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handle with care

30 January 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 dont 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 havent 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.

This article was first published by www.localgovernmentlawyer.co.uk

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