Albert Sánchez Graells, Senior Lecturer in Law, University of Bristol*

A recent Guardian article by Heather Stewart revealed that the UK Department for International Trade is seeking bids from tech companies that demonstrate the right ‘cultural fit’. This requirement, interpreted as a way to determine support for Brexit, raises concerns about potential bias and unfair treatment. This practice, in my view, goes against both EU and UK public procurement regulations. While I aim to be straightforward in this analysis, the technical complexities of this economic law area necessitate some detailed explanation.

These tenders include ‘cultural fit’ as a criterion, worth 15% of the total score, requiring companies to express their dedication “to the best possible outcome for the United Kingdom following its departure from the European Union.” Other sub-criteria within this category focus on the company’s ability to stay focused, deliver under pressure, and show enthusiasm for working in a dynamic environment. Evaluation is based on written proposals and presentations.

These sub-criteria raise concerns regarding objective assessment, potentially favoring those who can craft a compelling narrative rather than demonstrating true capability. Additionally, the criteria’s focus on future behavior makes it difficult to monitor during contract execution, potentially rewarding companies that excel at making promises rather than delivering results.

Moreover, these criteria lack a strong connection to the contract’s core subject matter and seem more focused on general company traits that should be assessed during the selection phase, not evaluation. Worryingly, these criteria apply broadly to the tenderer and not the specific team assigned to the task. This becomes particularly concerning when considering factors like a company’s “commitment” to post-Brexit outcomes and “enthusiasm,” which are inherently subjective and impossible for the contracting authority to objectively assess.

These issues make the ‘cultural fit’ questions unsuitable as evaluation criteria under current regulations. Notably, the legality hinges on the contract value, with different rules for contracts above and below certain thresholds. The Department for International Trade aims for a contract value not exceeding £50,000 but is open to higher bids. This ambiguity necessitates compliance with the strictest rules, typically applicable to higher-value contracts. However, let’s examine both scenarios.

Contracts below thresholds

Regulations mandate that contracts below a certain value must adhere to the Public Contracts Regulations 2015, specifically Regulation 111, and general EU law principles like non-discrimination, equal treatment, transparency, and competition. Essentially, contracting authorities can only pose questions related to a company’s suitability if they are directly relevant to the contract and proportionate in scope. Guidance from the Crown Commercial Service emphasizes that any project-specific questions should focus on the supplier’s technical and professional capabilities, primarily determined by their past performance.

These regulations imply that evaluating a company’s reliability should be based solely on their prior experience and its relevance to the current contract. Asking companies about their dedication to post-Brexit UK outcomes or enthusiasm for working with the Department for International Trade on Brexit-related analysis strays from these requirements. These criteria are neither directly linked to the contract’s core subject nor verifiable within the framework of technical and professional ability assessments.

This inability to objectively assess commitment and enthusiasm during the tender evaluation process raises concerns about potential breaches of fundamental EU law principles, particularly non-discrimination. If this sub-threshold contract has cross-border implications, the use of ‘cultural fit’ criteria would be even more problematic.

Contracts above thresholds

When dealing with contracts exceeding a certain value (currently above £106,047 for services), the use of ‘cultural fit’ criteria becomes even more problematic. While this is only relevant if the final contract significantly exceeds the initial £50,000 estimate, it’s crucial to discuss in case the Department for International Trade, or the UK government as a whole, is testing ‘cultural fit’ as a wider procurement strategy. ‘Cultural fit’ could be employed as either a selection criterion (vetting companies broadly) or an award criterion (assessing the specific offer and the proposed team).

If used for selection, ‘cultural fit’ must comply with Regulation 58 of the Public Contracts Regulations 2015 and Article 58 of Directive 2014/24/EU, considering the case law of the Court of Justice of the European Union (CJEU). These regulations stipulate that assessing technical and professional capabilities should focus on ensuring companies have the necessary resources and experience for satisfactory contract performance. Crucially, any criteria used must be directly relevant and proportional to the contract’s subject matter.

‘Cultural fit’ criteria don’t align with these requirements. The CJEU’s ruling in the ‘Dutch coffee’ case established that selection criteria based on general company policies or attitudes (in that case, sustainable and socially responsible practices within the coffee industry) are not permissible. Applying this precedent, it’s clear that the Department for International Trade’s ‘cultural fit’ criteria, particularly those assessing commitment to specific outcomes or enthusiasm, would similarly clash with UK and EU procurement laws.

Alternatively, framing ‘cultural fit’ as a “quality-based” award criteria falls under Regulation 67 of the Public Contracts Regulations 2015 and Article 67 of Directive 2014/24/EU, again considering CJEU case law. Among other considerations, such as the link to the contract’s subject matter, award criteria must enable effective competition and be verifiable to ensure fair assessment.

Once more, the inability to objectively verify commitment or enthusiasm makes ‘cultural fit’ unsuitable as an award criterion. This aligns with the CJEU’s stance against criteria that grant contracting authorities excessive discretion.

Final remarks

The UK Government’s policy of using ‘cultural fit’, whether applied broadly or specifically by the Department for International Trade, is a clear violation of both UK and EU public procurement regulations.

The core issue lies in the difficulty of replacing in-house expertise with outsourced consultancy. While the government might have more control over the civil service’s work (a separate debate altogether), this influence diminishes when outsourcing advisory roles. Procurement regulations allow the public sector to define the services needed, implying those services must be clearly definable. When decisions to contract hinge on elements that can’t be explicitly outlined in a contract, public procurement becomes an inappropriate tool. The UK government may face challenges in building internal expertise or managing the civil service, but procurement will not provide a solution.

Barnard & Peers: chapter 27

Art credit: Peter Brookes

*Reblogged from the ‘How to Crack a Nut’ blog