Public Procurement Health Check – TCC decision illustrates how the evaluation of public procurements can go awry

In a decision which will have important implications for the conduct of public procurement exercises, London’s Technology and Construction Court (TCC) has set aside the award of a public procurement contract on the grounds that the reasons given for the evaluation scores awarded to the tenderers were insufficient in law.

In Lancashire Care NHS Foundation Trust v Lancashire County Council [2018] EWHC 1589, the Claimants, two NHS Foundation trusts, challenged the award of a contract for Public Health Nursing Services by Lancashire County Council to Virgin Care Services Limited, the rival tenderer. Sitting in the TCC, Mr Justice Stuart-Smith ordered that the award of the contract to Virgin be set aside.

The decision offers a timely reminder that public authorities must maintain a clear audit trail and rationale for their decision and clear reasons for scoring tenderers at the moderation stage. Other aspects of the decision detail how easily procurement exercises can go awry.
Background and details

The case concerned the Council’s award of a public contract, worth an estimated £104 million over five years, for Public Health Nursing Services for its 0-19 Healthy Child Programme in Lancashire.

The NHS Trusts, the incumbent providers of the services, challenged the award of the contract to Virgin, disputing the Council’s evaluation of the bids, the scoring methodology, and the transparency of the award criteria.

In overturning the contract award, the Court focused in on inadequacies and inconsistencies in the Council’s reasons for the decision at the moderation stage. Key areas of concern included:

  • The evaluation panel reached consensus on scores, however, there was no apparent congruity of reasoning among the evaluators for the consensus scores.
  • While it was not necessary to keep a complete note of every point made, simply noting the negative and positive points raised in relation to the score for each question did not constitute reasons for the outcome.
  • The moderation notes contained no apparent attempt to attribute conflicting points to individual evaluators, “to reconcile them or to indicate whether or to what extent the panel reached agreement, even if that agreement was an agreement to disagree on the significance of a point while agreeing on the ultimate consensus score.”
  • The notes were not a complete record of the points made or even the points considered to be material at some stage during the discussion, as some were edited out at unspecified times and for reasons that were not recorded.
  • Other than recording positive and negative points, there was no consistency in the recording of any discussion or decision-making processes between the tender bids.
  • Neither was there any consistency in identifying key points, or highlighting influential points. Put simply, the reasons were “sparse and uninformative“, and failed to disclosure whether a given point was material or made the difference between a higher or lower score.

The Court was also concerned with departures from the Tender Panel Guidance, including the Council’s decision not to require members to sign the final moderated score sheet and agree the moderation notes.

Taking the Council’s tender evaluation process as a whole, Mr Justice Stuart-Smith held that “the pervasive inadequacy of the account of the panel’s reasoning and reasons…prevents any reliable assessment of the extent or materiality of any error in the reasons and reasoning actually adopted.”

As such, in spite of finding that the Council did not depart from the stated evaluation methodology, nor did it consider undisclosed sub-criteria or weightings, the Court ordered that the award of the contract be set aside.
Key Learning Points

  1. Reasons for the evaluation panel’s decision

In any public procurement process, it is imperative that the bids are scored and that there is a final rationale for the score(s) awarded. In this case the Mr Justice Stuart-Smith was critical of the lack of reasons for the decision at moderation. He stated “the reasons given by the Defendant for the scores awarded to the Claimants and Virgin for the quality evaluation questions are insufficient in law”.

Although it was accepted that the panel had reached a consensus on scores, it was imperative that a contracting authority is able to justify the decision that it has made, adding that “a procurement in which the contracting authority cannot explain why it awarded the scores which it did fails the most basic standard of transparency.”

The Court emphasised that while this did not entail keeping a complete record of the moderation meeting, the authority’s reasons had to disclose why the scores were awarded, with sufficient detail of the reasoning to enable the Court to review the authority’s decision.

2. The moderation process

Having a fair and transparent moderation process is fundamental to any public procurement exercise. In this case, the Council had identified specific bullet points in the Invitation To Tender which bidders were expected to cover as part of a satisfactory answer to each question.

However, the record of the moderation meeting did not clearly identify which of those bullet points had been considered and the moderators’ views on each issue, or clearly set out those points that justified the scores awarded.

Further, the records of the moderation were “not a complete record of the points that were made or even the points that were considered….”, with no consistency in the manner in which any discussion or decision-making process were recorded.

This left all parties involved unable to understand the basis on which the moderators arrived at a particular score thereby fatally undermining the Trust’s ability to challenge the decision; the Council to defend itself; and the Court to exercise its right of supervisory jurisdiction.

3. Process, process, process.

Mr Justice Stuart-Smith was of the clear view that the Council’s own guidance on how the process was to be run was “ignored”.

The Council had stated that the Chairperson at the moderation would “ensure all evaluation documents, including all evaluation comments, justifications, marks and amendments are fully documented and agreed by both the panel members and the Chairperson.” This did not take place.

There were also further deficiencies in the actions of the tender evaluation panel’s chairperson which also drew adverse commentary.

The learning point here is that where public authorities have stated the process of the procurement, this must be adhered to, in particular, where they have set out guidance in relation to scoring, unless there are good documented reasons for a departure.

It must also be clear at the outset which criteria and sub-criteria will be used in scoring, and the weight attached to each, and for this to be rigorously adhered to in scoring bids.

4. Transparency with challengers

hAs is their legal right to do so, the NHS Trusts sought further information and documentation during the mandatory 10-day ‘standstill’ period prior to the Council’s contract award decision being confirmed.

Sadly. some of the documents disclosed by the Council were redacted and backdated, which created the impression that documents had been signed earlier in the process than was in fact the case.

The Court decided that “the Council misled” the Trusts as a result and further commented “To describe this (as the Council did) as merely “a regrettable episode of poor administration” is, to my mind, an unacceptable understatement.

Contracting authorities should bear in mind from the outset that procurement documentation is prepared as part of a formal, legally reviewable process and that considerable care should be taken to ensure that documents accurately reflect the reality of the process as actually conducted.

Any inadvertent (or deliberate) action that could mislead bidders or the Court could, as occurred in this case, can result in significant consequences for the authority concerned.

Please also see our previous article on this case.

Image Credit: Pixaby/William Cho