Australia: Council's responsibility when evaluating tenders

Last Updated: 30 November 2016
Article by Hamish Broadbent

Section 198 of the Local Government Regulation 2012 (Qld) requires local governments to prepare and adopt a procurement policy for purchases of goods and services. Among other things, this policy must include sound contracting principles, namely:

  1. value for money;
  2. open and effective competition;
  3. the development of competitive local business and industry;
  4. environmental protection; and
  5. ethical behaviour.

However, what does "open and effective competition" mean? What consequences arise when Council disregards these values when evaluating tenders?

This issue was explored in the UK case of Woods Building Services v Milton Keynes Council [2015] EWHC 2011 (TCC). In that case the United Kingdom High Court determined that manifest errors in the tender evaluation process resulted in the wrong tender being accepted.

The Facts

The Milton Keynes Council conducted a tender process to undertake asbestos removal and site remediation services. Five tenderers bid.

Council's method of evaluating the tenders was to rate them based upon their compliance with the criteria and overall outcomes. Although the plaintiff Woods Building Services submitted the cheapest bid, the bid was only scored 88. In contrast, the ultimate winner of the project was strongly evaluated on quality aspects and received a score of 104.

The Decision

The Court ultimately found that the Council's evaluation processes were flawed, and awarded damages in favour of Woods Building Services. Although the Court was reluctant to order Council to choose WBS as a contractor, it was strongly suggested that Council redo the procurement process correctly.

What went wrong?

The Court expressed concern with the way the Council applied its own scoring system in disregard of its procurement policy.

Transparency

Transparency was a key element in the Council's procurement policy. Despite this, Council could not provide any notes or documentation produced during the tender evaluation process. It was apparent that the decision-makers did not record the reasons behind their decision.

Conflicts of Interest

At all times, the Council was aware that one of the persons involved in the assessment of the tender was a former employee of the plaintiff. The Court suggested this person should not have been involved in the evaluation due to a reasonable apprehension of bias.

Equitable Treatment

The Council's procurement policy called for the fair, equitable and non-discriminatory treatment of tenderers throughout the tender process. Nonetheless, Council's assessment demonstrated an apparent preference for the winning bid over that of WBS, despite being objectively inferior.

The Court was also critical of Council's failure to disclose all of the assessable criteria in the Request for Tender documentation. As the tenderers had not been made aware of the criteria, they could not adequately respond to the procurement request.

Comment

This case provides a number of illustrations of the practical operation of "sound contracting principles". The purpose of a procurement policy is to maintain the integrity of the process and ensure that the public have confidence in Council's decision making. Although the tender evaluation process will not always be subject to review in the Courts, Council's reputation for acting honestly, ethically and fairly is hard won and easily lost.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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