Procurement Challenges. Tactics and Lessons Learnt from Recent Developments 6 December 2016 Jennifer Robinson

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1 Procurement Challenges Tactics and Lessons Learnt from Recent Developments 6 December 2016 Jennifer Robinson

2 Procurement Challenges Quick refresh on procurement law on challenges The Energysolutions v NDA judgment Overview & what makes Energysolutions different? The main issues Tactics Lessons learnt Procurement challenges From the Claimant s perspective From the Authority s perspective

3 Quick refresh (1) Main route for challenge: High Court (under the Public Contracts Regulations 2015 as amended) Other routes for challenge: Also in the High Court: Judicial review, e.g. ultra vires, misfeasance in public office Contractual dispute, e.g. breach of express/implied contract term Complaint to the European Commission Cabinet Office Mystery Shopper scheme Arbitration/ADR (e.g. report of Welsh Government 1.25m compensation pay-out following arbitration)

4 Quick refresh (2) Specific remedies regime at Part 3 of the PCR 2015 Pre- and post-contract remedies available But: Claimant must have standing; and Claim must be started in time No obligation under the PCR 2015 to issue a pre-action letter (but note TCC procurement protocol) Usually Technology and Construction Court Division, but can also be Administrative Division

5 Quick refresh (3) Standing any economic operator which, in consequence, suffers, or risks suffering, loss or damage (Reg. 91(1)) Limitation period Generally, claims under the PCR 2015 must be started within 30 days beginning with the date when the economic operator first knew or ought to have known that grounds for starting the proceedings had arisen (Reg. 92(2)) ( started means that the claim form has been issued (Reg. 92(6)) Where a declaration of ineffectiveness is sought, the limitation period is within 6 months beginning with the day after the date on which the contract was entered into but in certain cases can be reduced to 30 days (Reg. 93(2))

6 Quick refresh (4) Claim form must be served on CA within 7 days after date of issue (Reg. 94(1)) Where claim issued, CA s ability to enter into the contract with the successful tenderer is automatically suspended until: Court brings this to an end (after a reverse injunction hearing (Reg. 96(2)); or Proceedings discontinued, determined or otherwise disposed of, and no possibility of appeal (Reg. 95)

7 Quick refresh (5) Interim orders (where contract not entered into) Lifting/restoring/amending the automatic suspension (note: undertakings/conditions may be required by the Court if it decides that the automatic suspension should remain in place) Suspending the tender process Suspending the implementation of any decision/action by the CA Final orders (where contract not entered into) Set aside of decision/action by the CA Amendment order Damages

8 Quick refresh (6) Remedies where contract entered into Ineffectiveness order must be made by Court if any 1 of the 3 potential grounds for ineffectiveness are made out, unless overriding reasons relating to a general interest for not doing so Civil financial penalties (Contract shortening) Damages The Court may also deal with: Consequential matters arising from ineffectiveness order; Restitution and compensation, subject to any appropriate agreement reached between the parties on mutual rights/obligations.

9 Energysolutions v NDA overview (1) High Court judgment of 29 July 2016 [2016] EWHC 1988 TCC Decommissioning of 12 former nuclear facilities 20 month long tender process; 8 months of dialogue (Member of the) second placed bidder challenged successfully the contract award decision ES claims damages of approximately 100m (bid costs of 10m) Appeals? Other claims?

10 Energysolutions v NDA overview (2) Process was unlawful and the contract wrongly awarded Had the correct process been followed, the successful bidder (CFP) would have been disqualified Evaluation process was manipulated to avoid disqualifying CFP s tender NDA did not meet its equal treatment & transparency obligations under PCR 2006 RSS (ES/Bechtel consortium) had in fact submitted the MEAT Original tender results Adjusted results CFP 86.48% 85.56% RSS 85.4% 91.48%

11 What makes Energysolutions different? A rare detailed and lengthy procurement judgment Success for the bidder Judge showed himself keen and willing to get into the detail of the tender process Review & amendment of scores awarded (following in the vein of Woods, nearly a year previously) Review underlined the differences between the evaluation process in theory and the evaluation process in practice a perfect storm

12 ES v NDA the main issues (1) Statutory duty / legal principles Manifest error of assessment Court s role is a supervisory one; not a chance for a tender to be wholly re-assessed Court will only disturb the CA s decision where there has been a manifest error, i.e. where an error has clearly been made Manifest error includes manifest factual error in evaluation Whilst CA has a margin of appreciation on matters of judgment or assessment, no such margin exists in relation to compliance with equal treatment & transparency obligations (which was then a key focus of the judgment)

13 ES v NDA the main issues (2) Statutory duty / legal principles Transparency/consistency inconsistency in treatment of different bidders can amount to unequal treatment An umbrella that covered a number of aspects: SME treatment of different bids & consistency generally Record-keeping of dialogue with bidders SME note-taking Equal treatment a duty to treat all the tenderers equally probably amounts to simply statement had to treat the tenderers fairly comparable situations must not be treated differently and different situations must not be treated in the same way unless such treatment is objectively justified

