Everything in moderation...

We recently had a decision in a case concerning child and adolescent mental health services in Lancashire. The contracting authority was Lancashire County Council. These services have up to now been provided by two local NHS Trusts (the "Claimants") but on the re-procurement the winning bidder was Virgin Care which was scheduled to start provision of the services on 1st April.

The effect of the claim was to automatically suspend the award of the contract to Virgin. The Claimants' scoring on price almost identical to Virgin's and very close on technical / quality (2 actual marks difference which equated to 4% on weighting).

The general trend has been for the Court to find in favour of the contracting authority; to lift automatic suspensions and allow contract award to proceed. This judgment is usually made on the basis that were the Claimant to eventually show that the procurement rules were breached a payment of damages could be made to compensate the Claimant for having lost out. More rarely however the Court maintains the suspension of the award process until a full trial can be held.

Unusually the Claimants in this case succeeded in persuading the court to maintain the suspension of the award pending the main hearing of the complaint such that the contract with Virgin was not signed. The Claimants demonstrated that in the event their claim was successful at full trial an award of financial damages could not be sufficient to compensate for for example the loss of senior staff and lost funding for sustainability and transformation. The judge decided that there would be a significant effect on the operational activities of the Claimants which would affect the quality of the healthcare they provided and which could not be compensated for in mere financial terms. The fact that it was possible in this case to have an expedited trial of the main claim so that the question could be resolved quickly was also a factor in the judge's decision to maintain the suspension.

We have now had judgment in that expedited main trial where the judge upheld the Claimants' argument and ordered the Council to set aside its decision to award the contract to Virgin. The Claimants argued amongst other things that the procurement process had lacked transparency and that the evaluation had not been done properly typical grounds on which procurement challenges are based.

The judge reminded us of the legal framework for assessing whether the Council's running of the procurement process had met the required standards of transparency non-discrimination and equal treatment. The Council was obliged to give details of the how the process would be run how the evaluation would be conducted and how marks would be awarded and to do so in such a way that was objectively capable of being understood by a reasonably well informed and normally diligent bidder (often referred to as the "RWIND tenderer"). Bidders should be put in a position of awareness as to how the Council would mark the tenders including the relative importance of the various elements of the bid. The Council was then required to conform to the stated process in order to ensure transparency.

The Claimants argument was that the evaluation of Lot 1 was not done transparently as it departed from the stated process. Lot 1 accounted for 95% of the value of the procurement weighted at 80% quality 20% price so representing the lion?s share of the overall contract. The general evaluation scheme set out award criteria; these were further developed (for the quality element) in an appendix using a list of seven questions (to each of which marks were attributed). Each of the seven questions were expanded into a series of sub-bullet points which were not separately given marks. The evaluators were instructed that scores must be based on the evaluation sub-criteria identified directly under each question. In the absence of separate marks for each bullet point the Judge decided each was to carry equal weighting.

There was evidence that the moderation of the scores given by evaluators was not carried out compliantly - moderators looked first at the scores achieved by Virgin and then went on to try and moderate these by looking comparatively at the Claimants' tender and scores. This was not the permitted approach as it amounted to using the Virgin bid itself as an evaluation/moderation schema rather than the actual award criteria (set out in the seven questions and associated bullet points). The moderation process also meant that certain points of the original evaluation were altered and on examination moderators were not always able to identify whether a comment was written in the original evaluation or was a product of the later process of moderation. This led the judge to agree with the Claimants' argument 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".

There was also evidence that record keeping fell below the standard required - the notes of the moderation were never agreed upon/signed off by the evaluators plus there was more concerning evidence that the Claimants had been misled by the Council on the dating of the evaluation notes; the judge took a dim view of this practice saying "to describe this (as the Council did) as merely 'a regrettable episode of poor administration' is to my mind an unacceptable understatement."

All this meant that the Claimant was not put in a position where it could understand how the evaluation had been done and the reasons for finding that the Virgin bid was the most economically advantageous tender. While the judge did expressly state that there is no requirement to disclose a full account of each individual moderating decision the reasons given and the account of the moderation process must still be sufficient to allow a claimant to understand what has been done in the evaluation/moderation and why.

The judge upheld the Claimants' complaint and ordered the Council to abandon its decision to award the contract to Virgin. Presumably a new procurement will now have to be run unless the current contract with the Claimants can somehow be lawfully extended (under Regulation 72).

The case is a reminder to contracting authorities of the important of adhering to a stated procurement process and of adequate record keeping. It is also a reminder that moderation needs to be done on a bid by bid basis against the award criteria for each tender and not comparatively against the top scoring bid.

(1) Lancashire Care NHS Foundation Trust and (2) Blackpool Teaching Hospitals NHS Foundation Trust v Lancashire County Council [2018] EWHC 1589 (TCC).

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