While Canadian procurement is rooted in our unique legal structure, we are among many jurisdictions in the world that ascribe to fair, open and transparent competitive procurement processes. As we know, organizations that follow these guidelines tend to get better value and attract more sophisticated respondents while fully demonstrating the unbiased nature of their contract award decisions. In the public sector this translates into demonstrating effective stewardship of public funds, which in turn bolsters taxpayer confidence.

A recent decision out of the UK highlights the international attention to fairness in procurement. Energysolutions EU Ltd. v Nuclear Decommissioning Authority [2016] EWHC 1988 (TCC) outlines a myriad of fairness complaints lodged by an unsuccessful bidder to a procurement for the decommissioning of 12 different nuclear facilities in the UK. Among other arguments, the claimant Energysolutions (‘ES’) alleged:

• Acceptance of a non-compliant bid from Cavendish Fluor Partnership (‘CPF’), the entity who was ultimately awarded the contract;
• Manipulation of the evaluation process to ensure CPF success;
• Seeking clarification differently with respect to some bidders;
• Providing inaccurate or incomplete information to ES during debriefing; and
• Deliberately limiting the permanent records of the evaluation process to thwart any potential challengers to the process.

The complaint was not filed within the time limit for suspending the contract award decision, which meant that ES was limited to only a claim for damages. They estimated their losses to be £100 million (roughly CDN$165 million).

As one of the largest contracts ever tendered by the UK government with a procurement process spanning nearly two years, the final decision by the High Court understandably includes a long and complex analysis. For the purposes of this article, we will focus on the final challenge, which related to the government’s insufficient record-keeping.

The evidence presented at the lengthy trial shows that the government was acutely aware that an unsuccessful bidder might initiate a challenge to the contract award decision, and pro-actively and deliberately directed staff to limit or destroy documentation that might be detrimental to its case. This defensive approach included restricting evaluators’ note-taking, possibly destroying contemporaneous notes, and issuing directives to “consider shredding documents” that could damage their position should the matter proceed to litigation.

The credibility of the government became an issue early on in the proceedings, as they failed to produce witnesses to provide evidence on key points, and, in the words of the judge, the witnesses that did appear “suffered from what, on occasion, bordered on an almost obstinate refusal to accept that any mistakes or errors had been made at all.” Pivotal to the Court’s finding of liability against the government was evidence of deliberate attempts to avoid scrutiny by unsuccessful bidders and to subvert the procurement rules that required an open and transparent process.

Damages payable to ES will be assessed in a separate proceeding, but we can assume they will be in the range of several hundreds of millions of dollars – certainly not an effective use of tax dollars.

While this is a particularly egregious example of deliberately sabotaging principles of transparency, it serves as a cautionary tale for all procurement professionals. Had the UK government spent as much time and energy ensuring the process was conducted fairly – rather than redirecting those resources to limiting documentation that could support a potential challenge – the outcome would have likely been entirely different. A well-designed process with skilled and highly trained evaluators, coupled with rigor and discipline throughout the evaluation documentation process, would have provided a complete defence to any potential challenge. Instead, the UK government has taken a huge hit to its credibility, wasted potentially millions of taxpayer dollars and become embroiled in highly contentious and public litigation.

This case serves as a stark reminder of one of the key principles of our Canadian legal system: ‘justice must not only be done, it must be seen to be done.’ As we have seen in other, less egregious cases, it is not enough that the evaluators acted fairly and transparently: the procuring entity must be able to prove such conduct through proper and complete documentation of its process. We often receive questions about how much documentation should be retained through the procurement evaluation process, and our answer is always more rather than less. Retaining the absolute minimum required by legislation and/or policy is not always an effective approach to risk mitigation when it comes to procurement challenges in this litigious era.

Readers are cautioned not to rely upon this article as legal advice nor as an exhaustive discussion of the topic or case. For any particular legal problem, seek advice directly from your lawyer or in-house counsel. All dates, contact information and website addresses were current at the time of original publication

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