Evropaïki Dynamiki v European Commission [2011] the
General Court held that the Commission had incorrectly awarded a
contract by using selection (rather than award) criteria.
Specifically, the Commission had evaluated the tenders against
information already submitted at the selection (PQQ) stage relating
to the bidders’ capacity to perform the contract.
The court noted that award of a contract must be on the basis of
the “lowest price” or (under the procurement regime followed by the
Commission) “best value for money”. In neither case can looking at
the experience of the bidders in similar contracts be justified –
such considerations of the technical and professional capacity of
the bidder should have been looked at in the PQQ. This error was
compounded by relying on summaries of services on bidders’
websites, rather than on information specific to the
procurement.
In Resource v Northern Ireland Courts and Tribunals Service
[2011] the Northern Ireland High Court held that a contract
for security services had been awarded on the basis of irrelevant
information not required in the tender. The contract had been
awarded, under the restricted procedure, to G4S whose response only
included an alternative proposal to part of the Statement of
Requirements. The court held that this was a manifest and serious
error and therefore the contract award should be annulled. It was
also found that the evaluation panel had not provided a good
quality or consistent audit trail for their decision-making
process.
Establishing a difference
Since the Lianakis case, it has been clear that there must be a
distinction between:
- selection stage – which has the aim of identifying bidders
capable of performing the contract; and
- award stage – which looks at what bidders are offering in
relation to the specific contract being awarded
In other words, selection criteria assess the bidder, and award
criteria assess the bid.
Awarding authorities might take the view that these rules, and
their enforcement, introduce another legal hazard while preventing
them from awarding the contract to the best bid, and indeed the
best bidder, available.
On the other hand, a disgruntled bidder might point out that,
having qualified for the procurement process (and perhaps spent
considerable time and resources in bidding), it is not fair for him
to lose out because, although sufficiently robust, he is not quite
as large as a rival. Similarly, having submitted a bid within the
parameters of an Invitation to Tender, he could feel that a process
lacks transparency if a competitor ignores these constraints and
gets extra credit by doing so.
How to avoid the risks
How can awarding authorities avoid these risks while factoring
into a procurement their legitimate wish to ensure that a bid is
robust and that innovative proposals can be taken into account?
Criteria
To take a step back, ensure that the PQQ criteria are
sufficiently robust to exclude from process any bidder you would
not be comfortable contracting with. Decide what the minimum levels
of assurances are that you would require from the bidders and set
these as either pass/fail questions or give a question a minimum
score where appropriate.
At the award stage don’t evaluate the bidder, evaluate the bid.
If you are looking simply for the lowest price then that is the
criterion to award against. However, many awards are made on the
basis of most economically advantageous tender meaning different
criteria must be looked at with price only being part of it.
Criteria used to evaluate a bid could take into account
deliverability of a specific example project (perhaps as
pass/fail). It is common to set out a specification and ask the
bidders to respond to that with their proposals for delivery.
In relation to finance, security of funding or deliverability of
a funding model can be an award criterion (as opposed to pure
financial strength of bidder) as this allows the contracting
authority to assess the viability of the proposals.
If you have any concerns as to the cross-over of the selection
and award criteria go back and look at the PQQ again to check what
has already been asked.
Variant bids
As the Northern Irish case above shows, variant bids are often
of interest to a contracting authority as they offer options that
maybe haven’t been thought of previously. However you must be clear
as to what type of variants are permitted and how they will be
evaluated. This is particularly important in a competitive dialogue
process where, for example, you might end up with two bids
(compliant and variant) from same bidder at the final stage. This
might not be acceptable.
You may only wish to receive variations for part of the
criteria, for example, how the payment mechanism is structured.
This must be set out clearly in the tender documentation.
You must be clear that a compliant bid, one meeting all of the
criteria, is submitted as well as a variant. The evaluation
criteria must be capable of assessing a compliant and a variant bid
as you cannot have different criteria. It is worth spending some
time going through some possible scenarios to test the evaluation
approach.
Conclusion
Challenges to contract award decisions are becoming ever more
frequent and so the importance of setting out and using the correct
award criteria only increases. Careful and consistent drafting of
award criteria that have been compared with the selection criteria
and tested is key.
The content of this bulletin is provided for the purposes of
general interest and information. It contains only brief summaries
of aspects of the subject matter and does not provide comprehensive
statements of the law. It does not constitute legal advice and does
not provide a substitute for it.