Behavioural assessment in procurement: A legal perspective

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Summary: Behavioural assessment offers a way for clients to estimate how well bidding contractors will collaborate. But clients need to take a structured legal approach.

What is ‘behavioural assessment’?

There is an increasing trend, in construction and engineering procurement, to include an assessment and evaluation of behavioural characteristics of key individuals within tendering teams.

Behavioural assessment is most likely to be relevant in the context of complex projects which will rely heavily on collaborative behaviour.  Behavioural assessment has, for example, been used in the context of large scale alliance procurement within the utility sector, where success depends on good relationships working well over a prolonged period.  

Legal constraints

UK law imposes procedural and substantive disciplines on procurement of works and services:

  • in public sector contracts, or where public finance is involved – by way of the Public Contracts Regulations 2015; and
  • in the water, electricity, transport and telecommunications sectors – under the Utilities Contracts Regulations 2016 (which will replace the Utilities Contracts Regulations 2006 with effect from 18 April 2016).

Commonly referred to as the “OJEU rules”, these items of secondary legislation respectively  adopt the EU Utilities Directive 2014/25/EU and the EU Public Contracts Directive 2014/24/EU  into UK law.  Provisions relevant to behavioural assessment are substantially consistent as between these two sets of regulations, which are referred to collectively below as the “Regulations”. 

The legal requirements summarised in this article are drawn from the Regulations and are therefore specific to public contracts and procurement by utilities.  However, they reflect general good practice and therefore still potentially provide useful guidance where the Regulations do not apply - for example, to the tendering of a major private sector project or framework contract outside the utilities sector.

Key principles

The Regulations are intended to provide a “level playing field” where all bidders are given equal treatment.  The guiding principles of the Regulations are:

  • transparency;
  • objectivity;
  • consistency.

Where evaluation of bids includes an assessment of behaviours and matters of culture and approach – all of which can naturally give rise to subjective interpretation - it is particularly important that these principles are observed. 

Timing

At what point in a tender process should behavioural assessment be carried out?

Under the Regulations, procurement falls broadly into two stages, namely:

  • Selection:  an assessment of bidders’ capability and resource to perform the contract in question, based on  experience, resource and track record, typically as a basis for shortlisting
  • Evaluation:  the consideration of how particular bidders will perform the intended contract, in order to determine the “most economically advantageous tender” for contract award (see Regulation 67(1) of the Public Contracts Regulations 2015 and Regulation 82(1) of the Utilities Contracts Regulations 2016).

The distinction between selection and award criteria is important, because challenges have been brought on the grounds that a contracting authority has considered selection criteria at the evaluation (ie award) stage of the public procurement process.  Selection criteria can only be used before the bidders are short-listed and may not be repeated at the award stage: Regulation 58(19) of the Public Contracts Regulations 2015.

The distinction between these two stages is relevant to behavioural assessment.   General issues of attitude and culture can be relevant to an organisation’s general suitability for a particular project, but if these issues are addressed as part of a shortlisting exercise then they should not be reassessed at evaluation stage.  If the shortlisted bidders’ behaviours are to be assessed by way of simulation exercises, interviews and questionnaires in the later stages of a procurement then issues of corporate “culture” and attributes of individual personnel should not be examined at the initial selection stage.

Ensuring objectivity in behavioural assessment

  • Required behaviours can usefully be split out into component parts so that they are easier to test objectively.  For example, if it is appropriate to test a person’s likely behaviour in a team leadership context, that can be broken down to assess separately that person’s clarity of vision, their communication skills, their willingness to take responsibility for mistakes, their ability to delegate and the manner in which they handle criticism.  More precise definitions aid incisive and objective assessment and help bidders to understand what is required.
  • In order to maximise objectivity it is useful to test each required characteristic several times, by way of different exercises.
  • There should be multiple opportunities for assessing each individual.  Each individual should ideally be seen by different assessors in rotation and on several occasions, in order to provide the fairest opportunity for each bidder to present a balanced picture of its team.
  • It is important to be very clear that what is being assessed is a person’s specific behaviours, directly associated with the relevant project or contract.  Behavioural assessment must not be about making a judgement on an individual as a person.  A purchaser’s evaluation team must constantly be on guard against making subjective judgements based on personal preference, conscious or otherwise.
  • The assessors should ideally not all be drawn from the purchaser’s project team.  It may be useful to involve people from other parts of the client organisation and also external assessors.  The point is to maximise objectivity by scoring from alternative perspectives and different disciplines.
  • It is important that those doing the scoring are completely familiar with the rules and the scoring system.  Some form of training or briefing for assessors in advance of the assessment is key to consistency.
  • The assessors need a common understanding of what different scores indicate and what “good” looks like.  The scoring matrix must be clear and ideally it should be simple and transparent to bidders.
  • Once the scores are recorded they need to be moderated objectively to make sure that any extremes are understood.  Disciplines should be in place to ensure that moderation has no tendency towards verification or manipulation of results.
  • It is essential to have a clear audit trail through the procurement process.  This includes keeping a record of all scores, including (particularly in the context of behavioural assessment) not just the moderated end result, but all individual assessors’ notes and markings. 

Evaluation criteria

Behavioural assessment is most commonly carried out at the evaluation stage of the procurement process.  The Regulations require purchasers to disclose their evaluation criteria to bidders.  Where evaluation criteria are broken down into sub-criteria, these must be disclosed as well.  Behavioural assessment can therefore only be used as part of a bid evaluation process to test criteria that have been disclosed to bidders.  

