Following the process of submission of bids by tenderers during the tender closing/opening process of public tenders, the Procuring Entity commences the process of tender evaluation.

The tender evaluation process is conducted by an ad hoc tender evaluation committee appointed by the Accounting Officer of a Procuring Entity pursuant to section 46 of the Public Procurement and Asset Disposal Act (hereinafter the PPADA or the Act).

The process of bid evaluation is conducted in four steps, namely;

1. Preliminary/Mandatory Evaluation

2. Technical Evaluation

3. Financial Evaluation

4. Post Qualification (due diligence)

This article will delve deeper into the technical evaluation stage. This is the second stage of evaluation following the preliminary/mandatory evaluation stage.

For a recap on what the preliminary/mandatory evaluation stage entails, read the article, Preliminary/Mandatory Evaluation in Public Procurement in Kenya: Necessary Formalities or Undue Technicalities?

While the first stage of preliminary/mandatory evaluation takes a checklist approach and can be said to be about checking compliance with formalities (form over substance), technical evaluation is or should be more about substance than form.

It is about the merits of the bid, assessing the actual competence of the bidder. This is done by assessing the weight of a bidder’s technical qualifications and capabilities, expertise, experience, and financial ability.

Unfortunately, bidders have to first be evaluated and eliminated based on matters of form or on technicalities at the preliminary stage before their bids can be evaluated on merit at the technical evaluation stage.

As argued in the article on preliminary evaluation, this form over substance approach adopted at the preliminary evaluation stage where bidders are eliminated for missing any mandatory requirements often results in absurdities.

Such absurdities include eliminating bidders who are more technically competent and who offer the Procuring Entity better priced bids owing to failure to comply with certain formalities e.g. inadvertently omitting to attach a document even if in actual fact they have the document.

As unfortunate as such an outcome is, it is currently the law in Kenya even as supported by decisions of both the Public Procurement Administrative Review Board (PPARB) and the Courts.

Courts in several cases have opined that procurement bristles with technicalities which bidders often overlook at their own peril.

As noted in Judicial Review Application No. 90 of 2018, Republic v Public Procurement Administrative Review Board, Ex Parte Saracen Media, at paragraph 33,

“…The standard practice in the public sector is that bids are first evaluated for compliance with responsiveness criteria before being evaluated for compliance with other criteria, such as functionality, pricing or empowerment. Bidders found to be non-responsive are excluded from the bid process regardless of the merits of their bids. Responsiveness thus serves as an important first hurdle for bidders to overcome.” 

 

Legal Provisions on Technical Evaluation

The relevant provisions of the PPADA that govern the process of technical evaluation of bids are sections 79, 80 and 81 of the PPADA.

While section 79 is mostly applicable to preliminary evaluation due to the mandatory requirements, it is also applicable in situations where there are mandatory requirements during the technical evaluation stage.

Section 79 (1) of the PPADA states, “A tender is responsive if it conforms to all the eligibility and other mandatory requirements in the tender documents.” (emphasis mine)

Of even greater relevance to the subject of technical evaluation is section 80 (1), (2) and (3) of the Act which states as follows:

80. Evaluation of tenders

(1) The evaluation committee appointed by the accounting officer pursuant to section 46 of this Act, shall evaluate and compare the responsive tenders other than tenders rejected under section 82(3) [the correct section should be section 79].

(2) The evaluation and comparison shall be done using the procedures and criteria set out in the tender documents and, in the tender for professional services, shall have regard to the provisions of this Act and statutory instruments issued by the relevant professional associations regarding regulation of fees chargeable for services rendered.

(3) The following requirements shall apply with respect to the procedures and criteria referred to in subsection (2)—

(a) the criteria shall, to the extent possible, be objective and quantifiable;

(b) each criterion shall be expressed so that it is applied, in accordance with the procedures, taking into consideration price, quality, time and service for the purpose of evaluation; and… (emphasis mine)

The following two points are worth highlighting:

Use of extraneous criteria is not allowed – it is important to note that evaluation should be done using the criteria that is set out in the tender document. Attempts to introduce extraneous criteria by the evaluation committee has been challenged successfully before the PPARB and the Courts. 

