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Tuesday, September 8, 2015

Hide and go seek

Procurement award challenges – the disclosure dilemma, by the UK law firm Mayer Brown LLP
Disputes about public procurement contract awards can pose evidentiary problems for both tenderers and contracting authorities. Does the tenderer challenging an award have enough evidence to support its concern that something has gone wrong? If it does not, will its request for more information be rejected as a ‘fishing expedition’?

Does the contracting authority, in turn, stick to the minimum information that it has to give, or, subject to protecting its confidentiality, does it, despite the time and costs involved, try to be helpful and provide more information, at the risk of opening the door to additional requests?

Bristol City Council’s award of a new contract was challenged by the unsuccessful incumbent contractor ["BMLL"] and the new contract award was automatically suspended. The council asked the court to lift the automatic stay. In deciding that there was a serious issue to be tried and rejecting the council’s interlocutory application, the court recognised the council’s dilemma but said that it should not refuse requests for documents relating, say, to the evaluation of the successful tenderer’s bid, or the bid itself, but then, on the application to lift the suspension, provide, for the first time, evidence about the process or the successful bid in support of its case.
The decision had a number of things to say:
Disclosure in procurement disputes is a perennial problem. On the one hand, an unsuccessful tenderer, whose knowledge of the proposed contract will often be detailed (particularly if, as here, he is the incumbent contractor), may feel instinctively that something has gone wrong in the tender evaluation process. But it can be difficult for him to obtain any information to back up that concern, beyond the sometimes scanty material supplied by the contracting authority ("the authority") pursuant to the Regulations. Any application for early disclosure may often be dismissed as a 'fishing' exercise. There is a real risk that, in such circumstances, there is an unlevel playing field, and the unsuccessful tenderer may never obtain the information he requires to mount a claim.

On the other hand, I quite see that the authority may wish to stand on his rights and refuse all requests for early disclosure, in part because of the confidential nature of the information (although that can usually be dealt with by way of a confidentiality ring), in part because of the time-consuming and expensive business of dealing with such requests, and in part because the authority may feel – often with good cause – that the unsuccessful tenderer will never be satisfied with the answers provided, and will always be seeking just one more document.

It is a question of balancing the interests of justice against the background facts of the particular case.

Contracting authorities have to work out, in fairly short order, whether, having provided the unsuccessful tenderer with the statutory minimum information, they are going to retain all other documents relating to the evaluation and the successful tenderer's bid, and let the unsuccessful tenderer take his own course; or whether they are prepared to be helpful and, providing that the confidentiality of the information is protected, offer to provide as much information about the process as they can.

In my view, however, what the authority should not do is to try and have it both ways. It ought not to refuse requests to provide documents relating, say, to the evaluation of the successful tenderer's bid, or the bid itself, but then, on the application to lift the suspension, provide for the first time evidence about the process or the successful bid in support of its case, either that there is no serious issue to be tried, or that he would be prejudiced if the suspension was not lifted. That approach is at least potentially unfair, because it is relying on potentially controversial material which the unsuccessful tenderer has been given no proper opportunity to consider.

I ... conclude that controversial material, and/or material which, because of the absence of prior disclosure, the claimant is simply not in a position to address satisfactorily if it is produced for an interlocutory hearing, should not ordinarily be deployed on an application [to lift the "suspension"/stay], because of the risk of unfairness. I consider that, in this case, the Council has sought a potentially unfair advantage through its attitude to disclosure. There are two reasons for that.

First, their solicitor Ms Nugent purports to give evidence as to how the [preferred] Refuge tender was evaluated (even though she was not involved in this process). She does this by reference to documents which were sought by BMLL but the disclosure of which was refused.

As it happens, BMLL were able to download from the Council's website a document which appeared to be the Council's evaluation of the Refuge bid. The Council have complained that this document has been wrongly obtained by BMLL, but I find the evidence on that unpersuasive. It is much more likely that this document was wrongly downloaded by a Council employee to this particular part of the website, so that it could then be accessed by others, including BMLL. A Council's inability to use its own website facilities properly is hardly unusual.

But now, in order to argue that BMLL do not raise a serious issue, the Council have disclosed a detailed scoring sheet for Refuge that is in a different and fuller form to the one BMLL downloaded from their website in January. As Ms Metters of BMLL says...:

"No explanation was provided as to why it was suddenly felt appropriate to disclose that document where previously it had been withheld. This document has caused us further concern about unequal treatment because it shows that many points of criticism about Refuge's bid were taken out of the feedback that was apparently given to them with their standstill letter, potentially to justify the high scores that were awarded."

I regard it as potentially unfair for the Council to pick and choose what documents they provide and when, as it suits them.

Worse still in my view is the copious evidence in the witness statements of Mr Anderson (a Service manager with the Council) and Ms Nugent, which seeks to extol the virtues of the Refuge tender itself. This is done in order to persuade the court that there would be prejudice to the Council and the service users if the suspension was not lifted and the contract with Refuge was delayed. But it is difficult for BMLL to respond in any detail to such material, when it was not provided when they asked for it. Moreover that problem is compounded here because the evidence consists of a series of assertions based on what it is said is in the Refuge tender, as opposed to the specifics of the tender itself (which has still not been disclosed).

Often, in a suspension/injunction dispute in a procurement case, the contracting authority will accept that there was a serious issue to be tried. But in the ordinary procurement case, where there may be points to be made on both sides, it will often be unproductive for the parties (and a waste of judicial resources) to spend a good deal of time arguing about the merits or otherwise of the underlying claim. The threshold is, after all, a low one: [***] first that, in cases where there are clear issues arising out of individual scores, it will be difficult for the court to conclude that there is no serious issue to be tried; and, second, that this difficulty arises, at least in part, because the relevant documents have yet to be disclosed.
The Court then evaluated the claim to lift the stay/suspension by weighing the relative damages each party might suffer if the stay were sustained or lifted, considering factors described as "the balance of convenience". 

Central to the result was this important element:
"there is a public interest in the avoidance of delay and ... there will be a detriment to that interest if it is necessary to wait a further six weeks .... I do not, however, consider that detriment to be sufficient to outweigh the strong public interest in compliance with the law and the benefits that implementing the scheme in a lawful way may be expected to bring."

There is Guam Supreme Court judicial authority and Public Auditor administrative review authority for the proposition that parties cannot be charged with knowledge of facts unknown to them when they have been withheld by the government. See, Guam Imaging Consultants, Inc. v. GMHA 2004 Guam 15, ¶ 36 (coincidentally also a procurement case involving issues related to the stay and its lifting), and In the Appeal of Town House Dept. Stores (etc.) OPA-PA-08-011.

Guam procurement law also specifically states that procurement records are public information, generally, 5 GCA § 5251 (e.g., 2 GAR § 3114(h) re nondisclosure of proposals/tenders, which in any event would not include the evaluation records). Further, 5 GCA § 5485 provides an expedited judicial action that may be brought by "any member of the public" to obtain withheld "procurement data". The time limit for bringing a judicial review of an administrative protest decision is specifically "tolled" so long as the disclosure action is pending (5 GCA § 5481(a)).

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