Member Article

Fleur Turrington, Jennifer Clarke & Aimee Cook work through the pros & cons of the Procurement Bill.

While the UK could continue following the four distinct sets of procurement regulations (the Public Contracts Regulations 2015, SI 2015/102; the Utilities Contracts Regulations 2016, SI 2016/274; the Concession Contracts Regulations 2016, SI 2016/273; and the Defence and Security Public Contracts Regulations 2011, SI 2011/1848), the government has chosen post-Brexit to consolidate the regulations into a new Act of Parliament.

The Procurement Bill is of interest to public sector bodies looking to tender works, services or supplies, as well as private sector organisations bidding for public contracts or involved in the supply chain.

As the Procurement Bill passes from the House of Lords to the House of Commons, we look at the extent to which the Bill is likely to change the existing public procurement regime, and highlight some examples of pros and cons to be aware of.

Pros

Shift in contract award criteria

• There is a move away from contracts being awarded in accordance with ‘the most economically advantageous tender’ to ‘the most advantageous tender’.
• This could mean that there is not the same driver to place financial impacts ahead of other, perhaps more important, criteria for the contracting authority such as environmental, social and governance (ESG) concerns.
• This could be beneficial for a wider range of suppliers who have different strengths to offer. As well, although price will always be important in public contracts, it may therefore see suppliers not having to underbid to win the contract where other criteria are of equal or more importance to the contracting authority.

Duration of standstill period

• There will be a change to the mandatory standstill period from ten days to eight working days starting with the day on which a contract award notice is published in respect of the contract.
• Although this is still a very tight deadline for a challenge to be fully considered and brought, this is an improvement to the current regime: the change from just ‘days’ to ‘working days’ is significant because the clock no longer ticks over the weekend and bank holidays, meaning that potential challengers have longer to gather information and work with legal teams to formulate a challenge.

Cons

Information provided on contract award

• The Bill provides that (subject to certain exceptions) before entering into a public contract, a contracting authority must publish a contract award notice stating that the contracting authority intends to enter into a contract and containing any other information that is yet to be specified in regulations. This is a departure from the existing regime where contract award notices are required to be published after the contract is entered into.
• Before publishing the notice, the contracting authority must provide an assessment summary which contains information about the assessment of the tender and, if different, the most advantageous tender. Although we don’t yet know exactly what will have to be included in assessment summaries, this does sound more limited than the existing requirements to provide information related to the ‘characteristics and relative advantages of the tender selected’. This could be a pro for contracting authorities in terms of the detail they are required to provide, but from the perspective of a losing bidder who may be assessing if they have good robust grounds to challenge a decision, if less information is provided that may be very difficult to assess and would therefore clearly impact the ability to bring a procurement challenge. At a time when there are reports of VIP lanes in public procurement, a lack of scrutiny cannot be helpful.

SME ability to challenge

• Although the Procurement Bill contains new additions to assist the participation of small and medium-sized enterprises (SMEs) in procurement, such as allowing suppliers to provide alternative evidence where audited accounts are not available in order to clear the financial records hurdle and only requiring suppliers to put in place the required insurance cover at contract award rather than incurring the costs of that up front, there are still blocks on the ability of SMEs to challenge.
• As well as the point mentioned above concerning the potentially limited information provided on contract award, the court fees for issuing a procurement challenge are high £10,000 for any claim with a monetary value above £200,000, and there do not appear to be any proposals to make changes to benefit SMEs. Together with the costs of the urgent legal advice and the preparation of court proceedings, we expect SMEs to continue to be dissuaded from pursuing remedies for breaches of the procurement rules.

Conclusion

Features of the new procurement regime such as those set out above, as well as streamlined and flexible procurement procedures and a new Procurement Review Unit, arguably have the potential to light the way towards a better functioning system, where fewer challenges arise.

At the same time, it is undeniable that breaches of the rules will continue, and bidders will continue to issue challenges in the courts. With that in mind, the Procurement Bill is unfortunately looking like a missed opportunity to address the obstacles to bringing and resolving procurement challenges more efficiently.

 

This article was first published in New Law Journal

 

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