In Republic v Public Procurement Administrative Review Board; Finken Holding Limited & another (Interested Parties) Exparte Desbro Engineering Limited [2018] eKLR, the High Court affirmed the PPARB’s decision which overruled the Procuring Entity for attempting to disqualify a bidder due to lack of a work schedule, which had not been included as a requirement under the Tender Document for tender evaluation purposes but as a post award requirement.

Criteria used/applied should be objective and quantifiable – this explains the reason why technical evaluation takes the approach of awarding scores for various qualifications, often with a minimum score.

 

Defining Technical Specifications

Technical specifications form the substantive part of any tender document. They are the most critical aspect of the tender as they enable the Procuring Entity to acquire what it intends to acquire in order to meet its needs.

Procuring Entities thus need to ensure that the technical specifications are well defined since if not, they may end up with something different or of lesser quality than what they intended to purchase.

The PPARB dealt with the issue of technical specifications at length in PPARB No. 81 of 2020, Tunasco Insaat Anonim Sirketi v The Accounting Officer, Kenya Medical Supplies Authority & China Railway No. 10 Engineering Group Co. Ltd, at page 40.

The PPARB quoted Andrew Hiles in his book Business Continuity Management: Global Best Practice (Rothstein Publishing, 30 Sep 2014, 4th Edition), which defines the term “Technical Specifications” as follows:

Technical specifications is that part of the tender documents which provides to the bidder technical details of the materials, plant and equipment, services, or site activities which the bidder is to supply if he becomes a successful bidder.

 

Technical Specifications are the Crux of the Tender

The Board in PPARB 81 of 2020 went further to quote Andrew Hiles in noting the importance of technical specifications as follows:

“The technical specifications are the most important section of the tender document, both for the purchasing organization as well as for the bidders, since it is the specification which sets out precisely what characteristics are required from the materials, plant and equipment, services or site activities being sought by the purchasing organization.

Technical specifications clearly, accurately and completely describe in detail what the purchasing organization wants the successful bidder to supply. A clear, accurate and complete specification is the foundation of any purchase, and ensures the best chance of getting what the purchasing organization wants.” 

Noting that technical specifications are the most important part of a tender document, bidders are called upon to read the tender document in question keenly to ensure that they respond by promising to supply exactly what the procuring entity intends to buy.

It is also crucial that bidders describe what they intend to supply accurately and, in the language, required by the tender-mostly English in the Kenyan context (or provide an English translation) to enable the evaluation committee to conduct the evaluation in an objective and quantifiable fashion.

Where manuals and material certificates, brochures, drawings and other descriptions of the specifications are required, bidders must provide that information to enable the Evaluation Committee to conduct an objective evaluation (see PPARB 81 of 2020).

 

Technical Evaluation in Practice

 Evaluation at the technical stage usually takes the approach of awarding (or denying) scores for every qualification which the bidder has or does not have. Most tender documents also provide for different scores that consider the quality of a requirement.

Higher marks for priority criteria – different marks are awarded for each technical criterion depending on how crucial that item is to the delivery of the project.

In a tender for construction projects, higher marks may be awarded for plant and equipment while in a tender for consultancy services, the bulk of the marks during the technical evaluation stage will be awarded for academic and professional qualifications and experience of the personnel.

Under each criterion, marks will be graduated to reflect the quality of each item. For instance, in evaluating personnel, the bidder is awarded more marks for personnel with a Degree and a lower mark for those with Diplomas or Certificates. The bidder is also awarded more marks for personnel with more years of relevant experience.

Marks may be graduated – the marks to be awarded for the various elements evaluated during technical evaluation are usually graduated e.g. in evaluating personnel, the tender evaluation criteria may provide for 10 marks for 15 years’ experience and above, 5 marks for 10 years’, zero marks for less than 5 years’ experience.

Pass marks / minimum marks – most tender documents will provide for a pass mark with a clear indication that bidders who do not meet the pass mark will not proceed to the next level of evaluation i.e. financial stage.

The net effect of awarding or denying a score for every criterion, or awarding a higher score for a higher quality of an item or denying a score for a weaker quality is that automatically – assuming that marks are fairly and objectively awarded – the more competent bidders should end up scoring higher marks while the less competent bidders will end up scoring less marks.

In addition to scoring higher marks, it also means that bidders who consistently fail to score well will end up either with lower marks or not even meeting the set pass mark. If they do not meet the set pass mark, they will then be disqualified and will not be allowed to proceed to the next stage of evaluation.

