When can bid evaluation criteria apply to a contractor’s personnel?
An amendment to the Public Procurement Law of 22 June 2016 implementing Directive 2014/24/EU upholds the principle that bid evaluation criteria cannot apply to a contractor’s economic, technical, or financial credibility. Lawmakers have however provided for the possibility of formulating a criterion applicable to qualifications of a contractor’s personnel.
Requirements for admission to a procedure and bid evaluation criteria
In a public procurement procedure there is an important distinction between the contractor classification phase and the bid evaluation phase.
The first phase is evaluation of eligibility of contractors to participate in the procedure, i.e. fulfilment of the minimum requirements for a contractor to apply for the public contract in question. This evaluation is binary, i.e. is a question of “does or not fulfil”, and at this stage in principle fulfilment of the requirements above the minimum level does not earn a higher score (except in the case of selection criteria).
During the bid evaluation stage, it is contractors’ bids and not their characteristics that are evaluated. Unlike in evaluation of requirements for admission to the procedure, bids are given various scores according to the points system specified by the contracting authority. The bid evaluation criteria are used among other things to guarantee higher quality of the product. This means that during this phase contracting institutions can give scores for fulfilment by contractors of requirements above the minimum level.
The fundamental difference between the criteria and the admission requirements is that the requirements concern characteristics of a contractor, while the bid evaluation criteria apply to the subject matter of the contract.
Option of evaluation of specific individuals
In the same way as in the past, the bid evaluation criteria cannot apply to characteristics of a contractor, in particular economic, technical, or financial credibility (art. 91(3) of the Public Procurement Law). The standpoint of the Public Procurement Office stated in this opinion “Bid evaluation criteria and the requirements for admission to a procedure in the context of a specific track record required of contractors by contracting authorities” continues to apply. Meanwhile, under art. 91(2)(5) of the Public Procurement Law, bid evaluation criteria can be set with regard to organisation, professional qualifications, and previous project experience of the personnel of the contractor required to discharge the tender contract if these characteristics have a major impact on the quality of the tender contract. Evaluation of particular individuals among a contractor’s personnel is therefore possible if there is a direct link to the subject matter of the contract.
For this criterion to be applied correctly, it needs to be formulated in a manner that leaves no doubt that it applies to persons who will discharge the contract in practice, and not the contractor’s entire personnel.
Twofold examination of personnel qualifications
In a single procedure, the characteristics of the contractor’s team can be examined both as a requirement for admission to the procedure, and as bid evaluation criteria. As part of the requirements for admission to the procedure, the contracting authority can specify the minimum scope of qualifications to be held by the contractor’s personnel. As an element of the bid evaluation criteria, a higher score can be awarded for contractor personnel who hold qualifications higher than the minimum requirement. In such a case, the contracting authority is required to demonstrate that the higher level of qualifications mean that the quality of performance of the contract will be higher. The contracting authority can also specify requirements for admission to the procedure with regard to the contractor’s overall track record and qualifications, and evaluate the characteristics of particular individuals as part of the bid evaluation criteria.
Where a contractor’s personnel are evaluated as a requirement for admission to the procedure according to art. 22d(1) of the Public Procurement Law, unlike in the case of evaluation of personnel in connection with bid evaluation criteria, there is no obligation for these individuals to subsequently be involved in work on the tender contract. The potential for the appropriate team to be assigned is sufficient.
When a contracting authority can evaluate a contractor’s team
Contracting authorities can apply a criterion of this kind when work of the team in question of persons assigned to perform a particular task determines the quality of the product. This means that precise analysis is needed of the impact that setting the criterion in question will have on the outcome of the procedure.
According to point 94 of the recitals in Directive 2014/24/EC, this criterion should be allowed whenever qualifications of the hired personnel affect the quality of contract performance, and as a result the economic value of the tender. Examples given are contracts for intellectual services such as consulting (for example legal services) or architectural services.
Application of a criterion of this kind is assumed to be allowed in the case of contracts which require special qualifications.
Performance of a contract by personnel holding qualifications specified in the bid
Point 94 of the recitals in Directive 2014/24/EC also states that contracting authorities that opt to apply bid evaluation criteria with regard to personnel should ensure, by way of the appropriate contractual provisions, that the personnel assigned to perform the contract indeed fulfil the specified quality requirements and that the personnel can only be replaced with the consent of the contracting authority once the contracting authority has verified that the replacement personnel can provide equivalent quality.
This requirement arises because information about personnel assigned to perform the contract in question constitutes the contractor’s bid, and cannot be changed at will. The possibility of providing additional information under Art. 26(3) of the Public Procurement Law also does not apply in this case as this would result in change of the content of a bid once the time limit for submitting bids had expired.
