The Procurement Bill 2022 is making its way through the House of Lords and is expected to be introduced during 2023. It represents, in principle, a shift away from European governance of public procurement towards a UK set of priorities and was, consequently, held out as one of the changes in regulation which Brexit would facilitate. Having said this, the new regulations will remain subject to the WTO’s underlying Government Procurement Agreement, which the UK has signed up to in its own right, and which also underpins the European regime. As such, there is no clean sheet of paper from which to start and many similar themes from the existing regime remain present, even where the overlying drafting and (potentially) emphasis is due to change.
Proposed changes to the existing regime
Challenges to procurement decisions or processes are widespread and well established. In one respect that is a good thing – it means that active steps are being taken by those most interested to keep public sector procurement (i.e. the use of public powers and money) true. On the other hand, it gives rise to uncertainty, cost, potentially double payment from the public purse (to a successful claimant as well as to the winning bidder for the work done) and on occasions frustrating delays to worthwhile public contracts. The initial green paper recognised this and set out an ambition to tailor enforcement more effectively:
“192 The Government wants to bring about fundamental changes to the way procurement challenges are heard and managed, increasing accessibility for suppliers and reducing the impact of sometimes long and expensive court cases on contracting authorities, businesses and ultimately the taxpayer.”
During the consultations which followed (informal and formal) there was a debate about how effectively to manage enforcement (court processes or potentially tribunals) more effectively. The cost, rigour and speed were all debated, as was whether there should be a default towards
(a) allowing an authority to enter a contract promptly - subject to the possibility of having to pay compensation to unfairly treated bidders latter; or
(b) preventing authorities entering the contract until any challenge was resolved such that the correct outcome was reached – but at the cost of delay even to some properly run procurements.
i.e. in principle is it more important to allow public bodies to conclude their contracts quickly, or to check they are right, before they are concluded (potentially more slowly).
To a degree, the Procurement Bill stops short of making substantial changes following that consultation. While there may in future be another round of reconsideration of how challenges should be brought and managed, at this stage the Bill makes adjustments rather than wholesale change. On its face, it also does not seek to impose a default preference between prompt contracting and confirmation of accuracy. Whether there is a practical change may ultimately depend on how the courts interpret new requirements for assessing interim challenges to an intention to award.
Key enforcement and remedy aspects of the Bill
Many of the changes proposed are of a practical or procedural nature. In principle, it appears that any person/business who has suffered or may suffer loss or damage from a (flawed) procurement process or decision may bring a claim in the High Court (TCC). In some circumstances, bringing such a claim will automatically prevent award of the contract until the court has had a chance to decide whether it can be entered into. Similar remedies will be available of compensation, overturning the award or set aside (a new name for ‘ineffectiveness’) of a contract which has wrongly been entered into in certain circumstances. Claims will (in most cases) have to be brought within 30 days of awareness that the grounds of claim have arisen.
There is nothing in the Bill expressly to prevent a judicial review of the decision to award being brought in parallel (or instead) where a party has the standing and need to do so. The removal in the Withdrawal Act of the right to claim damages under the rule in the European law-inspired case of ‘Francovich’ only where a breach is ‘sufficiently serious’ also remains untouched.
Detailed changes do include:
Some changes to which bidders can take action to enforce a breach of procurement law. Previously this included entities from all EU countries and a number of others depending on existing (EU level) trade treaties. Policy in government was largely to treat bidders from all countries equally in this respect. The scope of these protections is now proposed to change with entities only having the right to claim if they come from countries with suitable trade treaties listed in the Bill and only in relation to the matters covered by those treaties. In practice, this may not make a big difference, however, it may be one to watch for particular bidding parties;
An assessment summary will be required before award in a procurement under the competitive procedure together with the contract award notice (which itself must be accompanied by information to be specified by the Minister). It is not yet clear what this will involve (it may be subject to orders to be made by the Minister from time to time) but it may change the dynamic in potential challenges where the bidder currently has very little information about how its bid was assessed. Obviously how onerous / useful this is going to be depends entirely on how much is provided for in this ‘assessment summary,’ and the information required to accompany a contract award notice. This may emerge in practice, through court decisions and through ministerial orders.
- Standstill and automatic suspension
The period during which the authority must wait before entering a contract goes from 10 calendar days to 8 working days. This is arguably fairer around holiday periods.
Automatic suspension apparently only applies if court proceedings are commenced and notified during this standstill period. Even if the contract has not been signed, if the claim is started or notified after the standstill the contract may be signed. It remains possible that this will encourage free-standing injunction applications to be brought where claims are brought after 10 working days where the contract has not yet been entered into.
- Whether to prevent the contract being signed
The court currently decides whether to lift an automatic suspension of the right to enter the contract (due to a claim being issued) on the basis of a modified version of the common law injunction test (known as modified ‘American Cyanamid’ – if you don’t know why, don’t ask). In place of this test, the Bill sets out a range of factors for the court to consider
In overview the court should consider:
(a) the public interest in (a) compliance with the law and (b) avoiding delay in supply. Like the current test, neither is given priority, although this test is not expressed as a balance of convenience between claimant and defendant (as currently) – only between competing public interests;
(b) Consider the interests of suppliers (this may be different to balancing them with the interests of the defendant, as currently) including whether damages are an adequate compensation for the claimant. There is no reference to damages being adequate for the defendant or to cross undertakings so these matters are potentially open for debate again before the courts;
(c) Other relevant matters – this could include anything and consequently its application will depend upon the early case outcomes and precedent from the courts.
Until this is tested by the courts, it remains unclear how different the outcome will be on the basis of this new test.
Although not strictly a matter of enforcement, the Bill brings in a new concept of debarment for entities which have breached mandatory or discretionary requirements. This is potentially quite an impactful issue for bidders who appear on this list. There is therefore a mechanism for entities to be removed from the list by application to the Minister if there has been a change of circumstance or new information is available since the debarment took place. If the application is refused there will be a right of appeal under a process to be set out in regulations (whose process is therefore not yet clear). Presumably any challenge to the final decision could go to Judicial Review. There is little detail at this stage on how the applications will be considered and appeals held. This again will need to emerge with new regulations, guidance and practice once the Bill is enacted. It is not impossible that Judicial Review might also be considered for the decision to put an entity onto the list in the first place.
Conclusion
The enforcement and remedies section of the Procurement Bill provides for a number of changes in language and emphasis with some practical changes to practice and potentially how the courts may approach claims which appear before them. However, it is not a wholesale change or switch to a new approach. Therefore, the degree to which these changes make a practical difference remains to be seen once guidance is given by the minister and early cases have been heard by the court to set precedent.
This article was written by Ian Tucker, a partner in our Procurement team.