A Scottish Court has applied a “reasonably well-informed and normally diligent” tenderer test to assessing procurement award criteria. Rachel Bickler explains the background to the ruling.
For public authorities struggling with mounting challenges to tenders and increasingly stringent transparency requirements, a recent common-sense ruling by the Scottish Court of Session is likely to provide some relief.
On 21 March 2013, the Court dismissed an action to set aside the award of a framework agreement by the Common Services Agency for the Scottish Health Service (CSA) on the grounds that the award criteria lacked sufficient clarity. In doing so, the Court had to consider the appropriate test to determine whether the award criteria sufficiently met the obligations for transparency and equal treatment.
The Court concluded that the award criteria must allow “all reasonably well-informed and normally diligent tenderers to interpret the criteria in the same way”.
In 2010, the CSA invited tenders for a single-supplier framework agreement to provide certain breast cancer treatment drugs (Tastuzumab) and nursing services to patients in their homes.
One of the bidders, Healthcare at Home Limited (HAH), had been providing the services under an earlier contract but lost the bid to a competitor, BUPA.
HAH challenged the decision on the basis that the award criteria set out in the Invitation to Tender (ITT) lacked clarity and consequently breached the obligations of equal treatment and transparency under the procurement rules.
On 1 May 2012, in a first instance ruling, a commercial judge of the Outer House of the Scottish Court of Session dismissed the claims, leading HAH to appeal to the Inner House of the Court of Session.
Basis of appeal
In Healthcare At Home Ltd v The Common Services Agency  ScotCS CSIH_22 HAH made a number of specific complaints concerning drafting and evaluation of the ITT including the following:
- Misapplication of the transparency test: HAH alleged that the test the judge at first instance should have applied was whether “all reasonably well-informed tenders would have interpreted the ITT” in the manner intended by the CSA. In particular, HAH considered that the requirement to address matters which included “but were not limited to” certain issues inherently led to subjective evaluation.
- Use of silo evaluation: There was an alleged lack of clarity over the CSA’s use of the “silo” method of evaluation (i.e. dividing the tenders into sections with each section being given to a different person to score).
- Consideration of “staffing levels” as award criteria: HAH criticised the fact that BUPA had been given credit for explaining how they would obtain staff, arguing that experience and manpower are factors relating to the ability to perform the contract and should have been considered at the selection rather than the award stage.
- Manifest error concerning the “vial services”: It was alleged that there was a misunderstanding by one of the scorers of an aspect of HAH’s responses relating to an element of the services which they were offering.
- Lack of clarity in reasoning: HAH complained that the explanations it received from the CSA regarding its evaluation lacked clarity.
Court of Session judgment
The Court of Session dismissed HAH’s appeal upholding the judgment at first instance.
- Test of transparency and equal treatment: Following the European Court of Justice’s judgment in SIAC C-19/00 the Court held that the test for clarity was not whether all tenderers would interpret the criteria in the same way but an objective test of whether the formulation allowed “all reasonably well-informed and normally diligent tenderers to interpret the criteria in the same way and as they were applied by the contracting authority”. The Court held that the formula “including but not limited to” was entirely understandable to mean that a bidder should cover the items specified but could add other relevant material. It also considered “unexceptional” the use of a process that awarded extra marks for creative or novel ways of working that the contracting authority found attractive.
- Use of the “silo” method of evaluation: The ITT indicated that the panel evaluating the tender would consist of panellists with different areas of expertise. It was also sufficiently clear that each section had to be completed fully and separately (including relevant attachments). Tenderers were therefore on notice of the likelihood that different sections would potentially be scored separately and by different scorers.
- Staffing levels: The Court concluded that the CSA was entitled to consider the issue of staffing level as part of the award evaluation insofar as it was relevant to the bidder’s ability to execute the obligations under the contract.
- Manifest error concerning the “vial services”: The Court found that on the evidence the evaluation panel had been consistent in the scoring of this element of HAH’s offer in relation to “vial service” delivery and the misunderstanding by one of the three scorers of one aspect had not materially affected the overall scores for this element of the bid.
- Clarity of reasoning: The CSA was obliged to provide HAH with a summary of the reasons it had been unsuccessful and the characteristics and relative advantages of BUPA’s bid. The Court considered that both in terms of numerical scoring and commentary, this obligation had been fulfilled and had demonstrated that BUPA had scored marginally higher overall.
The case highlights or confirms a number of practical points for drafting ITTs:
- Award criteria should be drafted in a manner which is unambiguous and can be readily understood by potential bidders.
- It is permissible for a contracting authority to award extra points for “added value” responses for a specific criterion, provided that the ITT specifies what the core requirements are, identifies that the authority is open to additional creative or added value solutions and makes clear how this will be scored.
- The use of “silo” evaluation is permissible where it is clear from the ITT that the contracting authority will use different experts to score the different criteria and that the ITT is drafted to ensure that responses to each criterion are clearly severable and easily distinguished for evaluation purposes.