Marks at technical evaluation should count during financial evaluation – usually, the criteria at the financial evaluation stage often includes a formula that gives more weight to bidders who attained higher technical scores during the technical evaluation stage.

It is submitted that an evaluation criterion at the financial stage that fails to give more weight/marks to the technical score lacks objectivity and risks ending up with the absurd results such as having a much less qualified bidder who does not offer much of a financial advantage ending up as the successful bidder.

Illustration on Technical Evaluation Criteria (Illustration developed from various actual tender documents with minor modifications)

ITEM	DESCRIPTION	SCORES
1.	Compliance with technical specifications Compliant – Full marks Non-compliant – Zero marks	Max 30 marks
2.	Experience Contracts completed in the last 10 years – 10 marks 3 or more contracts completed – 10 marks 2 contracts only – 5 marks One or no contract – Zero marks Schedule of ongoing projects – 5 marks	Max 15 marks
3.	Key personnel Experience of 15 years and above – 10 marks Experience of 10- 15 years – 7 marks Experience of 5-10 years – 4 marks Less than 5 years’ experience – 0 marks	Max 10 marks
4.	Plant and Equipment Relevant Equipment as detailed in schedule 8. Owned (0-40 marks) and leased (0-10 marks)	Max 20 marks
5.	Program of works and work methodology – Should include schedule of completion time	Max 10 marks
6.	Financial Capacity Audited Financial Statements for the last 3 years (5 marks) Evidence of Financial Resources, including bank contacts (5 marks)	Max 10 marks
7.	Litigation History	Max 5 marks
	Total	100 marks

 

 

Technical Evaluation on the basis of YES/NO Criteria

Though rare, there are a few instances when Tender Documents provide for technical evaluation to be conducted on the basis of YES/NO.

This means that rather than award marks on a graduated scale for the various criteria, a bidder ends up being given full marks for provision of an item and zero marks for failure to provide the item.

The use of a YES/NO approach at the technical evaluation stage ends up taking the approach of mandatory evaluation since a bidder who lacks any items ends up being disqualified (regardless of the importance of that item and/or the bidder’s ability to hire or lease such items on being awarded the tender) and a bidder who provides an item is awarded full marks.

Such an approach can lead to absurd results since it means that all items are mandatory. It also lacks objectivity as it does not quantify the value of the items and ends up awarding or denying a score regardless of the value of the items and/or the bidder’s ability to hire or lease such items on being awarded the tender.

It is submitted, that the use of a YES/NO approach at technical evaluation stage is not in alignment with the spirit of section 80 (3) (a) of the Act which requires that the criteria that is applied for evaluation and comparison, “…shall, to the extent possible, be objective and quantifiable”.

Such an approach is neither objective nor quantifiable as it can easily result to a bidder with weaker qualifications and technical capabilities being awarded the tender simply because the bidder who presented a strong bid technically and financially missed out on one minor requirement.

The use of YES/NO criteria should be used sparingly and for very crucial requirements and even then, only in situations where the specifications must be fixed and in instances where variations or alternatives cannot work.

 

Plant, machinery and equipment is one of the items usually evaluated at the technical stage. A scoring system would allocate marks for each piece of equipment listed as available by the bidder.

The more crucial and heavy equipment such as graders, compactors, bitumen distributors, bulldozers would attract higher marks compared to smaller equipment like rock drills or a pickup vehicle. Also, a bidder who owns the equipment would be awarded higher marks than one who leases the equipment.

With a YES/NO approach to technical evaluation, a bidder who owns all the crucial heavy equipment and is more technically qualified on all other indicators (e.g. experience, personnel, financial capability etc.) but who fails to provide a less critical piece of equipment e.g. a rock drill, perhaps due to human error while compiling its bid, will end up being disqualified.

Such a tender runs the risk of being awarded to a less technically qualified bidder who provided everything, even though the bidder would barely meet the pass mark if a scoring method had been used for all criteria.

 

Mandatory requirements during technical evaluation

As noted above and in the detailed article on Mandatory Evaluation, mandatory requirements are often contained in the preliminary/mandatory evaluation stage.

Bids are first evaluated for mandatory requirements, before they are evaluated for other requirements. The evaluation for mandatory requirements is referred to as evaluation for compliance with responsiveness.

