How do you ensure award criteria are sufficiently transparent?

Regulation 4(3) of The Public Contracts Regulations 2006 (the Regulations) – and its equivalent in Scotland - requires contacting authorities to treat economic operators equally and in a non-discriminatory way, and to act transparently and proportionately.

Recent years have seen a dramatic rise in the number of claims by suppliers alleging that award criteria were either not disclosed or were not sufficiently transparent. How then can contracting authorities ensure their award criteria and evaluation methodologies are sufficiently transparent? A recent Scottish case, Healthcare At Home Ltd v The Common Services Agency (2013), provides some useful guidance.

The case concerned the award of a contract to supply the cancer drug Herceptin to patients in their own homes. The claimant, Healthcare at Home (HaH), had been the incumbent supplier but narrowly lost the contract to BUPA when it was retendered.

The claimant argued, on a number of grounds, that the ITT was unacceptably subjective, too open-ended and lacked transparency. Its arguments focused on the following points in particular: 

• Using the phrase "including but not limited to": The ITT asked tenderers to detail in their tenders issues "including but not limited to" a number of expressly listed items.
• Giving the highest marks for "creative and innovative" responses: The evaluation methodology stated that the top marks for certain sections of the tender response would only be given for answers that were "creative and innovative".
• Use of a "silo" method for marking tenders: HaH argued the ITT had not made it clear that different sections of the tender response would be marked by different teams of evaluators.

The court noted that contract award criteria must be formulated in such a way as to allow all reasonably well-informed and normally diligent tenderers to interpret them in the same way (SIAC Construction v County Council of Mayo (2001)). The criteria must not be so vague as to allow the contracting authority an unrestricted freedom of choice. However, said the judge, this did not mean that a criterion could only satisfy this test where all the tenderers responded in an identical way and a range of responses could still be expected. Provided the criteria "allow" every reasonably, well-informed and normally diligent tenderer to arrive at the same interpretation, that is sufficient. The test is an objective one for the court to decide: it must make its own evaluation of what the hypothetical reasonably, well-informed and diligent tenderer might understand from the criteria. Evidence of what the claimant or other tenderers themselves thought the criteria required is, essentially, irrelevant.

The court held that the award criteria and associated evaluation methodology were sufficiently clear in this case. In particular: 

• Use of the phrase "including but not limited to" was sufficiently transparent and should have been understood as requiring the tender to deal with all the matters expressly listed in the ITT and to provide additional material which could be inferred from the ITT as relevant.
• A reasonable bidder would generally be expected to anticipate a "silo" method of marking. This was particularly the case here as the ITT had referred to a panel of evaluators; that the response to each section of the ITT was to be completed "fully", and that attachments were to be provided for every section where they were relevant and not by way of a cross reference to a different section. In any event the court found there was nothing about silo marking which prejudiced the claimant or could have led to unequal treatment. 
• A process that provides extra marks for creative thinking is inoffensive, as is one that allows a tenderer to suggest new methods of working which the contracting authority might find attractive, provided these fall within the reasonable ambit of the specified criteria as would have been understood by the hypothetical, well-informed tenderer.

The case is good news for contracting authorities as it shows the courts will apply an objective test to a hypothetical tenderer despite the claimant in question giving evidence that it had in fact been misled by the criteria.

What can a contracting authority do to minimize the risk of a challenge of this kind? Obviously careful and clear drafting of the ITT, award criteria and any associated evaluation methodology is key. Likewise, ensuring bidders understand the requirements of the ITT by arranging bidder briefing meetings and/or encouraging them to seek clarification should help. Note, however, that putting the onus on bidders to request clarification may not offer a complete defence if the ITT is insufficiently clear.

If a contracting authority has concerns about the transparency of its ITT, award criteria or evaluation methodology, it should carry out a risk assessment in order to decide on the appropriate action to take. The guiding principles here should be ensuring equal treatment of bidders and acting proportionately. Where there is a risk that any lack of clarity could influence how bidders will bid, and this can be addressed before the bid deadline, then the contracting authority should consider issuing a clarification and, if necessary, extending the bid deadline.

If the bids have already been submitted the position is trickier (and particularly so if bids have already been opened and considered). While re-winding or re-procuring using an improved set of criteria are possibilities, both these options carry risks as to the fairness of the subsequent competition; either because the contracting authority has been influenced by the bids which it has already seen and/or because debriefing information may already have been provided such that the previously successful bidder’s competitive advantage has been lost. The contracting authority will need to balance the risks of the various options available, identify any additional measures which might assist in mitigating each of these, and then decide on the appropriate action to take.