In the recent case of Energysolutions EU Limited v. Nuclear Decommissioning Authority, the High Court has highlighted the importance of transparency in the evaluation process of a procurement process. Compliance with the principles of transparency, equal treatment and non-discrimination is obligatory for contracting authorities and their evaluation team.
Energysolutions EU Ltd ("ESEU") claimed that the Nuclear Decommissioning Authority's ("NDA") decision to award a contract for the decommissioning of 12 nuclear sites (with a contract value of just over £4 billion) to a rival tenderer was unlawful. During the procurement process, NDA evaluated and scored the tenders on a number of requirements. NDA had formulated both the requirements and the scores assigned to each of the requirements. The court explored a number of issues but two of the most significant relate to transparency and the exploration by the court of the meaning of "manifest error".
Transparency is integral to the fairness of any procurement procedure. The court made it clear that transparency is critical in relation to both record keeping and in the assessment of tenders against each of the requirements. NDA was found to be particularly sensitive about the prospect of its decision being challenged and took positive steps to restrict the amount of information that would be available to a disappointed tenderer. NDA also discouraged the evaluators from making notes and to shred any hard copy notes which had been taken. The court found that such an approach was wholly unacceptable and wholly contrary to the obligation of transparency. HHJ Fraser stated that "the need for transparency in the evaluation was never sufficiently grasped by the NDA".
Contracting authorities should be acutely aware of the importance of transparency throughout the evaluation process and ensure that thorough records of both formal and informal discussions on tenders are made contemporaneously and that evaluators are encouraged to make notes throughout the evaluation process. Contracting authorities should not fear the possibility of future litigation, but should be prepared for it. Every tenderer is likely to consider that their tender is the best. It would not be unusual for an unsuccessful tenderer to be disappointed and it will want to clarify the reasons why it was unsuccessful. If contracting authorities ensure that they can evidence the process undertaken by the evaluators, then it may be difficult for a disappointed tenderer to be successful in challenging the final decision.
The concept of what constitutes a "manifest error" has been widely explored and developed in case law. In the present case, the court found that a manifest error had to be material to the procurement process before the court would interfere. A manifest error would not be material if it made no difference to the outcome. The court found that:
- The NDA had failed to evaluate the tenders in accordance with its own evaluation requirements and its obligations of transparency and equal treatment;
- The evaluators had made manifest errors when evaluating the tenders;
- If the tenders had been scored correctly against the requirements, a number of scores would have changed; and
- The successful tenderer would have been disqualified for failing to reach the requisite thresholds for certain requirements.
In summary, NDA was found to have "fudged" the evaluation of the requirements to avoid a situation where the successful tenderer would have been disqualified.
The case has highlighted the importance for contracting authorities to ensure they set requirements which are relevant, proportionate and, in relation to thresholds, attainable by tenderers. The relationship between the requirements and the scores has to be clear and consistently applied to avoid an error being made by evaluators which has a material effect on the outcome of the procurement process.
This article was written by Katharine Rutherford. For more information conract the Construction and Infrastructure team.