This position was clearly stated in Republic vs Public Procurement Administrative Review Board; Kenya Medical Supplies Authority (KEMSA) Ex-parte Emcure Pharmaceuticals Limited {2019} (Emcure Case) and also more recently in Republic vs Public Procurement Administrative Review Board; Kenya Bureau of Standards, Ex-parte Tuv Austria Turk (No. 60 of 2020), in paragraphs 40 and 39 respectively. The learned Judge opined as follows:

The standard practice in the public sector is that bids are first evaluated for compliance with responsiveness criteria before being evaluated for compliance with other criteria, such as functionality, pricing or empowerment. Bidders found to be non-responsive are excluded from the bid process regardless of the merits of their bids. Responsiveness thus serves as an important first hurdle for bidders to overcome.

In as much as mandatory requirements are more a preserve of the mandatory evaluation stage, mandatory requirements also find their way into the technical evaluation stage.

The inclusion of mandatory technical requirements is an indication that the Procuring Entity considers those requirements to be an absolute necessity, without which the tender cannot be achieve the objectives it was set to achieve.

A good example of scenarios when having mandatory requirements at the technical stage may be warranted is in procurement of sensitive items such as drugs. It is noted that some of the tenders for procuring drugs advertised by the Kenya Medical Supply Authority (KEMSA) indicate that most if not all of the technical requirements are mandatory.

The Tender Document in the Emcure Case (cited in full above), was one where owing to the sensitivity of ARV medicines, it can be argued that marking of all technical requirements as mandatory was an absolute necessity.

The issue of Mandatory Technical Requirements was discussed in detail in the case of Republic v Public Procurement Administrative Review Board & 2 others Ex-Parte MFI Document Solutions Ltd [2017] eKLR (hereinafter the MFI Case).

Paragraph 22 summarised the key issues in this case as follows:

22. In the view of the Exparte applicant, the erroneous findings by the 1^st respondent were that:

23. The technical specifications were not mandatory and

24. Failure to comply with the technical specifications would not render a bid non-responsive or lead to disqualification.

 Held: The court held that the Review Board had erred in failing to consider relevant factors and took into account irrelevant factors by purporting to qualify that which the tender document had made expressly clear, that is, that the technical specifications were mandatory (see paragraph 101 of the judgement).

The court also noted that by ordering the Procuring Entity to proceed and award the tender to the Interested Party, the Board was sanctioning an illegality by compelling the Procuring Entity to ignore the mandatory provisions in the tender documents and in so doing, the Board exceeded its jurisdiction (see paragraph 116 of the judgement).

After analyzing the provisions of the tender document and summarizing those findings in paragraph 82, the court made the following conclusion at paragraph 83:

From the above observations, it is clear that the technical specifications provided in the tender documents and as weighted were mandatory since they were indicative of minimum specifications.

The net effect of the court’s findings in this case is that mandatory requirements in tender documents are not only found at the preliminary stage but also at the technical stage.

The issue is how the tender document is worded and bidders should carefully go through the tender document to establish the presence of mandatory requirements, not just at the preliminary stage, but also at the technical stage.

In the MFI Case discussed above, the tender document was clear that these technical requirements were mandatory. The court summarised the sections of the tender document that stipulated that the technical requirements were mandatory in paragraph 82 as follows:

The technical specifications are then set out in Section V pages 27, 28, 29 with weights between 1 and 20 all totaling 100 weights. On pages 28 and 29 thereof are the technical specifications required and after item No. 23, the weight given for the note is “mandatory”. The mandatory weight covers the note: The above are indicative minimum specifications only. Vendor must meet or exceed specifications. Original detailed and highlighted product brochures should also be attached along with written specifications.

From the foregoing, it is clear that bidders who fail to meet the mandatory technical requirements are disqualified from proceeding further in the process (to financial evaluation) for failure to meet mandatory requirements, just as would happen during the preliminary stage.

 

Minimum Requirements Equate to Mandatory Requirements

Another way in which mandatory requirements can find their way into the technical evaluation stage is through provision of a minimum quantities that the bidder should provide.

For instance, in a tender for road works, where the tender provides for different marks for owning or hiring equipment, a requirement that you must provide a minimum number of certain equipment essentially means that a failure to provide that minimum number of equipment leads to disqualification.

It would not matter how many pieces of the other items you provided if you miss out on the minimum number for one of the equipments.

The issue of minimum requirements being mandatory requirements was also explained by the court in the MFI case above in paragraph 82 which is quoted in full above.