Contracting authorities are required to ensure that a contract is performed by persons holding the qualifications listed in the most favourable bid. Persons who replace the personnel listed in the bid should as a minimum have the same qualifications as the persons they are replacing. As a rule, it is not permitted to amend a concluded agreement for a public tender contract in relation to the contractor’s bid. This rule also applies to elements of the contractor’s bid relating to the qualifications of the personnel assigned to perform the contract. To ensure the option of changing the persons assigned to perform the contract, the conditions for an amendment of this kind should be provided for in the invitation to tender or tender terms of reference, in the form of explicit contractual provisions (Art. 144(1)(1) of the Public Procurement Act).
Application of criteria with regard to personnel according to former laws not prohibited
In a judgment of 26 March 2015 in case C-601/13 (Ambisig) the CJEU ruled that it was possible to apply this criterion under the previously applicable Directive 2004/18/EC. The CJEU stressed that even under the previous laws it was possible to evaluate specific teams assigned by contractors to perform the contract in question.
The ruling pointed out the difference between general project experience of a contractor and the project experience of particular individuals intended to perform specific tasks directly affecting performance of the contract. It was stated that capacity to perform a public contract can depend to a large extent on the professional quality of the persons obligated to perform it, i.e. the quality resulting from their professional experience and qualifications. In the case in question the CJEU found that it is possible for a contracting authority to apply evaluation criteria regarding the composition, experience in past projects, and individual profiles of the team assigned to perform the contract of a weighting of 40%.
Difficulties in applying the criterion in question
The team organisation criterion is a criterion that is not measurable, which contracting authorities dislike using due to difficulties in describing them. Contracting authorities fear in particular allegations that bid evaluation procedures are not defined clearly and that they will have to give reasons, in the event of an audit, for a particular criterion and demonstrate that it truly affects performance of the contract.
It is particularly vital that contracting authorities analyse whether the organisation, professional qualifications and project experience of the designated individuals in the case of a particular contract will affect the quality of contract performance. It is also important to check whether a criterion that at first glance appears to apply to the personal designated to perform the contract might in fact be a prohibited bid evaluation criterion applicable to characteristics of the contractor. Another frequent allegation made against contracting authorities is that there is no link between the criterion applicable to personnel and the subject of the contract (Art. 91(2) of the Public Procurement Law).
Does the specified criterion definitely result in higher quality of contract performance?
For example, in a judgment of 4 May 2017 (KIO 777/17) the National Appeals Chamber ruled that a criterion could not be set according to which the contracting authority awarded points for experience of a person designated to act as the project manager in implementation of a lecture organisation system only if that experience related to an institution of higher education offering medical courses. The chamber ruled that the criterion did not result in higher quality of the contract. The chamber stated that there was no difference between implementation of a lecture organisation system at a medical university, which was the subject of the contract, and implementation of a system of that kind at a university that did not run medical courses. The chamber pointed out that operation of a lecture organisation system for medical courses was not of a specific nature being grounds for awarding points for experience of personnel in this area. The chamber stated that the organisational problems described by the contracting authority in connection with the sudden absence of physicians giving clinical lectures due to medical events are not specific to medical courses. It stated that lecturers can be suddenly absent for various reasons, such as holiday leave taken at short notice, an accident, or sick leave. For this reason, there were no grounds for awarding extra points for experience of personnel gained at a medical university.
A criterion may not apply to a contractor’s payroll and HR policy
In a judgment of 3 March 2017 (KIO 492/17) the National Appeals Chamber ruled that a bid evaluation criterion according to which a contracting authority awarded points for employment on an employment contract for more than three months prior to the day of submission of the bid was prohibited due to it relating to characteristics of the contractor and not the subject of the tender contract.
The Chamber did not concur with the argument presented by the contracting authority that employment under an employment relationship meant that finalised teams could be created, and a three-month employment period was vital for the team to learn internal procedures, methods and practice concerning performance of the contractor’s projects. The National Appeals Chamber stated that the circumstances described were not relevant to the quality of the contract, and that the contract could be performed by any team with the appropriate knowledge and know-how, regardless of the form of employment.
Neither of the parties lodging appeals in this case contested that it was possible to expect employment of individuals on employment contracts. They questioned the requirement to demonstrate employment of the individuals prior to the date of commencement of the proceedings.
Katarzyna Śliwak, legal adviser, Infrastructure, Transport, Public Procurement & PPP practice, Wardyński & Partners