The Procurement Bill: Recent changes following exit from House of Commons Committee Stage

The Procurement Bill is nearing the end of its passage through Parliament and is expected to become law in Spring 2023.

Draft Secondary Legislation is expected to go out for consultation in the next few months, putting meat on the bones of some important part of the Bill, including the heavily revised procurement notices regime and information to be shared via the online portal. The Cabinet Office’s training offering to Contracting Authorities is heading towards finalisation. The new regime is currently still on course for “go-live” in Spring 2024 (based on current Cabinet Office aspirations communicated at the recent Procurement Reform Conference).

This article highlights four important changes in the current draft Bill against the version that exited the House of Lords. If you are interested in reading a summary of where we have come from, read our previous article on The Procurement Bill: Key changes as it leaves the House of Lords.

There are a number of substantive changes, some made by the Lords and retained, others added by the Commons or reversing changes made in the Lords. Other important changes include clarification of the test for abnormally low tenders (ALTs), and a new provision relating to international trade disputes. However, we focus here on what we think are four key areas of change. By far the most significant change is likely to be the new debarment regime.

We summarise the changes below but you can see a ‘redline’ of the key relevant sections of the draft Bill discussed below by clicking here.

Section 13 – National Procurement Policy Statement (NPPS)

The change here is one example of something wider: the Commons have reversed a number of changes inserted by the Lords, bringing the text of the Bill closer to its original proposed form. A particularly notable aspect of this is Section 13, under which the Government will publish iterations of its National Procurement Policy Statement (NPPS) – setting out its strategic and policy priorities for Government procurement – and Contracting Authorities will be required to “have regard to it” when undertaking acts covered by the Bill. 

An insertion by the Lords into the previous draft Bill was that, before publishing its NPPS, the Government had to give “due regard” to high level principles such as promoting the public good, value for money, transparency, integrity, fair treatment and non-discrimination. This has now been removed. What remains is a requirement that the Government must first carry out appropriate consultations and make any necessary changes in view of the responses.

This is an understandable change. Critics of the amendment pointed to the risk of mixing policy – which may change with the Government of the day – and the legal framework of the Bill – which is designed to withstand the test of time. The remaining text of Section 13 strikes a balance which enables the Government of the day to inject current policy into the factors to which a Contracting Authority must have regard, and to update those factors by subsequent revisions to the NPPS.

Section 56 – Technical Specifications

The “rules of technical specifications” are an important part of constructing a procurement:

• ‘Conditions of participation’ (which under the new Competitive Flexible Procedure no longer have to be deployed at SQ stage so long as they are tested prior to Award) may test a suppliers “technical ability to perform the contract (Section 22(1), but must not “break the rules on technical specifications” (Section 21(4)).
• When detailing its requirements for a procurement, Contracting Authorities “must be satisfied that” those requirements are “sufficiently clear and precise” and “do not break the rules on technical specifications” (Section 21(6)).
• Similarly, in setting Award Criteria, a contacting authority “must be satisfied that” the award criteria “relate to the subject-matter of the contract…are sufficiently clear, measurable and specific…and do not break the rules on technical specifications” (Section 23(1)).
• There are equivalent rules for Dynamic Markets (the new name for DPSs) and Frameworks (Sections 36(3) & 46(4))

Section 56 of the current version of the Bill (which is unlikely to change on this point), now provides that:

• Procurement documents may not refer to a UK Standard unless either “the standard adopts an internationally recognised equivalent” or “there is no internationally recognised equivalent”. 
• In either event, it will be mandatory for the Contract Authority to provide that bids (“tenders, proposals or applications”) which “the Contracting Authority considers satisfy an equivalent standard” will be treated as satisfying the UK Standard.
• The Contracting Authority’s consideration of whether the other standard is equivalent “may” take into account “the authority’s purpose in referring to the standard.”
• The Contracting Authority “may require certification, or other evidence, for the purpose of satisfying itself that a standard is satisfied or equivalent.”

These additions bolster existing provisions on equivalence. For example, the Bill already provided that conditions of participation could not “require particular qualifications without allowing for their equivalents”. However, it creates a counterbalance to the calls from various bodies to use the Bill as a driver for the “Buy British” agenda. These provisions also pose a potentially significant burden to a Contract Authority. They must accurately identify whether a UK Standard “adopts an internationally recognised equivalent” (presumably from reading the Standard and/or the literature surround it) and also give clear thought to why they are asking for the UK Standard and therefore which other standards they might consider equivalent in that context. The flipside is that it may promote a greater plurality of bidders.

Section 54 – Time limits

There are small but important changes to time limits. The core of Section 54 is still the obligation for the Contracting Authority to “have regard to” a range of practical factors when setting time limits (such as the nature of the procurement, its complexity, a need for site visits, and a need for bidders to be able to line up sub-contractors). Nevertheless, the minimum time limits are important, not least for urgent procurements outside of the mechanisms for Direct Award.

The notable additions at Committee stage are special time limits for utilities and non-Central Government contracts. Without these additions, the relevant time limits would be somewhere between 25 and 35 days. However, provision is now made so that there is no minimum period for a procurement of a utilities contract (or contract awarded by a contracting authority that is not a central government authority) which is subject to a “negotiated tendering period”, and a minimum period of merely 10 days where the procurement is only open to “pre-selected suppliers”.

Sections 62 to 66 – Debarment

Debarment was a new concept brought in by the draft Bill, and this part of the Bill has now seen something of an overhaul in terms of how bidders can object to their potential inclusion on the Debarment List. In summary, that challenge mechanism for a bidder to avoid being put onto the Debarment List will work much like the current regime for challenging the outcome of procurements, with a standstill period, and the potential for suspension during the challenge. However, the discretionary nature of the suspension from inclusion on the List during the challenge, and the limited remedies available to the challenger, are notable differences.

