Public Procurement Health Check – TCC Decision Provides Checklist of how Public Procurement Exercises can go Awry

In a decision which will have important implications for the conduct of public procurement exercises, the 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, Stuart-Smith J 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 Claimants, 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. Following a prior ruling by Fraser J, the contract with Virgin had been suspended pending the outcome of the trial, with the Claimants providing the services on an interim basis.

The procurement was conducted under the light-touch procedure, and so was required to comply with Regulations 74 to 76 of the Public Contracts Regulations 2015 (“PCR“). Stuart-Smith J considered the central obligation of transparency and observed that, once an authority has identified what the tenderer is required to address and how marks are going to be awarded, it should generally adhere to its stated methodology. Stuart-Smith J also addressed the evaluation criteria for the bids, the evaluative methodology adopted by four evaluators, and the subsequent moderation process.

Key Findings

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.

The Court’s concerns with the adequacy of the reasons also impacted its assessment of whether the Council made manifest errors or breached procurement law. Stuart-Smith J 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.

Implications

The decision provides timely guidance for public authorities on the requirements for reasons and procedural obligations when conducting a public procurement exercise.

First, authorities must be aware of the need to maintain a clear audit trail for the decisions reached, detailing the weight attached to positive and negative points, and the arguments raised at moderation. 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.

Secondly, where the 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 reasons for a departure.

Thirdly, authorities should make clear at the outset which criteria and sub-criteria will be used in scoring, and the weight attached to each, and adhere to this in scoring the applicants.