The English High Court judgment this month in Bechtel Limited v High Speed Two (HS2) Limited [2021] EHWC 458 underlines the difficulty of challenging procurement decisions based simply on a disagreement with the contracting authority's assessment, and contains some lessons for contracting authorities and potential challengers alike.
Unsuccessful bidder Bechtel sought £100m in damages after HS2 awarded a contract for the development of Old Oak Common station in west London to a consortium of Balfour Beatty, Vinci and Systra (BBVS).
Bechtel had come a close second to BBVS in overall scoring, but included a substantial qualification in its bid. Bechtel scored higher than BBVS on quality, but lost overall due to its price.
Time limits for procurement challenges are very short, yet bidders rarely consider challenging a procurement process until a bidder is selected. By that point any challenge based on the process or documents as outlined at the start is almost always time-barred.
That will often leave two bases for challenge – a lack of transparency and/or equal treatment (i.e. that the contracting authority did not do what it said it would do) or manifest error (the contracting authority just got its evaluation wrong).
In this case Bechtel alleged that HS2 had committed a manifest error by giving BBVS a grade of "Concerns" for a question relating to project organisation, rather than a grade of "Major Concerns" which ought to have resulted in BBVS being disqualified. It also argued that BBVS's bid was abnormally low, that there was downward pressure applied to Bechtel's own scores during a moderation process, and that BBVS had been allowed to give reassurances about its resource levels at a post-tender meeting that should not have been permitted.
HS2 denied the allegations and argued that they were irrelevant in any case because Bechtel's proposed fundamental qualification to the contract terms meant that it would never have been awarded the contract.
The decision
Bechtel's challenge failed on all grounds. There are various lessons for both bidders and contracting authorities in the reasons that the court gave for upholding HS2's decisions.
Firstly, procurement challenges are not an appeal against the tender outcome, and the court will give appropriate recognition to the competence and expertise of the evaluators entrusted with the assessment of bids. The court will only interfere with their judgment where there is a "manifest error", which is a very high threshold similar to "irrationality" in public law (i.e. a decision so unreasonable as to be outside the range of decisions open to a reasonable decision maker in the circumstances). In this case, the difference between a "significant risk" leading to a "Concerns" grading and a "substantial risk" leading to a "Major Concerns" grading was a matter of judgment. The court would not interfere with the conclusion of several hours of consensus discussions.
An argument that there was manifest error because the consensus score was lower than some evaluators' individual draft scores was rejected by the court, on the basis that the purpose of a consensus meeting is to develop a consensus score. The court was not persuaded by Bechtel's witness evidence that the scores given to Bechtel were too low – subjective disagreement about what is the "right score" falls far short of demonstrating manifest error in the evaluators' views.
Secondly, the court reminded challengers that a particular tenderer's understanding of the tender documentation is not relevant: what matters is how a reasonably well informed and normally diligent (RWIND) tenderer would interpret it.
Thirdly, the court rejected an argument that the evaluators should, when marking technical answers, have considered whether BBVS's technical proposals were practically achievable given their resourcing proposal. The scoring methodology was set out in the ITT: if Bechtel had an objection to that, the time to challenge it was when the ITT was published rather than only after it had worked to Bechtel's disadvantage.
Fourthly, the clarification meeting was permissible because it was provided for in the ITT, and in any event the score received by BBVS had already been determined and was not affected by those explanations.
Fifthly, with regard to the allegation that BBVS' bid should have been rejected as abnormally low, the court noted both that resources were not part of the price evaluation, that HS2 had performed a review of the staff rates proposed, and (perhaps most significantly) that HS2 had set a "fee collar" or lower limit on the lump sum fee and BBVS' fee was above that. By placing a lower limit in the ITT the contracting authority had set what it considered to be the anomaly threshold in the ITT itself – again, if Bechtel thought that was itself irrationally low, then its challenge ought to have been to the terms of the ITT, not to the outcome of the exercise.
Bechtel's remaining challenge to "material change" to the contract between that envisaged in the ITT and the final contract (because the HS2 timetable had slipped) was rejected. It was clear from the start that the timetable was subject to change.
Finally, the court agreed with HS2 that even if Bechtel had received a higher score than BBVS, it would have been disqualified because it sought to insist on a fundamental qualification that would have shifted financial risk from Bechtel to HS2. Bechtel's case would therefore have failed regardless.
Key lessons
Potential bidders rarely want to challenge a procurement process still in its early stages, reasoning – perfectly understandably – that to do so is not conducive to a friendly relationship with the authority from whom they are seeking a contract. However, procurement challenges are subject to a very tight statutory time-bar that means they must generally be brought within 30 days of the bidder becoming aware of the issue that gives rise to the challenge. So if the problem is apparent from the ITT – for example, the proposed evaluation process is unclear or even contradictory, or the questions or criteria seem to favour a particular bidder – then the challenge must be brought within 30 days of the ITT's publication.
Challengers therefore have to be alert to potential issues as they go, rather than waiting until the contract has been lost. If all that remains is a manifest error argument then the challenger is unlikely to succeed unless the contracting authority has clearly made an obvious mistake such as an arithmetical error, or a statement that a question was not answered when it was.
For contracting authorities, the lesson is the flip-side of that: the clearer the tender documents are, the more the process (provided it follows what the documents said) and its outcome will be protected by time bar. A clear and unambiguous procedure, properly followed, remains the best defence against procurement litigation.
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