The Debarment Regime will create a single accessible public Debarment List, maintained by the Government, containing suppliers who (with limited exceptions) will be barred from competing for future covered procurements. The Debarment List will list both “excluded suppliers” (being those to whom a mandatory exclusion ground applies preventing them competing) and “excludable suppliers” (being those to whom a discretionary exclusion ground applies and so may be prevented from competing). Inclusion on the list is therefore potentially highly damaging for the bidding organisation.

Before being placed on the Debarment List, a Minister must first conduct an investigation, giving the relevant supplier notice that they are being investigated and the opportunity to make representations. As part of this process, the supplier may be required to provide relevant documents (in their possession or control) and/or “give such other assistance” that is reasonable in the circumstances. Once the investigation has concluded, a report will be published (subject to national security or public interest concerns) which will include whether and for what reason(s) the supplier will be entered onto (or will be kept) on the debarment list by virtue of a mandatory or discretionary exclusion ground.

The latest changes provide a new process for suppliers to challenge their inclusion on the debarment list:

• Debarment standstill period (Section 62(6)) – A Minister must give notice to the supplier of its decision that it intends to place them on the Debarment List. However, there must then be a minimum period of eight working days (beginning on the day of the notice) during which the supplier must not be placed on the debarment list.

• Legal challenge during standstill (Section 62(7)) – During the standstill period, a supplier has the option make an application for ‘interim relief’. If such a challenge is made within the standstill period then the supplier cannot be placed on the Debarment List until those ‘interim relief’ proceedings are “determined, discontinued or otherwise disposed of”. However, these ‘interim relief’ proceedings only relate to the granting of interim relief, not for challenging the substantive decision, for which there is separate provision (see below).

• However, despite the clear wording of Section 62(7) preventing a Minister from entering a supplier onto the debarment list, the ‘interim relief’ process provided for in Section 63(3) states that during the challenge period the Court “may” (rather than “must”) “suspend the Minister’s decision to enter the supplier’s name on the debarmentlist”. So it seems unclear whether the suspension on entry onto the list is mandatorily suspended or discretionary.

• Interim relief hearing (Section 63) – At the interim relief hearing, the court “may” (rather than “must”) make an order to suspend entry onto the Debarment List until conclusion of the substantive appeal proceedings against the decision to enter the supplier onto the List or, where those proceedings have not been brought, a period of 30 days within which that challenge could be brought. In considering whether to make such an order, the court must have regard to a new test for relief which requires consideration of —

(a) the public interest in, among other things, ensuring that public contracts are not awarded to suppliers that pose a risk,

(b) the interest of the supplier, including in relation to the likely financial impact of not suspending the decision, and

(c) any other matters that the court considers appropriate.

• Substantive appeal (Section 65) – This is different from ‘interim relief’ in that it is a substantive appeal against the debarment decision, either before entry onto the list, or potentially after that entry has been made, although in either case subject to the limitation period below.

• Appeal: 30 day limitation period (Section 65(2)) - Any legal challenge to the decision of a Minister to enter a supplier onto the debarment list can only be made within 30 days of the date the supplier “knew or ought to have known of the Ministers decision”. Once this period expires, no appeal can be made, although the Minister retains a discretion to remove the supplier from the debarment list (see below). This limitation period may be hard to apply in practice. It seems the latest the clock could start would be when the Minister sends notification of their decision (see above). However, query whether prior indications in the days before that formal notice might start the clock running earlier than expected.

• Appeal: Grounds for challenge (Section 65(2)) - A challenge “may only be brought on the grounds that, in making the decision, the Minister made a material mistake of law”. Note that, on the face of the current drafting, suppliers may not be prevented from challenging based on a material mistake of fact. 

• Appeal: Remedy (Section 65(4)) - If the Claimant succeeds with the appeal, the court “may” (not must) set aside the Minister’s decision and/or award compensation but that compensation is strictly limited to only compensating the supplier for any wasted costs incurred tendering for a contract it was subsequently excluded from due to the debarment decision. Of course, the quantum of that compensation will depend on how many contracts the bidder was bidding for, and how much cost had been committed to those bids at the point the contracting authority(s) decided to exclude the relevant bidder.

• Discretionary power to remove or curtail an entry (Section 62(8)) – Any entry onto the Debarment List must be time limited; and that time must be stated in the List. However, a Minister can discretionarily decide to remove a supplier from the List at any time or revise the future date from which that entry will be removed.

Given the severe bidding and reputation consequences of entry onto the Debarment List, it is probably right that the Bill should contain interim relief and appeals mechanisms. However, the mechanisms now provided are quite narrow in scope and at the same time have fairly involved processes. The challenge window is small; the available grounds for appeal are limited to mistakes of law and there are no enhanced disclosure provision to ensure the bidders is given from the outset the materials relied on by the Minister in order to mount an effective challenge. The available damages are limited to wasted tender costs.

It will be important for suppliers to act fast if they are notified of an investigation. The representations and documents provided at this stage will be vital in avoiding an adverse report being published. And if a debarment decision cannot be avoided, prompt action and decision-making will become even more important to mitigate and/or reverse the impact. There will be less than eight days to lodge an application for interim relief and only a further 22 days to digest the Minister’s reasons and consider bringing substantive proceedings.

If you found this article helpful, continue to look out for new content on our P.A.T.H (Procurement Act Training and Help) webpage, which is regularly updated to provide insight and assistance for those preparing for the Procurement Bill’s implementation.

This article was written by members of our Chambers Band 1 Ranked Procurement Team: Ian Tucker (Partner), Lloyd Nail (Senior Associate) and David Hine (Associate).