Evaluation criteria must in turn be clearly linked to contract terms and outputs.  Behavioural assessment cannot be used to assess general issues of culture and behaviour unless these aspects are clearly relevant to performance of the contract being procured. 

Tender documentation must be absolutely clear about what specific behaviours are to be exhibited in order to achieve successful contract delivery.

Balance

Both the behavioural criteria being tested and the relative weight given to those scores must be linked and proportionate to their likely impact on contract performance.  So, for example, a high weighting of 20/25% associated with behavioural criteria is unlikely to be appropriate unless successful contract delivery depends on a long term collaborative relationship.  In the context of a large scale engineering procurement, styles of management and communication are relevant, but must also be weighed against important factors such as technical offering and price.

An alternative approach is to carry out behavioural assessment without allocating any specific score or weighting to this.  Instead, the output of behavioural assessment tests is used simply to moderate information gained through other aspects of a procurement concerning.

Behavioural assessment can be aimed to test corporate culture and team approach, but will essentially involve an examination of individuals.  Realistically, individuals move between organisations and a project team put forward at bid stage is unlikely to remain unchanged through the life of a project or framework of significant duration.  This imposes some caution on allocating an excessively high proportion of scoring on behavioural elements.

Bid teams can change during the course of a lengthy procurement exercise.  If there is any possibility that individuals assessed as part of a behavioural exercise might be replaced before an appointment is made, then provisions need to be built into the process to ensure that other bidders are not disadvantaged by modifications within their competitors’ teams.   The safest solution may be to re-run behavioural assessment for new team members if the procurement timetable permits this.  However, there should not be an opportunity for a bidder to improve its overall score by replacing personnel.

Useful disciplines for purchasers

  • The Regulations require “all procurement documents” to be made available on publication of a Contract Notice (see Regulation 58(19) of the Public Contracts Regulations 2015 and Regulation 73 of the Utilities Contracts Regulations 2016). 
  • The criteria against which bids will be assessed – and the respective “weightings” applied to those criteria must therefore have been settled before the Contract Notice is published. 
  • The requirement for evaluation criteria to be linked closely to contract outputs emphasises the need for the specific requirements of the contract as to performance and delivery to have been thought through carefully by the point at which the Contract Notice is issued.  If invitation to tender documentation indicates that behavioural factors are to be assessed then associated contractual incentive provisions should also have been considered.
  • It is crucial that those who will ultimately endorse the appointment of the successful bidder understand how that bidder will be selected – and, more particularly, that they are comfortable with the evaluation criteria to be used and the relative importance attached to each of these.  This is likely to require detailed engagement and dialogue with internal and external stakeholders.
  • Once evaluation criteria have been disclosed to bidders, these criteria cannot be changed.   There is therefore no scope for a purchaser to modify the application of these criteria if objective scoring based on published criteria and weightings yields unexpected results.
  • Early and meaningful dialogue with bidders to explain the benefits sought from behavioural assessment by reference to contract outcomes can aid the  procurement process by helping contractors to prepare more effectively.  Regulation 40 of the Public Contracts Regulations 2015 and Regulation 58 of the Utilities Contracts Regulations 2016 specifically permits pre-procurement consultation, in order to inform potential suppliers and to seek their input in advance of issue of a Contract Notice.

Objectivity and equal treatment

In order to comply with the Regulations it is important to ensure that each element of a behavioural assessment process is administered and scored in a manner which is objective and accountable and which treats all bidders equally. 

Who should be assessed?

The requirement to link evaluation criteria to contract outcomes and outputs should confine behavioural assessment to the actions and aptitudes of individuals who will be responsible for contract delivery.  Regulation 67(3)(b) of the Public Contracts Regulations 2015 and Regulation 82(3)(b) of the Utilities Contracts Regulations 2016 confirm that evaluation of bids may now include as assessment of “organisation, qualification and experience of staff assigned to perform the contract, where the quality of staff assigned can have a significant impact on the level of performance of the contract”.  

Pointers for bidders

  • It is critical from a bidder’s perspective that invitation to tender documentation is read thoroughly, particularly where a tender process involves an element of behavioural assessment.
  • If there is any doubt as to the precise purpose of a behavioural stage in an assessment process, the bidder should ask for this to be verified.  Behavioural assessment must be linked to published evaluation criteria, which must in turn be associated with contract delivery.  Bidders are therefore entitled to seek guidance on the precise purpose of behavioural tests and on the linkage between the behaviours sought and successful contract delivery.
  • It is important that all individuals being assessed understand the purpose of each exercise and the rules relating to it.  They should all be well-drilled in the requirements of the intended contract and the impact of specific behaviours on contract outcomes, so that responses and attitudes are geared towards that, rather than to a perception of “saying the right thing”.
  • Bidders should put forward for behavioural tests appropriate individuals who are likely to be involved in contract delivery following selection.  Involving people focussed on “sales” or business development roles is unlikely to produce high scores.
  • The use of behavioural assessment has the potential to be replicated with second and third tier suppliers, driving culture on a wider scale through the entire supply chain.  If a contractor’s ability to perform under a contract to maximum advantage depends on the culture and approach of its sub-contractors and suppliers then it may be appropriate for an element of behavioural assessment to be used by that contractor in supply chain selection.

This article appeared in on 1 February 2016 in Construction Manager.

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