The latest word on contract award criteria
Release Date: 16 June 2010
A large proportion of recent public procurement challenges have related to the contract award criteria. The law on evaluating tenders has seen significant developments over the last couple of years, with the requirements of transparency, fairness and objectivity placing ever increasing burdens on contracting authorities. In response to this uncertainty and the developing case law, the Procurement Lawyers' Association (PLA) has just published a paper on its website entitled “Issues in Evaluating Public Sector Tenders”. This is available from www.procurementlawyers.org.
Anthony Collins Solicitors’ partner, Andrew Millross was a member of the PLA working party responsible for the paper. His main contributions to the paper were on the evaluation of price and the extent to which the comparative experience of bidders can be taken into account at contract award stage.
Contract award criteria
The paper starts by setting out the basic principles on which the award of all public contracts must be based. The Public Contracts Regulations 2006 (the Regulations), emphasise that public contracts must be awarded on the basis of either:
• lowest price, (which means the lowest tender price, not the lowest cost to the authority); or
• the most economically advantageous tender (MEAT).
The Regulations specifically say that the award criteria used to determine MEAT can include:
• price;
• technical merit;
• aesthetic and functional characteristics;
• environmental characteristics;
• running costs;
• cost effectiveness;
• after-sales service;
• technical assistance;
• delivery date and delivery period; and/or
• period of completion.
This list is not exhaustive. Other criteria can be used as long as they are a means of measuring the comparative economic advantages and disadvantages of each tender.
Disclosure of the award criteria
The award criteria and how tenders will be evaluated, must be disclosed in the contract documents (usually in the Invitation to Tender). The key principle is transparency. This includes disclosure of any marking scheme that will be used by a contracting authority to evaluate bids.
Price
Price must always be an aspect of the award criteria, even where using MEAT. There are a number of aspects to price. Contracting authorities have a reasonable level of discretion over their methodology for evaluating price. The methodology a contracting authority uses to evaluate price must be comprehensive. It must set out how each aspect of price in relation to each bid will be scored.
Experience
Following the Lianakis case, issues to do with the contractor’s ability to do the job must be evaluated at the prequalification and selection stage. They cannot be left to contract award. In that case a procurement was successfully challenged because one of the award criteria was whether the contractor could finish the project on time. The case law is clear that the award criteria cannot include the issue of whether or not a contractor has sufficient experience for the work. However, it is an open question from the case law whether the comparative experience of the bidders can properly be considered at contract award. As set out in the paper, it is logical that it should be. An authority ought to be free to evaluate the benefits of having a tenderer with more experience of the particular work (potentially against a higher cost), rather than just being limited to evaluating whether a tenderer has “enough” experience. The issue is whether the case law allows for this and we hope that a future case will confirm this is legitimate.
Incumbent bidders
Where there is an incumbent bidder, the contracting authority should make sure the incumbent does not enjoy an unfair procurement advantage, for example by having more information about the authority’s requirements than other bidders. However, there is no obligation on the authority to “neutralise” the incumbent’s advantage so, if incoming bidders include set up costs in their prices, the fact that the incumbent will not have these costs is a legitimate advantage for the incumbent.
Site visits, references and interviews
Where site visits, references and interviews are used, a contracting authority must set out what aspects of MEAT they will each measure. It is generally better to regard these more as “methods of evaluation” rather than evaluation criteria. They can also be used to check whether statements made in the written method statements are true.
Summary
Choosing the right contract award criteria is vital to the success of any procurement. However, there are a large number of traps which contracting authorities and their procurement consultants can easily fall into. The PLA paper is a useful tool to help contracting authorities avoid some of these traps. However, it does not avoid the need for a proper review of the invitation to tender by legal advisers who are experienced in EU procurement law.
If you would like advice on how to reduce the risk of your procurements being challenged, or if you have lost out due to a poor procurement procedure, please contact any member of the Construction and Procurement Department team, on 0121 212 7473 or Andrew Millross (who heads the team) on andrew.millross@anthonycollins.com
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