Tender processes: Fair game

The cry of a frustrated child when they do not get their way is “it’s not fair!” As we get older we learn that life often isn’t, but there are areas where society tries its best to level the playing field. Such levelling features strongly in the world of public procurement.

The nature of any tender process is that there must be a winner and a loser. But there will be more losers. This creates potential challenges. If a challenge is to be made it must be made expeditiously and, while it is not the purpose of this article to set out the rules of such a challenge, it should be done immediately, as delay can be fatal.

There are both legal and commercial considerations as to whether a challenge will be worthwhile but there are occasions when a party feels that it has no choice but to seek redress.

One recent example is the case of Woods Building Services vs Milton Keynes Council ([2015] EWHC 2011 and [2015] EWHC 2072 in the Technology and Construction Court (TCC)).

The nature of any tender process is that there must be a winner and a loser. But there will be more losers. This creates potential challenges. If a challenge is to be made it must be made expeditiously and immediately

The first report addressed the merits of the case and the substantive issues and the second report addressed the appropriate remedy. The tender process undertaken by Milton Keynes council was the award of a framework agreement for asbestos removal and reinstatement services. There were five tenders submitted, and Woods was the cheapest.

However, it was not successful due to the council’s evaluation of the quality criteria in the tenders. The scoring had been weighted 60-40 in favour of price over quality and therefore Woods had scored comparatively poorly on the quality aspects of the tender. Woods’ complaint was essentially that the tender evaluation process was flawed as the council was in breach of its duties of transparency and equality of treatment of tenderers, and had made a number of manifest errors in its evaluation.

Mr Justice Coulson first summarised the legal principles applicable. Evaluation criteria must be drawn up in a clear, precise and unequivocal manner to enable a reasonably well informed and diligent tenderer to interpret them in the same way. Failure to comply with those criteria will be a breach of duty of transparency without any margin of appreciation. No margin of appreciation is equally applicable to the contracting authority treating all parties in the same way in evaluating the tender unless there is objective justification for a difference in approach. There is a little bit more flexibility in evaluation of tenders where a subjective element of judgment is involved. In those circumstances there is a margin of appreciation and the court will need to see a manifest error (for instance, that an error has been made).

To summarise Mr Justice Coulson’s judgment, there were a number of concerns regarding tender evaluation process. One of the council participants in the process was a former employee of Woods, it appeared that the council started assuming that one tender was worse or better than the other before carrying out the detailed evaluation, and also the evidence of the evaluation detail kept of the process was unsatisfactory. These matters did not provide “free-standing” grounds for judgment against the council. They did, however, form the background to the judge’s analysis of the tender exercise. In that context the courts went on to review the scores and found that there were a number of manifest errors in the tender evaluation process and instances where the council was in breach of its duties of equality and transparency. Those conclusions led the judge to say: “I am confident this will mean that Woods outscored […] so that there should have been a different result.”

It is highly unlikely that the outcome will be the appointment of the wronged contractor into the role initially advertised

It was then left to the parties to go away and analyse the effect of the court’s decision on what should have happened in the evaluation process and then decide on appropriate relief for Woods.

Woods argued against the council that it should be awarded the contract although seeking damages in the alternative. Various reasons including damages being an adequate remedy meant the court would not award Woods the contract.

This case shows that there are circumstances where the tender process can be successfully challenged but it is highly unlikely that the outcome will be the appointment of the wronged contractor into the role initially advertised.

Most of us still have an element of small child syndrome when it comes to fairness. But a temper tantrum followed by you or your adversary having a spell on the naughty step does not work in the law of procurement. You need to act quickly with good reason, or simply live to tender another day.

Laurence Cobb is a partner in the construction and engineering team at Taylor Wessing