Procurement in a nutshell – documentation retention requirements

This update outlines the judicial note of caution and explains the obligations which exist for CAs under the Public Contracts Regulations 2015 (PCR 2015).

EnergySolutions EU Limited v Nuclear Decommissioning Authority

In the case of EnergySolutions EU Limited v Nuclear Decommissioning Authority [2016] EWHC 1988, a CA had developed “as a matter of policy”, a system which involved the destruction of certain notes pertaining to the evaluation process.

The judge remarked that these “conscious decisions in terms of record keeping” were motivated by the attempt to make the CA immune from challenge.

He opined: “Serious consideration seems to have been given to restricting the keeping of contemporaneous records of evaluation, because it was known these would be disclosable in any litigation…had the evaluation process been performed in accordance with the NDA’s obligations under the Regulations, disclosure of the records of that process would present no danger to the NDA…

“I find it extremely worrying that any public authority…could contemplate any policy that would involve the routine destruction of such important documents.

“Public authorities have express obligations of transparency under the Regulations. It is difficult to see how the proposed or intended destruction of contemporaneous documents could ever be consistent with those obligations.”

The regulation 84 requirements

The EnergySolutions case was decided under the 2006 procurement Regulations. Under the PCR 2015 there are recording obligations for CAs, which are more extensive than the previous regime.

Regulation 84 requires CAs to document the progress of the procurement and the decision-making involved. This must happen regardless of whether the procurement is conducted by electronic means.

“Sufficient documentation to justify the decisions taken in all stages of the procurement” must be kept for a period of at least three years by CAs.

Examples of such paperwork to be retained include that relating to:

• communications with economic operators and internal deliberations;
• preparation of the procurement documents;dialogue or negotiation if any; and
• selection and award of the contract.

It is clear that that the behaviour exhibited by the CA in EnergySolutions is at odds with the document retention requirements of regulation 84.

Sparse records or an absence of notes will not be sufficient for a CA to meet its obligations.

CAs should aim to build up a clear audit trail which will assist in demonstrating a full explanation of how the CA has conducted its procurement and made its decisions in the process.

Where properly implemented, the reporting requirement should enable the CA to show complete justification for the contract award.

Practical matters

The record keeping requirement will no doubt raise a number of practical matters for CAs, such as whether it should keep all notes, including the initial notes of individual evaluators.

There may be an inclination to only keep final notes, such as those from final moderation meetings, to ensure that the audit trail comprises only lawful notes.

Regulation 84 requires that CAs retain “sufficient”, not all, documentation. However, an incomplete audit trail carries the risk of failing to be able to disprove the existence of bias, manifest error, or improper moderation at some stage of the procurement.

CAs may have concerns regarding rogue evaluators and the possibility of adverse comments having been noted.

This highlights the importance for CAs to adequately train all evaluators in the general principles, the way in which evaluation methodology should be applied and the scoring system.

CAs should ensure that evaluators understand that:

• their reasoning must be documented against the evaluation criteria, in a way that refers to the content of the bid rather than mere repetition of wording in the scoring matrix;
• where a tenderer is considered to have provided irrelevant information, this must be noted in the reasons given for the score; and
• in the event of a challenge to the procurement, their comments may be examined and thus they are carrying out a significant role.

Why is this important?

An aggrieved bidder seeking to make a procurement law challenge will usually be entitled to obtain copies of documentation created throughout the procurement process.

A disclosure application can be made for all material relevant to the issues in dispute. Aggrieved bidders can make requests for documentation under procurement regulations, the Civil Procedure Rules and under the Freedom of Information Act 2000.

It is the content of such disclosure which is so often used in support of the claim that a contracting authority has improperly carried out a procurement exercise.

The application of the evaluation criteria is the area which most commonly falls under scrutiny. Therefore, while it might seem an onerous undertaking, conscientious record keeping enhances the prospect of warding off procurement challenges.

CAs should commit to ensuring that their internal processes – their procedures, practices and training of their evaluators – are in keeping with the principles of being transparent and non-discriminatory.

This will help ensure the legitimacy of the decision-making and mitigate the risks of costly procurement challenges.

How can I find out more?

If you have any queries on the issues raised or on any aspect of procurement, please contact us via our procurement hotline on 0191 204 4464.