Illustration of mandatory requirements during technical evaluation (based on a real tender document with minor modifications)

Main Scope of Works of this Tender	Main Equipment	Quantity (No) (Minimum)	Marks (Score)
			Owned	Hired
Bituminous Works (AC/DBM/Surfacing/Overlay)	Paver	1	15	3.75
	Bitumen distributor	1	15	3.75
	Pneumatic Roller	1	3	0.75
	Drum roller (Minimum 10 Tons)	1	3	0.75
	Tippers (Cumulative Capacity 28 Tons)	2	4	1
Total			40	10

 

The table above is an example of how mandatory requirements can be introduced in a Tender Document through minimum requirements. By adding the column on minimum quantity of equipment, the Procuring Entity in essence made the main equipment a mandatory requirement and eliminated the utility of the scores.

The tender document which contained the above table further stated:

Mandatory minimum number of equipment required by the Employer for the execution of this project that the bidder MUST make available for the Contract are detailed below:”

“40 marks shall be assigned to the mandatory minimum equipment as tabulated below [above].

Whether the inclusion of minimum equipment alongside moot scores was by design or default and whether the Procuring Entity had analyzed the full implications of such an approach is a question only the Procuring Entity can answer.

It is submitted that the introduction of mandatory requirements during technical evaluation should be done after careful thought and only for extremely crucial requirements without which the tender would not serve its purpose.

For a detailed discussion on whether mandatory technical evaluation requirements align with the spirit of the Act, and in particular section 80 (3) and their possible effects on value for money, read the article The Simple, Bad Decision That Cost You Kshs. 300 Million

 

Case Review on Technical Evaluation

In Republic v Public Procurement Administrative Review Board; Finken Holding Limited & another (Interested Parties) Exparte Desbro Engineering Limited [2018] eKLR, the court affirmed the decision of the PPARB regarding the correct approach to technical evaluation.

The court, after restating the reasoning and the findings of the PPARB in that case at paragraph 61 of the Judgement, concluded that the PPARB did not commit any illegality.

Of particular importance in this case are the findings in the following paragraphs of the judgement, which will be reproduced verbatim below, owing to their importance in understanding how technical evaluation should be approached:

“…Further to the above and even assuming for arguments sake that a work schedule was a requirement of this tender for the purposes of evaluation, the Procuring Entity could not disqualify the Applicant or any other bidder at the technical evaluation stage based on the absence of a work schedule and the only option open to it would have been to deny it a technical score.

 As the board has often stated, it is only the absence of a mandatory requirement or a bidder’s failure to attain the minimum technical score that can render a bidder’s tender as non-responsive.

Where a tender requirement is not mandatory or where no minimum technical passmark is set out, a bidder cannot be declared as non-responsive at the technical evaluation stage…” 

 

From the foregoing decision which has been quoted several times by the PPARB in its decisions, a bidder can only be disqualified/declared non-responsive at the technical evaluation stage for only two reasons i.e. failure to meet a mandatory requirement or to meet the pass mark.

 

Conclusion

 It is clear from the detailed exposition above that the technical requirements form the most important part of any tender document as they describe what the Procuring Entity is seeking to purchase.

The purchasing entities therefore need to be careful when designing technical specifications and in defining the evaluation criteria, including the scoring system, as this will have far reaching effects on whether they will end up procuring what they intended and at the right cost.

Noting how critical the technical evaluation stage is, Procuring Entities should not hesitate to use experts to formulate their tender document and especially in formulating technical specifications for complex procurements.

Further, where the Procuring Entity determines that there are elements of the tender that are extremely crucial, their importance can be reflected by making them mandatory even at the technical evaluation stage.

However, where the items are not very crucial, use of a scoring system to weight the merits of each tender and eliminate weaker bids may be more apt and aligns better with the spirit of the Act. It also avoids situations where competent bidders are eliminated due to non-crucial mandatory requirements.

Bidders need to be clear that at the technical stage, the norm is to use a scoring system to evaluate the quality of their bids. However, a bidder can be disqualified or rendered non-responsive at the technical evaluation stage where there are mandatory technical requirements or a minimum technical score, and a bidder fails to meet these requirements.

In order to reach the financial evaluation stage, which is the home stretch of any bidding process, bidders must understand the technical requirements and the mode of evaluation and respond with appropriately compiled bid documents.