Friday, August 31, 2018
Lancashire Care NHS Foundation Trust, Blackpool Teaching Hospitals NHS Foundation Trust v Lancashire County Council  EWHC 1589 (TCC) 22 June 2018
“a procurement in which the contracting authority cannot explain why it awarded the scores which it did fails the most basic standard of transparency”.
The above submission accepted by Mr Justice Stuart-Smith in this recent case can be said to be the central message emerging from the case. It is the latest case in a series of public procurement cases which has focused on the reasons maintained by a contracting authority to justify the scores awarded in a procurement process and highlights the fundamental importance of maintaining fulsome records pertaining to a tender evaluation.
The tender process concerned a contract for the provision of public health nursing services and was conducted in accordance with the light touch regime under Directive 2014/24/EU. Only two tenders were submitted for the contract and the incumbent (Lancashire Care NHS Foundation Trust, Blackpool Teaching Hospitals NHS Foundation Trust (the “Trusts”) lost out to Virgin Care Services Limited (“Virgin”).
The Trusts challenged the award of the contract to Virgin on a number of grounds (summarised by the Court as encompassing the following list of issues):
1(a) Were the reasons for the scores awarded to Virgin for the quality evaluation sufficient in law;
1(b) Did the Council apply or depart from the stated award criteria and/or evaluation methodology;
2. Did a scoring prompt developed by one member of the evaluation team amount to undisclosed award criteria;
3. Did the Council make manifest errors or breach the principles of procurement law; and
4. Did any breach (under points 1-3 above) cause the Trust to lose the award of the contract or lose a chance of the award of the contract.
The vast majority of the case focused on the first issue – whether the reasons provided by Lancashire County Council (the “Council”) to explain the scores awarded to Virgin were sufficient in law. Significantly, the findings of the Court under this issue had a direct impact on the Court’s decision under issue number (3) with the Court ultimately agreeing with the Trusts’ submission “….that the Court’s ability to identify whether there has been material error in the panel’s reasons is constrained by the deficiencies that I have identified under Issue 1”.
The Award Criteria
The tender documents set out seven award criteria that were phrased as questions for tenderers to respond to. Each question carried a different score and was followed by a number of bullet points (to which no separate scores were attributed). According to the Court’s interpretation of the tender documents, the Council was required to assess the tenderer’s answers to each of the seven questions specifically, ensuring that the mark awarded for each question took into account how the tenderer had covered the bullet points under the question being marked.
The evaluation involved each of the four evaluators completing their own individual assessment following which a moderation meeting was held for the purpose of reaching a final consensus score for each tenderer under each award criteria. It is this moderation meeting that attracted most of the Court’s attention and criticism.
In terms of the process followed during the moderation meeting, the chair asked a member of the panel with an outlying score to comment on their proposed score. Each of the evaluators were then invited to offer their comments on the answer, both negative and positive. Notes of the points that were made, though not verbatim were recorded on a laptop. A period of discussion of the points made ensued as the evaluators attempted to reach consensus on the score for the question under discussion.
Commenting on the process, the judge found it “clear from the evidence of the witnesses (and I find) that, 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.”
The judge also noted that “shifting of ground and reasoning is of course to be anticipated in the course of a moderated discussion such as took place; but it means that the evaluators’ original score sheets are not a reliable ground to the reasons that ultimately caused the group to reach a consensus score”. Accordingly, the Court’s focus was directed to the notes taken during the moderation meeting in order to identify the reasons that ultimately caused the panel to reach their consensus scores.
The Notes of the Moderation Meeting
According to the Council, the moderation notes recorded as comprehensively as possible a range of positive and negative comments made by the panel in respect of each question and highlight different points that the panel had picked up on. However, following its examination of these notes, the Court found the notes to “contain a number of examples where conflicting points are recorded, with no apparent attempt to attribute them 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”.
On the basis of the evidence provided during the course of the hearing, the moderation notes were also found to not represent “a complete record of the points that were made or even the points that were considered to be material at some stage during the discussion.” Additionally, the Court found there to be “no consistency in the manner in which any discussion or decision-making process was recorded over and above the recording of positive and negative points.” It was found that the positive and negative comments recorded during the moderation meeting “may provide material that was relevant to the Panel’s reasons and reasoning, but they do not themselves provide the rationale for the consensus scores.”
