Legal challenge fears force Environment
Agency to freeze water and environment bids
“The model is flawed because it is not identifying
The Environment Agency has suspended the procurement of a new
£2.5bn framework contract after flaws were spotted in the bidding
The Agency was forced to suspend bidding for its new 10 year
Water and Environment Management (WEM) framework just weeks before
it was due to be awarded, on legal advice.
An independent review into the procurement process instigated
after the recent West Coast Main Line franchise debacle - where the
process was also suspended - warned that the framework award could
be challenged in the courts.
“We regret that this decision has been taken at a late stage in
the tender process and consider the decision to be absolutely
necessary in order to ensure that the tender evaluation is
transparent, fully compliant with public procurement regulations and
not liable to challenge,” said a bulletin issued by the Agency to
potential suppliers last week.
“Whilst we have considered the contents of the tenders, our
decision has been taken independently of the tender contents and on
the basis of legal advice from advisors who have not themselves
viewed the tenders,” said the statement.
The new WEM framework combines four existing frameworks - the
strategic flood risk management framework, the national engineering
and environmental consultancy agreement, the national contractors
framework and the environmental services framework.
The Agency had been expected to announce the successful firms in
the next few weeks, with the new arrangements due to begin in April.
Major UK contractors and consultants are bidding for the
framework, and the suspension is expected to cost them millions of
pounds in tender costs in total.
One major consultant told NCE that bidding for a place on the
framework had cost it hundreds of thousands pounds, with several
staff working on the bid full time for almost a year.
The Agency said much of the work done by bidders could be
re-used, but the consultant told NCE there would still be plenty of
new work to do on tenders if the bidding process is restarted on a
Another consultant speculated that one possible area for a legal
challenge was that bidders could manipulate rates.
“The model is flawed because it is not identifying value,” said
the consultant, explaining that bidders could ascribe 1p rates for
areas that were weighted more heavily in the tender process, such as
construction equipment, but then decide to subcontract this area.
The firm could then make up its margin by increasing rates in
areas that were not weighted as heavily, such as staffing costs.
“It’s impossible to compare apples to apples in this system,”
said the consultant.
Last year contractor Amey used similar pricing tactics in its bid
to win a road maintenance framework with Transport Scotland.
Amey mounted a legal challenge when the contract was awarded to
Bear Scotland, despite its bid being more expensive, but it failed
to get Transport Scotland’s decision overturned (NCE 15 November
But similar tactics were successfully used by bidders for the
recent Highways Agency Area Support Contracts (NCE 21 June 2012).
Another reason the process could be open to challenge is that the
Agency has reportedly told bidders that some of the major contracts
could be awarded through existing frameworks.
As a result some firms are questioning the necessity of bidding
for the new framework.
The Agency has given no timescale for restarting the tender
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