Case Update: Inadequate Record Keeping Invalidates Contract Award
Lancashire Care NHS Foundation Trust & Blackpool Teaching Hospitals NHS Foundation Trust v Lancashire County Council  EWHC 1589 (TCC)
Hempsons acted on behalf of Lancashire Care NHS Foundation Trust and Blackpool Teaching Hospitals NHS Foundation Trust (the “Trusts”) in successfully challenging Lancashire County Council (the “Council”) in relation to a procurement challenge for the provision of 0 – 19 services.
The Trusts challenged the Council’s decision to award a contract for Public Health and Nursing Services for children and young people (0 – 19) to Virgin Care Services Limited. The process was run under the Light Touch Regime.
The Judge, in a ruling handed down on 22 June 2018, upheld the challenge and concluded that the procurement decision should be set aside. The Trusts demonstrated that the reasons given by the Council for the scores awarded to the Trusts and the winning bidder for the quality evaluation questions were insufficient in law and as a result the decision of the Council to award the contract to Virgin must be set aside.
The case highlights a number of key points when running procurement processes.
General comments on processes
The Judge provides a helpful summary on the established position on transparency and the need to disclose the evaluation criteria that will be used:
“[CCS guidance on the Light Touch Regime states] the key things are to be clear about what your process will involve, making sure the process ensures transparency and equal treatment of suppliers, and sticking to the process that you decide to run. It would also be necessary to be transparent about any award criteria to be used, and the weightings for the criteria and sub-criteria, to comply with the general transparency obligations”.
Case law has held that
“tender documents are to be construed on the basis of an objective standard, that is the standard of the reasonably well informed and normally diligent (RWIND) tenderer. It follows that the tender documents must state the process to be followed, including how marking of bids will be carried out, in terms that can be objectively assessed and understood by a RWIND tenderer; and, having done so, the contracting authority must stick to it”.
Key learning points
1 Reasons for the decision
In any process, it is imperative that the bids are scored and that there is a final rationale for the score(s) awarded. If there is a staged evaluation process, this exercise should be carried out at each stage. In this case the Judge 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”. The consequence of this breach was that “the decision of the Council to award the contract to Virgin must be set aside”.
The Judge stated “although the panel reached consensus on scores, there was not necessarily or even probably congruity of reasoning that led each evaluator to subscribe to the consensus score for the question.” It is imperative that a contracting authority is able to justify the decision that it has made. The Judge accepted 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.”
While it may not be mandatory (depending on the process followed) that all the moderators agree on all of the reasons for awarding a particular score, it should be possible from the evaluation notes to understand the basis on which the moderators arrived at a particular score. In this case, the Judge was satisfied that the “notes do not provide a full, transparent, or fair summary of the discussions that led to the consensus scores sufficient to enable the Trusts to defend their rights or the Court to discharge its supervisory jurisdiction.”
The Judge is clear that he is not suggesting “that it was necessary to keep a complete record of what was said or a comprehensive note of every point that was made [at the moderation]”, but there must be reasons for the decision to enable “the Trusts to defend their rights or the Court to exercise its supervisory jurisdiction.”
It is therefore imperative that there is a clear audit trail for the scores provided.
2 The moderation process
As we have consistently advised, having a fair and transparent moderation process is fundamental to any procurement. In this case, the Council had identified specific bullet points in the ITT 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.
The Judge held: “In the absence of a comprehensive record of the discussions at moderation, the absence of any recorded point that is attributable to a particular bullet point does not enable me to infer that the bullet point in question was not mentioned or discussed.” Further, the records of the moderation “are not a complete record of the points that were made or even the points that were considered….” He notes that “there was no consistency in the manner in which any discussion or decision-making process were recorded….”
The Judge also stated “there was no consistency either in identifying what were said to be key points or in highlighting points to show that they had been influential.”
At the end of the moderation meeting, after the scores for each bid were agreed, the Council procurement officer began to prepare notes on the ‘strengths and comparative advantages’ of the VCSL bid. Unfortunately, those notes were added to the moderation notes without clearly identifying which comments were subsequently added in. The Judge commented:
“The lack of clarity in the manner of recording the discussion and reasoning of the panel is compounded by the interpolation of comments which, on their face, appear to indicate that the scoring was done by comparing the Trusts’ answers with Virgin’s, which was not the permitted approach” and agreed with one of the Council’s witnesses that “it would have been better to have started fresh notes or at least identify within the note what he was doing.”
The Judge was satisfied that the reasons provided “do not provide a full or accurate account of the reasons or reasoning that led either individual panel members or the panel as a whole to reach the consensus scores that were reached.”
What is clear is that the moderation stage of any evaluation is critical. It is when a commissioner determines who will be awarded the contract as it is when the moderated score is agreed. There needs to be a rationale for this score, that is recorded.
3 Following the stated process
The Judge was of the 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. “No one purported to agree the notes of the moderation. They were never agreed by the panel as an accurate record of the moderation.” Commissioners should ensure that they follow their stated process.
4 Use of terminology to describe the criteria
One of the issues in this case was what were the criteria/sub-criteria? The Judge stated “what matters, in my judgment, is that the authority should identify (a) what the tenderer is required to address and (b) how marks are going to be awarded. Once it does that, it must…. stick to what it has said it requires of tenderers and how it has said it will mark the tenders. Provided it does, it does not matter whether the language of criteria and sub-criteria are used at all.” Put another way “potential tenderers should be aware of all of the elements to be taken into account by the contracting authority in identifying the economically most advantageous offer, and their relative importance, when they prepare their tenders….”
The language therefore is not critical, but rather the critical issue for commissioners is to be clear what a bidder is required to do, and how this this will be assessed.
5 Openness with challengers
As is common in procurement cases, the Trusts sought further information and documentation from the Council. Certain 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 Judge held 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.”
It should not be surprising that the Council was criticised for this. 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 is likely to be the subject of adverse comment, as here, and could have a significant adverse impact for the contracting authority.
6 The evaluator/moderator
The role of the evaluator/moderator is clearly crucial to the success of any process. We therefore recommend that consideration is given to training evaluators on the importance of their role and an explanation of why the rationale/reasons are critical.
Hempsons’ specialist, integrated procurement and litigation teams will utilise their significant experience to guide you through these issues if you need to challenge a procurement process, or to defend a challenge.