How to protect your infrastructure project from procurement legal challenges

Learn the importance of enforcing data and document integrity to protect your infrastructure project from procurement legal challenges

By AnsaradaTue Jan 10 2023Advisors, Tenders, Audits and compliance, Security and risk management, Governance Risk and Compliance

Increasingly complex risky projects

Large and complex infrastructure procurements of public works are resource intensive, costly, and time-consuming. They also face potential legal challenges from stakeholders and bidders who explore procedural missteps to litigate the outcome of the procurement for valid and often nefarious reasons. This legal risk needs to be mitigated if time consuming delays, costly legal disputes and procurement cancellations are to be avoided. 

The ultimate focus of any competitive procurement should be achieving value for money for the procuring entity, savings for the taxpayer, and the selection of the most qualified bidder as a project partner. This requires a procurement approach that can withstand any probity audits, one which is “squeaky clean” and which protects the reputations of the project team, government, bidders and stakeholders.

Large infrastructure procurements typically take years and include multiple phases and action such as: planning, market sounding, preliminary engineering design and scenario development, project feasibility studies, environmental studies, political and institutional approval, the preparation of procurement strategies and evaluation criteria, drafting of numerous iterations of procurement documents, the transparent dissemination of procurement documents (including draft contracts and terms of reference, TORs), multiple Q&A interactions with bidders, selection of pre-qualified bidders, receipt and review of bids, the selection of the preferred bidder, contract negotiations, and the eventual award of the contract.  

All of these activities create enormous amounts of project procurement data, and procedural and communication records that need to be archived in an easily referenceable and retrievable format, preferably digital in a data system that is compatible with all project partners' data systems.

It is also important that accountability protocols are established to ensure that all validated decisional and transactional records are securely kept so that a comprehensive document archive exists for instances when procurement procedures and decisions have to be justified, for example during contentious challenges to procurements.

Additionally, all records of procurement negotiations and the resulting contract TORs and expected outcomes and deliverables need to be continuously archived,  post procurement to ensure that any disputes that might arise during the construction of the project can be addressed in a responsive and informed manner before they escalate and get out of control.

The Purple Line – missed opportunities

There are many procurement horror stories of where things could have been done in a more expeditious way.  A cautionary US example of a large public works procurement that went wrong is the Purple Line Design-Build Project located in Maryland, USA. Four years of delays have caused $1.46 billion in additional construction costs, equal to 75% of its construction budget. Delays and legal disputes during the procurement process eroded public confidence in the project. 

Post contract award delays caused reputational harm to all involved and raised concerns that the best project partners were not selected thereby resulting in loss of value for money. Specific procurement challenges included opposition from resident and environmental interest groups; detractors who felt that the procurement process was flawed;concerns of disproportionately allocated risks; and the acceptance of a low-bid construction contract - due to political pressure – that left the Purple Line project vulnerable from the onset. 

Ultimately, the flawed procurement process and the resulting cascading impact of poor decisions led to a $250 million legal settlement paid to the original construction contractor after it exercised its contractual right to withdrew from the project.

Mitigation actions to avoid procurement legal disputes

Expensive legal challenges of high value complex procurements can be largely mitigated if data management protocols and systems are collaboratively designed with government project management needs in mind. 

These systems need to be able to manage the sheer volume of data that is generated in modern procurements.

Bespoke project-specific designed procurement management platforms increase the likelihood that the most competent bidder will be selected, that value for money is achieved from a tax-payer’s perspective, that cronyism is avoided, and that project procurements can be successfully accomplished.

The following mitigation actions should be undertaken to avoid legal disputes and build government confidence in its procurement process.

They include the:

  • Adoption of a fit for purpose project procurement platform that automatically captures all legally required information mandated by procurement policy and guidelines.
  • Establishment of data management authority protocols so that all critical information is protected against manipulation.
  • Protection of project procurement records and documents, no matter where they are housed.
  • A  retrievable information database (archive) - supported by a nimble and commercially available software platform - that records all procurement documents in all  formats.
  • Adoption of activity tracking safeguards that record all access to confidential documents, communication, and information to prevent any nefarious actions from compromising the integrity of the procurement (this includes a cyber-security hacker proof system).
  • Design of a harmonized data management platform that allows seamless and appropriate access to data (including Q&A exercises) during the procurement so that procurement transparency, fairness, and probity can be enhanced.
  • Preservation of all project feasibility, financial, and technical supporting studies that underlie the procurement rationale thereby enhancing the ability to defend against accusation of misinformation by disgruntled parties.
  • Conservation of all procurement contractual documentation (i.e. terms and conditions) to prevent legally risky negotiations that could lead to project scope creep and loss of project value for money.
  • Recording of all project award decisions including evaluation criteria and scoring to defend against nebulous litigations by discontented bidders who could make accusations of lack of transparency, unfounded favoritism, and probity. 
  • Creating of an easy to use fail-proof procurement submission interface for bidders that protects the commercial and technical interests of bidders (i.e. intellectual property).

Due to the increasing occurrence of procurement litigation risk, it is critically important to adopt measures that include mechanisms to enforce information and data integrity. 

This is not only in the interest of the procuring party, and bidders, but is also being increasingly mandated by large donors, multilateral banks and development institutions who are demanding full transparency to prevent infrastructure procurement corruption and to ensure that value for money is achieved. Judicious management of data will help project champions achieve the ultimate goal of the delivery of a value-added project that enhances society’s expectations.

If procurement practices are not enhanced, one should not be surprised if costly mistakes, corruption, procurement cancellations and legal challenges proliferate.

The author, David Baxter, is a Senior PPP Advisor to the International Sustainable Resilience Center (ISRC) located in New Orleans.  Additionally, he is a steering committee member of the World Association of PPP Units and Professions (WAPPP). During 30 + years of international development consulting he has worked in Asia, Africa, the Middle East, Europe and North and South America. David has collaborated on infrastructure policy, project development, and project procurement for institutions such as the World Bank, Islamic Development Bank, African Development Bank, USAID, and the Millennium Challenge Corporation (MCC).
David Baxter, Senior PPP Advisor, International Sustainable Resilience Center (ISRC)

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