Start by stating EXACTLY how you feel...
"I hate to do this/I find this really difficult to do/the one thing I dont like having to do in this job etc.... but have to tell you that you have not reached the required standard and therefore have to record a fail etc..."
IMHO best in the multi crew environment to be one on one when you have to fail anyone - its embarassing enough to fail without having peer group aroundl listening, unless of course you feel you need a witness that you have followed the correct procedure.
Good Luck