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Published 15 September 2016
Contracting Authorities and their evaluators are reminded once again of how important it is to ensure that the evaluation stage in a procurement process is carried out in accordance with the published criteria and the principles of transparency, equal treatment and non-discrimination as a result of the recent case of Energy Solutions EU Limited v Nuclear Decommissioning Authority  EWHC 1988 (TCC).
This case concerned a procurement on the part of the Nuclear Decommissioning Authority ("NDA") for the decommissioning of 12 different Magnox nuclear facilities in the United Kingdom. The value of the contract was just over £4 billion for the first 7 years of its 14 year term and it was a significant, high profile Government contract. The procurement was run using the competitive dialogue procedure under the Public Contracts Regulations 2006 (the "Regulations") (the relevant procurement regulations in force at the time). In terms of final scores, there was just 1.06% between the winning bidder and the challenger, Energy Solutions EU Limited ("Energy Solutions") who were part of a consortium. Energy Solutions challenged the process under the Regulations claiming damages in excess of £100 million.
The focus of the challenge was evaluation; whether scores for certain parts of the tenders had been awarded lawfully, and if they were not, the court was asked what scores should have been awarded and/or whether there had been a manifest error in the way that the scores were awarded. We are seeing more and more challenges on the basis of alleged errors made during the evaluation of tenders and there are some very useful lessons coming out of this case.
In his 320 page judgment (and there are further confidential parts of the judgment), the Judge found that a number of scores had not been awarded lawfully and that there had been a manifest error in the evaluation. The Judge reiterated previous case law on manifest errors and explained that for the Court to interfere in the marking carried out by evaluators the error had to be manifest and material.
The Judge criticised the NDA for the way it ran the procurement process in that it was concerned about a legal challenge from the outset and so some of its governance arrangements for the process, although well planned out, were aimed at defending a procurement challenge rather than running a process to comply with the principles of transparency, equal treatment and non-discrimination. In particular, the Judge criticised the following on the part of the NDA:
The Judge found that the winning bidder should have been disqualified from the procurement process for failing to meet a mandatory requirement. The consortium that Energy Solutions was a part of should therefore have won the contract.
Procurement professionals should not be put off from reading this case on the basis of the length of the judgment, it is a fascinating read with some quirky issues (such as Energy Solutions entering into agreements with its evaluators that they would be paid a bonus if Energy Solutions won – this was found to be contrary to public policy so is not advisable, although in this case the Judge found it did not impact on their evidence) and we see the key lessons learned (which, in reality, are reminders of what we know already) as follows:
Procurement teams and evaluators need to ensure that they are fully prepared for their role in evaluation – they need to have been given enough time to prepare and carry out the evaluation phase. It would be far better to delay a process by a few weeks to allow evaluators a reasonable amount of time rather than rushing it through and dealing with the consequences of costly and timely litigation. Evaluators need to take their role seriously and understand the impact of their decisions and the needs to records the reasoning for their scores in great detail.
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