The judge then proceeded to compare the notes that were recorded to explain the scores awarded to the Trusts and to Virgin under each of the award criteria noting that 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.”
It also transpired that, at the conclusion of the moderation meeting there was time left over which was used to go over the feedback that would be provided in the debrief letters while all members of the evaluation panel were present. While accepting that the moderation meeting did not adopt a comparative approach when reaching its consensus scores, the judge concluded that the notes of the moderation meeting were either deleted or overwritten by comments relating to the debriefing feedback which was found to further compound the “lack of clarity”. This point was accepted by the Council with the administrator of the procurement, on evidence, acknowledging that it would have been better to have started fresh notes for the purpose of preparing the debriefing notes.
Additionally, the judge was very critical of the fact that following the conclusion of the moderation meeting, the evaluation notes were not sent to the panel members for review and sign-off in contravention of the Council’s own Tender Panel Guidance. The judge ultimately concluded that “no-one purported to agree the notes of the moderation. They were never agreed by the panel as an accurate record of the moderation”.
Court’s Finding under Issue Number (1)(a)
The Court found that the notes from the moderation meeting did 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. ….. In summary, the negative and positive points are not, without more, themselves reasons or reasoning and the written reasons do not adequately set out the panel’s reasons or reasoning”.
The consequence of the Court’s finding under Issue 1(a) is that the decision of the Council to award the contract to Virgin was set aside.
Issue Number (1)(b) Did the Council apply the stated criteria and methodology?
The Court found that there had been substantial compliance with the requirement to ensure that there was an assessment under each bullet point and found against the Trusts on this issue.
Issue Number (2) – Did a scoring prompt developed by one member of the evaluation team amount to undisclosed award criteria?
One member of the evaluation team developed an aide memoire described in her own evidence as “…a distillation of the specification to get me up to speed so I was familiar with it.” The Court accepted that when evaluating and scoring the tenders, this evaluator “had regard to the questions and bullets as the focus of her scoring, and that she treated her aide memoire as a useful prompt where (and only where) she found it relevant and helpful to that approach to scoring”. The judge highlighted the fact that panel members are allowed a certain leeway in terms of how they go about the work of the evaluation provided they comply with the instructions and processes laid down in the procurement documents and ultimately concluded that there was “no evidence that the preparatory work prepared by this member of the evaluation team translated into taking into account irrelevant matters or ignoring relevant matters when it came to her evaluation”.
Issue Number (3) – Did the Council make manifest errors or breach the principle of procurement law?
The Court found that “in order to perform a useful exercise that gives a reliable answer on materiality overall, it would be necessary for the Court to carry out its own re-marking exercise for the whole of both tenders. That is not the Court’s proper function.” Ultimately, the Court concluded that “the pervasive inadequacy of the account of the panel’s reasoning and reasons, discussed under Issue 1 above, prevents any reliable assessment of the extent of materiality of any error in the reasons and reasoning actually adopted”.
Issue Number (4) – Did any breach (under points 1-3 above) cause the Trust to lose the award of the contract or lose a chance of the award of the contract?
The Court found that in light of its findings under Issue Number (1), that there was no further finding to be made in relation to issue Number (4).
This case again illustrates that informal, non-documented award procedures are open to challenge.
The tender evaluation stage is the key stage of a procurement process that typically carries most risk. However, it often does not attract the attention or focus that it deserves and the need to plan for this stage is very often over-looked by contracting authorities. Contracting authorities generally spend a considerable amount of time developing their statement of requirements or specifications and award criteria but will not consider in any great detail the process that must be followed for the purpose of awarding scores by application of these award criteria.
As demonstrated in this case, the tender evaluation stage cannot be conducted in an ad-hoc or improvised manner. Rather, the process to be followed must be planned out and subsequently set out in the tender documents. It must then be implemented in full by the tender evaluation team in a consistent manner and most critically, the process must be documented so that the reasoning process or rationale that led to the scores awarded can be clearly identified.