Biggart Baillie Solicitors

European Ombudsman rules on tender evaluation expert’s conflict of interest

On 23 September 2010, the European Ombudsman published a draft recommendation to the European Commission that it re-evaluate a tender procedure following its failure to address a conflict of interest by one of its officials.  The Ombudsman found that one of the experts who advised the Commission’s tender evaluation committee had previously worked for the successful tenderer and other short listed tenderers.

Conflicts of Interest

The Ombudsman has consistently taken the view that the principles of good administration and the EU principle of equal treatment requires that EU institutions ensure that no actual, potential or apparent conflicts of interests affect their work.

The Organisation for Economic Co-operation and Development’s (“OECD”) Guidelines for Managing Conflicts of Interest in the Public Service defines three possible types of conflict of interest:

• An Actual conflict of interest – This exists where there is a conflict between a public official's public duty and his/her private interests, such as where the public official has private interests which could improperly influence the performance of their official duties and responsibilities.
  
• An Apparent conflict of interest -  This can be said to exist where, despite the fact that there is no actual conflict of interest, an impression exists that that a public official's private interests could improperly influence the performance of their duties.
  
• A Potential conflict of interest - This arises where a public official has private interests which are such that a conflict of interest would arise if the official were to become involved in relevant official responsibilities in the future.

The Ombudsman took the view that the fact that the expert had worked for the successful tenderer and other shortlisted tenderers was enough to create a conflict of interest in this case.

Tender Evaluation – Experts and Officials

Contracting authorities often rely on technical experts to help them mark and evaluate tenders for public contracts.  In some cases the experts are members of the tender evaluation panel; in other cases the experts merely advise the tender evaluation panel. 

In this case the expert was not a member of the tender evaluation panel but a technical assessor and adviser.  The Ombudsman took the view that that did not mean that he had no influence on the evaluation panel’s decision. In fact, it could reasonably be expected that the evaluation panel would rely on his assessment in respect of the quality of each tender.

The Ombudsman also took the view that the fact the expert had worked for all the tenderers on the shortlist, and not just the successful tenderer, did not even out the problem.  In fact, this increased the chances of a conflict of interest arising, because an expert may person may be positively or negatively disposed towards the firms for which he or she has previously worked, depending on the nature of the working relationship with each company.

Comment

Commenting on the draft recommendation, Douglas McLachlan, an Associate in Biggart Baillie LLP’s Procurement Team said:-

“This case highlights some of the difficulties for contracting authorities in evaluating and marking tenders for public contracts.  In many cases, their in-house technical experts have either been previously employed by firms in the relevant industry, or have carried out freelance consultancy work for them. 

In small industries this can be a headache for the contracting authority, as it may be difficult to find an expert who has not worked for one of the tenderers on a previous occasion.  If a suitable independent expert cannot be found, the contracting authority will have to put special procedures in place to mitigate the effect of the conflict of interest, for example by taking special steps to conceal the identity of tenderers.

All contracting authorities in the UK should review their standing orders and procedures now to prevent conflicts of interest arising in the marking and evaluation of tenders.  Otherwise they could be exposed to the risk of a court challenge at a later date.”

For more information, please contact:

Glasgow:  Colin Miller or Douglas McLachlan - tel:  0141 228 8000