Procurement
Challenges - Don't Panic!
01
March 2020,
Iain C. Steel
You've just completed what you
believe is the perfect procurement. The debrief letters
have been sent and you are just waiting for that pesky
standstill period to end before you crack open the
champagne. Then the dreaded letter arrives: Dear John,
it's not me, it's you!".
An aggrieved
unsuccessful bidder doesn't agree with your award decision and
has listed a range of points in their debrief letter along with
details of perceived failings in your running of the
procurement. How very dare they!
In the public
sector, procurement teams expend a lot of energy to ensure that
their procurement exercises are compliant with the
regulations. While most will be concluded without any
challenge being raised, this can lead to some complacency.
So, what if you happen to be one of the unlucky ones at the
receiving end of a challenge?
Receiving
the allegations
It's unlikely
that you will receive a letter clearly marked 'Challenge'.
It is more likely that the starting point will be correspondence
documenting the bidder's concerns, but without any statement
about a formal challenge. Therefore, contracting
authorities should always have a defined process to manage this
eventuality.
The receipt
of this correspondence is your first warning that the bidder
could take their complaint further. No matter how spurious
you consider the claims, it is important to engage with the
bidder to address their concerns at the earliest possible
opportunity. The bidder has a reasonable expectation that
their grievances will be addressed appropriately. While
every contracting authority wants to move to contract award,
this stage must be treated with care and diligence.
Mind
the gaps
It is
essential to respond promptly and substantively - especially
during the standstill period. While it might be tempting
to 'run down the clock' before responding, this approach often
backfires as the bidders could thinkg that ther eis something to
hide, when the reality is that the authority is simply a little
sluggish.
It is not
unusual for a contracting authority to first realise that they
have gaps in their procurement when they receive a grievance
letter. Where a procurement process is well run, there is
invariably a clear audit trail of all documentation.
In the heat of the moment when responding to a bidder letter,
you will appreciate the value of having a structured approach to
documentation, correspondence and governance with named
individuals responsible for pre-defined elements of the
procurement. We would always recommend that there is a
documented competition plan produced at the outset of any
substantial procurement.
To respond,
the authority should first take a dispassionate view of the
veracity of each allegation, with representation from legal,
commercial and relevant technical departments.
Where
allegations relate to the rectitude of decisions made, this can
be taken as a slight on the ability of those involved.
Therefore, it is essential for calm heads to be in the room to
work on the facts of the matter. Unfortunately, it is not
uncommon for these facts to be ambiguous or to lack documentary
evidence, therefore having independent expertise is a sizeable
asset. There may be uncomfortable questions to be
answered, but it is better to respond from a position of
knowledge and, to this end, objective challenge from a trusted
advisor could be invaluable.
Grievances
generally take the form of the following two types:
- Point scoring: The allegation is
that you have incorrectly applied the scoring to the tender
responses and they would like you to reconsider the scoring
for them (or occasionally another bidder). They will
typically point to areas of the debrief letter where they
disagree with your summary, or to where they have been treated
unequally or harshly;
- Procedural: The bidder alleges that
the process itself is flawed. This will either be with
reference to the regulations or to the procurement
documentation. In this instance they will point to
perceived failings that call into question your proper
application of the appropriate procedures.
Once the
pertinent facts are known and all appropriate documentation is
collated, it is important to identify gaps and areas of
risk. There is no such thing as a perfect procurement, so
it is likely that something will be found that could present a
headache, however, an independent review should help to quantify
the extent of any gaps and their associated risk profile.
Responding
to the allegations
By running a
procurement, bidders are asked to invest their time and
resources into the exercise, with only a percentage chance
of success. It is easy to consider this as just the cost
of sale; however, buyers must remember that bidders are
commercial organisations who have spent real money for the
potential to win the work. On a personal level, there may
be real repercussions for members of the bid team if this is a
sufficiently sizeable opportunity that has been lost to them
and, when fruitless, they have to come to terms with their
failure to secure your business.
In the
bidder's eyes, they have done nothing wrong. They have
responded fully to your tender requirements but you have failed
to give their proposal a fair hearing. Often the most
successful way to help is to ease them through the grieving
process to arrive at acceptance of your decision.
Before making
any decision about the response to the bidder, the contracting
authority must first determine if, and to what extent, the
allegations are accurate. Where the bidder is correct in
their assessment of a failing, the contracting authority is
advised to take independent advice on how best to manage further
communication. The clock is still ticking at this point,
so it is advisable to brief advisors as soon as possible in
order that appropriate steps can be taken.
What
are my options?
While the
contracting authority is still managing communications with an
aggrieved bidder, it is generally advisable to hold off on
signing the contract and communicating this to the
bidders. Bidders can apply for an injunction to halt the
contract being signed, so voluntarily offering to delay
contract signature is an easy compromise and could spare the
contracting authority from having to deal with an injunction
hearing whilst continuing to manage communication with the
aggrieved bidder.
There are
rigid, short timescales during the standstill period.
This can lead to a knee-jerk reaction from aggrieved bidders
if they feel that the contracting authority is not
sufficiently responsive and this can lead to a protective
claim being submitted to assert their rights.
Tactically, this can be avoided in many instances by showing a
willingness to engage with the bidder, including potentially
voluntarily extending the standstill period to allow for
meaningful engagement.
Following a
full review of the substance of any allegations, the
contracting authority can take a view on the most appropriate
action.
A bullish
authority could take the view that the allegations are simply
a 'fishing' exercise and invite the bidders to proceed with a
formal legal challenge. Whilst this could be a high risk
response, there are reasons why this might be the most
appropriate course of action - for example, where the
investigation has shown there to be no substance to the
claims. This approach should not be taken lightly, and
should always follow a period of earnest engagement to attempt
to allay the concerns of the bidder.
A more cautious
approach would be for the authority to take a more
conciliatory tone. Providing that the documentation
backs up the contracting authority's stance, the authority
could potentially resolve the issue by providing the bidder
with the necessary information and assist the bidder to
understand the decisions that have been made. This is
often the recommended approach, however care must still be
taken. For example, by attempting to be helpful the
authority could inadvertently support the bidder's claims
through over-sharing evidence. Care must also be taken
not to provide 'new' information that may cause the standstill
to be restarted.
There is no
'one size fits all' approach to responding to a challenge,
however, the contracting authority should always in the first
instance try to work with the bidders to resolve their
concerns. If it is apparent that this approach is
unlikely to prevent a formal challenge, the earlier the
authority engages with appropriate professional support the
better.
Avoiding
a challenge by design
By far the best
way to avoid a formal challenge is to prepare your procurement
in such a way as to minimise the risk from the outset. A
well designed procurement will invariably have the following:
- a clearly documented competition plan;
- compliant documentation
- clarification routes;
- well trained evaluators;
- a well designed set of questions and evaluation
methodology;
- legal, commercial and technical support.
Challenges are
expensive for both the bidder and the authority, so it is a
brave bidder who takes an authority to court without a
reasonable expectation that their challenge will be
upheld. It's an even braver contracting authority who
buries their head in the sand.
(This
article was first published in the March / April 2020
edition of In-procurement Magazine, pgs. 10-12).
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