Evalution criteria in a procurement process must be fully disclosed
In the judgment in Lettings International Ltd v Newham
Borough Council
the High Court has provided further guidance on the extent to which
contracting authorities should disclose evaluation criteria for tenders.
The Facts
The Claimant was a property management company, which carried out the business
of procuring, updating, maintaining and managing properties leased to local authorities
in order to enable them to meet their statutory housing obligations. Newham advertised,
by means of a formal contract notice, its intention to enter into two types of framework
contract; one of which was for the procurement, management and maintenance of private
sector leased properties, while the other was for the management and maintenance
of private sector leased properties. The Claimant expressed an interest and submitted
its tender. The tender was marked and a report was prepared for a meeting of the
decision-making body of the authority. As a result of the tender procedure, the
authority announced its intention to enter into contracts with other tenderers but
not to accept the tender of the Claimant. The Claimant stood to lose a substantial
proportion of its business, and subsequently brought proceedings against the authority,
challenging the decision and the process leading up to it.
The Claimant contended that the authority had failed to comply with the requirements
of the Public Contracts Regulations 2006 (SI 2006/5) (the Regulations), which implemented
in domestic law the obligations of the United Kingdom under Parliament and Council
Directive (EC) 2004/18 on the coordination of contracts of the kind for which it
had tendered. It argued that the authority had acted without the requisite degree
of transparency, as required by r 30 of the Regulations, in failing sufficiently
to disclose contract award criteria and weightings in advance.
The following information was supplied in the Tender documents:-
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Compliance with specification (50%) assessed by method statements |
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Price (40%) assessed by reference to the pricing schedule
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Suitability of staffing, premises and working conditions (10%) determined by a site
visit. |
The following information was not supplied to tenderers:-
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The varying proportions by which the different method statements contributed to
assessment of the first criterion (i.e. compliance with the specification) |
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28 further sub-criteria against which the assessment of compliance with the specification
was made |
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Newham awarded only 3 marks out of 5 under the detailed sub-criteria for full compliance
with the specification. The other 2 were only to be awarded for exceeding the specification. |
Newham’s Case
Newham’s case was as follows:-
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The information omitted was not evaluation criteria but aspects of the specification |
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Full disclosure would not have affected the evaluation result |
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There was no prejudice to the Claimant |
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Tenderers had been urged in the Invitation to Tender to go beyond the contract specification |
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Even if there had been breaches of the principle of transparency, the Claimant had
no cause of action because it could not show actual loss resulting
from the errors
Newham had made. The Claimant had to show actual loss in that, if the errors had
not occurred, it would have been awarded the contract and would have made a profit. |
The Court’s Decision
In all the circumstances, the authority had acted unfairly without the requisite
transparency and contrary to the Regulations first, by failing sufficiently to disclose
contract award criteria and weightings in advance and second, by failing to apply
those criteria which had been disclosed.
The five method statements were award criteria because they were factors that would
determine the assessment, they were linked to the evaluation of the tender and they
were consistent with the examples of criteria given in the Regulations. Further,
they were described by Newham as “award criteria”.
The marks allocated to each head of the method statements had to be disclosed before
the tenders were submitted.
Details of the sub-criteria and their weighting should have been disclosed prior
to submission. Had all the criteria and weightings been known the Claimant’s tender
would have been prepared differently.
Disclosure was a requirement of transparency and equal treatment and so any effect
or otherwise on the preparation of tenders was irrelevant. If the above proposition
was wrong the test was whether it could rather than would have made a difference
to preparation of tenders. In this case it could and would have made a difference
to the Claimant’s bid. As regards alleged absence of prejudice, a bid was bound
to be superior if the bid took account of the criteria and weighting.
Newham failed to comply with Regulation 30 in failing to apply the disclosed criteria
by only awarding 3 out of a possible 5 marks and reserving the remaining 2 for those
exceeding the specification.
The submissions of Newham on loss (Regulation 47(6)) could not be accepted because
the Regulation used the words “risks suffering loss or damage” and there must merely
be a possibility of damage. It was not necessary to show that the tender would have
been successful.
Loss of a significant chance of obtaining the contract is enough and it was unnecessary
to show actual loss.
Regulation 47(6) did not provide a defence because the Claimant had as a result
of the breaches of the Regulations lost the chance of preparing a tender which had
a significant chance of obtaining a contract.
Comment
This, and other recent court decisions, apply the obligation of transparency very
strictly and place onerous obligations upon contracting authorities in relation
to tender evaluation. The courts are saying, in effect, that in general, there is
no distinction between criteria and sub-criteria. Further, anything used to assess
the most economically advantageous tender is a criterion and should be disclosed
in advance. This will require authorities to decide all the key elements of their
criteria at an early stage and to disclose such criteria in advance.
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For More Information Contact:
Peter Hill
TPP Law Limited
53 Great Suffolk Street
London SE1 ODB
t 020 7620 0888
f 020 7620 0778
e info@tpplaw.co.uk
Email: Peter
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