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Procurement Casenote (ROI) - Manifest Error and the importance of being ‘Word Perfect’

  • Ireland
  • Public procurement

27-10-2020

Background

The Irish Supreme Court has now delivered a final decision in long-running and multi-faceted litigation brought by Word Perfect Translation Services Limited (“Word Perfect”) against the Minister for Public Expenditure and Reform (“the Minister”) in relation to the award of a contract for interpretation services1. Word Perfect sought review of the award on a number of grounds, including manifest error, failure to provide reasons for the decision and grounds related to concerns about the integrity and transparency of the public procurement process. The grounds were narrowed to two issues before the Supreme Court; these related to the test by which a tender award under procurement legislation may be properly reviewed by a court for “manifest error”. In a judgment delivered by O’ Donnell J, the Supreme Court found that there was a manifest error in respect of one aspect of the evaluation process and consequently set aside the award decision.

Facts of the Case

The proceedings concerned a mini-tender under a multi-provider framework for the provision of interpretation services. Word Perfect came a close second in the competition, achieving 870 out of 1,000 available marks, 15 marks behind the successful tenderer, Translation.ie. The award decision was challenged by Word Perfect and the ensuing litigation gave rise to a number of important judgments in the High Court and Court of Appeal concerning the adequacy of damages as a remedy in procurement cases2 and discovery3. The substantive proceedings concerned allegations that the contracting authority had committed manifest errors in its evaluation process and failed to provide reasons for its award decision. The High Court initially rejected all arguments submitted by Word Perfect4. Word Perfect appealed on four grounds, two of which concerned the evaluation of a quality assurance plan and a service delivery plan5.

Quality Assurance Plan

The tender documentation stated that there was a requirement for an effectively and efficiently managed interpretation service for which management information reporting was critical. Tenderers were required to explain in their tenders how they would provide management information reports and were provided with notional information to produce a number of sample bespoke reports. Each report was required to include a narrative summarising the information provided and a separate narrative explaining how tenderers would ensure that reports would be provided in a timely manner.

Word Perfect scored the full 200 marks for its response to this criterion. The successful tenderer, Translation.ie, scored 170 marks despite the evaluation report noting that it had “failed to develop the narrative component of the report”. 170 marks equated to 85% of the available marks. According to the published scoring methodology (which established a top band of 80%-100%), this meant that the successful tenderer had provided an “excellent response that fully meets or exceeds requirements and provides comprehensive and convincing assurance that the tenderer would deliver to an excellent standard”. Word Perfect argued that in absence of any text containing a narrative summary of the information in a report, the successful tenderer’s response could not have fully met the tender requirements and a manifest error in evaluation had occurred.

The High Court had concluded that the successful tenderer did provide a “narrative” as it provided introductory text and information in graphic form with certain tabular summaries. However, the Court of Appeal reversed this decision and held that the word “narrative” would be understood by a reasonably diligent and well-informed tenderer as a written statement6. The Court of Appeal held that a visual display or a depiction of the information by way of charts and graphs, or similar was insufficient and that a narrative summary had not been provided. A manifest scoring error had occurred as the mark awarded to the successful tenderer implied that it had fully met or exceeded requirements.

Service Delivery Plan

A second aspect of the evaluation exercise concerned the proposed service delivery plans of tenderers and the requirement to demonstrate methods that would ’ensure’ interpreters retain their skills and fluency. The successful tenderer received full marks for its response to this. The evaluators’ report stated that “in relation to retention of language skills, ‘Translation.ie encourages ongoing training by providing and recommending the participation in workshops, seminars, formal course work as well and informal learning opportunities in order to remain up to date with current developments in the field’. However, a formal policy in respect of this training would have given a higher level of assurance”.

Word Perfect challenged the decision to award Translation.ie full marks for its response. It failed initially to convince the High Court that the response of the successful tenderer did not include any proposal to ensure skills retention. However, the Court of Appeal overturned the High Court’s decision on this issue noting that in its response, the successful tenderer merely stated that it would ‘encourage’ skills retention among interpreters, but that there was nothing in the plan that demonstrated how it would actually ‘ensure’ this. The Court of Appeal found that the response did not fully comply with the tender requirements and did not justify the successful tenderer obtaining a perfect score against this criterion. It found that the High Court was wrong not to find a manifest error on the part of evaluators in this regard.

The law: manifest error and the RWIND test

In considering the Minister’s appeal in relation to both of the above issues, the Supreme Court recounted the applicable law in relation to manifest error. The Court affirmed the standard of review established in the leading case of SIAC Construction Ltd v Mayo County Council7. In that case the Court applied the Court of Justice decision in the same case8 and held that tender documents must be interpreted by reference to how reasonably well-informed and normally diligent tenderers would interpret them (the well-known ‘RWIND’ test) while allowing “a wide margin of discretion” to the awarding authority.

