knowledge | 10 February 2017 |
Public Procurement: Recent Decisions on Record-Keeping
The 2016 public procurement regulations have brought into sharp focus the obligations on public bodies to keep careful records about their procurement procedures, by introducing a requirement to keep a detailed report for each process run. This report, known as the Article 84 report, must include sufficient documentation to justify decisions taken at all stages of the procurement process (including pre-procurement planning).
This includes records of internal deliberations, communications with economic operators, dialogue or negotiations, selection of the winner, and award of the contract. The report must be kept for at least three years from the contract award. The regulations do not specify the level of detail required in this report, or how much information has to be kept about the award process. However, two recent Irish and UK decisions make interesting reading in this context. The decisions do not deal directly with the Article 84 report, but they highlight the importance of detailed record-keeping for procuring authorities, and the negative consequences that can arise where the records available are poor.
Somague Engenharia SA v Transport Infrastructure Ireland1
The decision of the High Court in Somague provides welcome comfort to procuring authorities in performing the difficult task of evaluation, and clarifies some important principles. The judgment also highlights how notes of the evaluation process can be useful to a court in analysing decision-making by a public body.
The challenge in Somague concerned the tendering process that Transport Infrastructure Ireland (“TII”) adopted in assessing bids for the LUAS light rail extension. The applicants, an unsuccessful tenderer, alleged a number of serious errors had been made in the evaluation process. Among other things, they claimed TII had breached the principle of transparency in its evaluation process by applying undisclosed criteria and by not taking relevant issues into account. Evaluation records fell to be considered in this context.
First, the applicants complained that TII had wrongly deducted marks from them for concerns over certain products. In holding that there was no manifest error on the part of the evaluation team in expressing these concerns, and that the view of the evaluation team was founded in “evidentially sound judgment”, Baker J focused on the information which had been before the panel during evaluation, and looked to the notes of an individual evaluator for evidence that there was adequate material in front of the panel for TII to make its decision.
Similarly, the applicants complained that the winning bid had contained discrepancies which should have been picked up on by the evaluation team and given weight in the assessment. TII said that the scoring had in fact factored in these discrepancies. Baker J accepted TII’s position. She looked to the notes of the relevant evaluator, which evidenced that he had taken account of the discrepancies. Baker J therefore rejected the argument that TII had failed to take these discrepancies into account.
The applicant further argued that TII had applied undisclosed sub-criteria to the tender. One evaluator had prepared a matrix highlighting “factors” which he would expect to see addressed in a tender response. On the basis of this matrix, he had allocated provisional marks to the bids. The applicants argued that these “factors” amounted to undisclosed sub-criteria and therefore breached the principle of transparency. Ultimately, however, Baker J found no operative breach of the principle of transparency. She accepted evidence that the matrix was used at an early stage in the evaluation, to enable the evaluator in question to “deconstruct” the tenders and to identify differences between them; marks were ultimately not allocated based on the factors in the matrix. The matrix was not circulated to anyone else on the team, and the evaluator’s preliminary view of the mark to be awarded was then subject to a discussion and consensus process with other evaluators, leading to a mark which was quite different from the evaluator’s preliminary mark. Baker J saw this as evidence of the robustness of the process. She commented that the evaluator was entitled to structure his notes in the form of a matrix if that was the way in which he professionally could best understand and assess the submissions, in light of his engineering expertise. She also noted that as a member of the evaluation team, the evaluator was both entitled and required to have a personal reading and evaluation of the submissions (which his notes had evidenced). It is comforting for procuring authorities that this paper trail of how the evaluator’s thinking had evolved was not fatal, and in fact was taken by the judge as demonstrating the robustness of the evaluation process.
Energy Solutions EU Limited v Nuclear Decommissioning Authority2
The second case highlights the dangers of poor evaluation records. Energy Solutions EU Limited concerned the procurement of a significant contract by the Nuclear Decommissioning Authority (“NDA”) for the decommissioning of 12 nuclear facilities, worth billions of pounds.
The claimant was an unsuccessful bidder which had lost by a narrow margin - just 1.06%. It alleged a number of issues, including scores which did not properly reflect the quality of the bid, failure to exclude bidders who had failed on pass/fail criteria, and changing scores without documenting reasons. In finding for the claimant, the Court heavily criticized the procurement process and the conduct of the NDA as regards record-keeping and transparency.
The Court found there was, at the very least, a strong discouragement of the evaluators taking comprehensive notes. No hard copy notes were permitted at all, with heavy reliance on the AWARD system, an electronic record where the evaluators would input their own individual comments until consensus meetings were held, at which time a consensus entry was made to explain the comments for the score and the individual comments were removed. This was effectively the only mechanism for making notes during the process. Once the AWARD system was closed on a particular score, there was nowhere for any evaluator to record why a score might change (as happened on numerous occasions). Fraser J was critical of the lack of transparency involved in the system, and the almost complete absence of evaluation records it produced. He felt that the NDA was paying “lip service” to its transparency obligations, while in reality attempting to keep records to a minimum in order to minimise available evidence for any disgruntled bidder seeking to challenge.
On various occasions, changes were made to the scoring following undocumented conversations with senior personnel at the NDA, and following a review by the NDA’s lawyers. A key decision on whether the winning bid had passed or failed was again made in an undocumented conversation, with no reasons recorded. While accepting that the NDA was entitled to claim privilege over the legal review, Fraser J pointed out that this created another gap in the already poor decision-making record.
The judge also reviewed the policy included in training slides for the evaluators, the initial draft of which indicated that all handwritten notes would be shredded at the end of the process, and then ultimately stated that “as a matter of policy, evaluators must only use the AWARD system to record notes”. Evaluators were then sent an email insisting that they refrain from writing on the hard copy tender documents and only use the software to record notes, which “can then be deleted from the system if no longer required/answered during final review stage.” Fraser J said it was “wholly unacceptable” and “extremely worrying” that a publicly funded body would consider such a policy, highlighting the “clear obligations of transparency” upon the NDA, particularly where notes of the procurement process may become subject to disclosure in subsequent legal proceedings. Ultimately, the judge found that NDA’s approach to record-keeping in the process was in breach of the obligation of transparency.
In light of Baker J’s comments in Somague and the views of Fraser J in Energy Solutions, it is clearly critical for a procurement authority to carefully consider its policy on keeping records during the procurement process, as a detailed record of the evaluation can be a useful tool in justifying decisions to a court or to a dissatisfied bidder. While Somague is an example of the benefit of keeping good notes, Energy Solutions is another in a long line of UK cases where lack of records has been severely damaging to an authority. Accordingly, procuring authorities setting up their record-keeping procedures should be wary of the implications of failing to keep notes of the process. They also need to ensure their internal procedures – from pre-planning right through to contract award – reflect the new obligations regarding the Article 84 report, which are now part of Irish procurement law.
-  IEHC 435 (28 June 2016).
-  EWHC 1988 (29 July 2016).
This briefing is for general guidance only and should not be regarded as a substitute for professional advice. Such advice should always be taken before acting on any of the matters discussed.