14 ES v NDA the main issues (3) Statutory duty / legal principles Obligation to give reasons "[ ] It must also be remembered that there is a statutory obligation upon the NDA, and any authority in such a competition, to provide reasons to unsuccessful bidders. There is little point in having such an obligation if it can be satisfied by statements that are obviously wrong and keep changing, with later reasons contradicting the earlier ones. Additionally, such behaviour makes it very difficult to work out what the reasons for the particular evaluation in question in reality actually were at the time. I am not of the view that such constant changes in the reasons given by the NDA for why the score was in fact awarded can be wholly disregarded. If the NDA's own SMEs cannot sensibly explain why a particular Requirement was given a particular score, that is not a promising start if the Stage 1 reasons are wrong. (para. 666)

15 ES v NDA the main issues (4) Evaluation process Scoring methodology Court criticised certain changes to this post-dialogue which could not be justified Impact of such change on clarity of scoring methodology as understood internally within the CA and by the RWIND Wrong test applied/test contrary to good industry practice Consensus scoring Clear process departed from; introduction of two additional stages after scores had been apparently closed down Informal/unrecorded conversations with Head of Competition External legal review led to changed scores

16 ES v NDA the main issues (5) Evaluation process Pass/fail thresholds NDA had mandated that certain failures would lead to disqualification; no scope subsequently to lean against disqualification (and to increase scores to avoid a disqualification outcome) Difficult to change such rules after the event and especially once bids come in Proportionality arguments did not assist due to the significance of the thresholds in question Moderation/assurance Review of tender scores/comments for consistency SMEs invited in some cases to review mis-alignment of scores and comments

17 ES v NDA - tactics Confidentiality / legal privilege Court underlined that confidentiality not an obstacle to disclosure in procurement cases; confidentiality rings 25/72 agreed issues = confidential; separate confidential appendix to the judgment ES agreement to pay witnesses win bonuses Judge did not agree to dismissal/strike out/mistrial related to this issue; no indication of dishonesty Witness preparation Good thing or bad thing?

18 ES v NDA lessons learnt (1) A reminder that evaluation is a solemn exercise of critical importance The role and importance of SMEs should not be underestimated Consider carefully use of minimum/pass/fail thresholds, and whether to build in any discretion Clarity on what is being tested in the ITT (both internally and among bidders) Avoid changes to evaluation rules and, if unavoidable, communicate/seek agreement to these changes The need for clear rules and standards across SMEs Allow time for the evaluation process

19 ES v NDA lessons learnt (2) Beware of one or more influential individuals/impact of senior management especially post tender submission Ensure the use of and rules in relation to e-evaluation tools ties in with reality Deal with mistakes head on and at the time If in doubt, note it down (and explain context)

20 ES v NDA record-keeping/audit trail Note-taking SME note-taking restriction deemed overly defensive ; SMEs could only record notes in the e-evaluation tool, AWARD "the more comprehensive and robust the record of the SME's evaluation, the stronger the NDA would have been in terms of any challenge, assuming the evaluation was done correctly. Thus, ironically, in my judgment the NDA's approach to note-taking ran counter to its objective." (para. 221) Note/document retention Criticism over reference to shredding in an earlier version of training slides for the SMEs Oral/unrecorded conversations Criticised such selective conversations Only way SMEs could obtain guidance

21 A Claimant s Perspective Remember the ticking clock Make the most of the standstill period Issue/service of claim form may be a necessary, last resort Consider use of pre-action or early disclosure Costs remember the successful contractor Confidentiality rings Have regard to the TCC protocol

22 An Authority s Perspective All comes back to compliance with fundamental duties The importance of evaluation and support/guidance to your evaluation team Moderation and assurance still appropriate but needs to be planned Follow through of evaluation conclusions into standstill letters Head off issues before they escalate Consider position/use of successful bidder Record keeping Reg 84 report

23 Final thoughts Continued growth of procurement litigation Greater use of ADR, especially mediation Look out for future guidance on damages/ineffectiveness Could we ever see a UK procurement regime with no remedies regime for non-uk contractors? "Biggest risk not doing what we have said we would do!"

24 Contact details Jennifer Robinson

Pinsent Masons LLP is a limited liability partnership registered in England & Wales (registered number: OC333653) authorised and regulated by the Solicitors Regulation Authority, and by the

25 Pinsent Masons LLP is a limited liability partnership registered in England & Wales (registered number: OC333653) authorised and regulated by the Solicitors Regulation Authority, and by the appropriate regulatory body in the other jurisdictions in which it operates. The word partner, used in relation to the LLP, refers to a member of the LLP or an employee or consultant of the LLP or any affiliated firm of equivalent standing. A list of the members of the LLP, and of those non-members who are designated as partners, is displayed at the LLP s registered office: 30 Crown Place, London EC2A 4ES, United Kingdom. We use 'Pinsent Masons' to refer to Pinsent Masons LLP, its subsidiaries and any affiliates which it or its partners operate as separate businesses for regulatory or other reasons. Reference to 'Pinsent Masons' is to Pinsent Masons LLP and/or one or more of those subsidiaries or affiliates as the context requires. Pinsent Masons LLP 2016 For a full list of our locations around the globe please visit our websites: and

TENDER EVALUATION HOW NOT TO DO IT

TENDER EVALUATION HOW NOT TO DO IT LANDMARK CASE REPORT A comprehensive analysis of the 300-page judgment arising from Energysolutions EU Ltd v Nuclear Decommissioning Authority (2016) covering: Background