The Supreme Court also drew attention to the principle of transparency set out by the Court of Justice in Commission v Netherlands9 and adopted by the Irish Courts in Gaswise Ltd v Dublin City Council10:

“The principle of transparency implies that all the conditions and detailed rules of the award of procedures must be drawn up in a clear, precise and unequivocal manner in the notice of the contract document so that, first, all reasonably informed tenderers exercising ordinary care, can understand their exact significance and interpret them in the same way, and, secondly, the contracting authority is able to ascertain whether the tenders submitted satisfy the criteria applying to the relevant contract”

The Supreme Court also confirmed that tender documents must be interpreted from the perspective of industry professionals involved in tendering and not from that of lawyers.

There was no significant disagreement between the parties on the applicable principles of law. However, as the Court pointed out, this does not mean that there cannot still be considerable dispute about the application of those principles to the facts.

O’Donnell J added:

“For my part, I would be inclined to see that standard of manifest error not so much in terms of the patent nature of any error, but rather as relating to the degree of confidence with which it can be said that the decision was wrong. An error may not be apparent on the surface of the decision, and may be difficult to identify and explain, but if, once understood, it is clear that it is indeed an error, then the test is satisfied.”

Service Delivery Plan

The Supreme Court allowed the Minister’s appeal on this ground, holding that the decision to award Translation.ie full marks for its Service Delivery Plan was not a manifest error. The maintenance of skills was only one component of the Service Delivery Plan and the review of both tenders in their entirety was necessary to determine if a manifest error had occurred. It was unlikely that the tender documentation required tenderers to provide some form of “absolute and humanly impossible guarantee” that the maintenance of skills would be ensured and so if a tender fell short of such a guarantee it must also necessarily fall short of full marks. That would be to take “too lawyerly an approach” to the interpretation of the tender documents to the exclusion of the industry context.

Quality Assurance Plan

The Minister argued that the Court of Appeal’s interpretation of the word ‘narrative’ was too verbal and text-bound and that the graphical charts presented could still satisfy the requirement of a narrative. However, the Supreme Court found the Court of Appeal’s conclusion that compelling that a narrative summary in text was required. This was the natural meaning of the words, particularly when taken in their context. Thus, the Court held that the award of marks in the top band to Translation.ie was a manifest error because only submissions which fully met or exceeded the requirements could legitimately fall within that band. This had to result in the setting aside of the award decision (even though it was possible that Translation.ie could still have won the competition had it been awarded a mark within the scoring band below, albeit by a wafer-thin margin).

Comment

While the decision of the Supreme Court does not establish new legal principles to be applied in cases of manifest error, it is nonetheless of interest. It demonstrates the level of precision that contracting authorities must apply, both when drafting tender documents and evaluating responses thereto. The fact that different courts have adopted varying interpretations of the same tender requirements also illustrates that evaluation is an inexact science and susceptible to error no matter how thorough and detailed it is.

Another interesting aspect of the case was the analysis given to the scoring methodology used by the contracting authority, which applied the top band of marks (80% to 100%) to those responses which fully met or exceeded requirements. O’Donnell J described the marking scheme as a “straight jacket” which could lead inevitably to the conclusion that a response which is excellent in nearly every respect and fully meets or exceeds the requirements in all but one area cannot achieve more than 79% of the marks. This may be so even though that response is superior overall to a competing response which does meet all of the requirements. Scoring methodologies play a critical role in the evaluation process. Contracting authorities preparing tender documents are well advised to give full consideration to how scoring systems will be applied to tender responses in practice.

Notes:

1 Word Perfect Translation Services Limited v. the Minister for Public Expenditure and Reform [2019] IESC 38.

2 [2018] IEHC 1 and [2018] IECA 35.

3 [2018] IEHC 158 and [2018] IECA 87.

4 [2018] IEHC 237.

5 In relation to two other grounds of appeal raised by Word Perfect, the High Court’s decisions were upheld. The Court of Appeal found that evaluators were not required to explain why the provisional marks awarded to tenderers evolved over the course of a number of evaluation meetings – to do so would add a new layer of complexity. It also held that Word Perfect was not entitled to the additional reasoning it sought in respect of questions where it had achieved higher scores than the successful tenderer.

6 [2018] IECA 156.

7 [2002] 4 IR 148.

8 C-19/00 SIAC Construction Ltd v. Mayo County Council [2001] ECR 1-7725.

9 Case C-368/10 [2012] 3 CMLE 11.

10 [2014] IEHC 56.

11 This case note was first published in the Public Procurement Law Review, Issue 4/2020, by Thomson Reuters