The Procurement Bill – a first look

Fri, 13 May 2022

The first draft of the new Procurement Bill was published on Wednesday (11 May).

The legislation is designed to repeal the Public Contracts Regulations 2015 and equivalent regimes for defence, utilities and concessions procurement, and to replace them with a single Procurement Act for the whole of the United Kingdom – which will no longer correspond with EU public procurement rules.

The Bill is likely to be amended during the Parliamentary process before it is enacted. Once enacted, it will be brought into force by secondary legislation (rather than entering into force immediately), and the UK Government has said that it will provide contracting authorities with a six month adjustment period.

As a result, the current draft merely provides an indication of the “direction of travel”. But some of its provisions involve relatively significant differences from the current EU-derived public procurement regime. This article highlights some potential points of interest.

A different approach to transparency

Clause 11 of the Bill (entitled “Procurement objectives”) lays down a general duty of equal treatment, but no general duty of transparency. Instead, transparency is required “piecemeal”. Most importantly:

  • A contracting authority will be required to publish a “tender notice” to start a procurement, which must contain information (and be accompanied by “associated tender documents”) that will be specified in subordinate legislation (cll. 20, 86). The contracting authority will have to conduct the procedure as it is described in the tender notice and associated documents (cl. 19). Precisely what information about the process has to be given to bidders at the start of a procurement, which will then bind the authority, remains to be determined.

  • At the outcome of a competitive procurement, a contracting authority will be required to provide bidders with an “assessment summary” that contains “information about the contracting authority’s assessment” of the bidder’s submission and (if different) the winning submission. An authority will also be required to publish a “contract award notice”, again with contents to be specified in subordinate legislation (cl. 48). What information has to be given to bidders at the end of a procurement thus also largely remains to be determined – given that, based on the current wording, the “assessment summary” may not have to be particularly detailed.

  • The Bill contains other specific obligations to provide and publish information, some of which are new – such as the clause 51 obligation to publish a “contract details notice” after concluding a public contract (as well as, in some circumstances, to publish the contract terms) and the clause 66(5) obligation to publish information about breach of a public contract by a supplier.

Depending on the content of the subordinate legislation referred to in the Bill, this different approach to transparency may have important consequences for bidders’ ability to challenge procurements. There may be an important question as to the existence or extent of any duty to provide reasons (such as led to the successful challenge in Lancashire Care [2018] EWHC 1589 (TCC)). It could of course be argued that, in line with EU jurisprudence, the general duty of equal treatment “implies” a general obligation of transparency in order to enable scrutiny as to whether equal treatment has been ensured (e.g. Case C-458/03 Parking Brixen at [49]), although this would perhaps, in turn, raise questions about the domestic approach to statutory interpretation after Brexit.

Different procedures

The Bill introduces new rules as to the design of a public procurement process.

In many respects, the new rules introduce new flexibility. Broadly, a contracting authority will be entitled to run an “open procedure” (which is a “single-stage tendering procedure without a restriction on who can submit tenders”) or “such other competitive tendering procedure as the contracting authority considers appropriate” (cl. 19). The contract is to be awarded to “to the supplier that submits the most advantageous tender”, and this is to be judged by reference to “award criteria” that can be drawn very broadly – and would apparently permit price-only, quality-only or even perhaps social-value-only approaches as well as “blended” approaches (cll. 18, 22).

For “light touch contracts” (the scope of which is also to be determined in subordinate legislation), there will be a higher financial threshold as at present (Sch 1); however even for contracts above the threshold, there will be no minimum time periods during the process (cl. 52), no mandatory standstill period following award (cl. 49(3)) and no apparent restrictions on modification of the contract (cl. 69(2)).

However, there are also additional duties. For example, contracting authorities will be obliged to consider whether each procurement can be subdivided into lots (cl. 17). There will also be a general obligation to include KPIs (where appropriate) in contracts above a specific financial threshold (starting at £2m, but subject to change) and to assess performance against KPIs on an annual basis and publish related information (cl. 66).

Post-award, legal challenges and enforcement

As noted above, after reaching an award decision a contracting authority will be required to provide assessment summaries to bidders, and thereafter publish a contract award notice (CAN). There will be a mandatory standstill period that runs from the publication of the CAN (not from provision of assessment summaries) during which the awarded contract cannot be concluded. The mandatory standstill will last for 8 working days, rather than the 10 calendar days under the current legislation – which, if nothing else, may have the potential slightly to improve the Christmas period for procurement litigators.

The provisions for legal challenges remain broadly similar, but with tweaks. A supplier that has suffered, or is at risk of suffering, loss as a result of a breach of requirements of the legislation will be entitled to sue in civil proceedings in the High Court (cl. 89). The general 30-day time limit for challenge remains (cl. 95), as does the “long-stop” of 6 months for seeking the “setting aside” of a concluded contract (although the precise application of the long-stop is different from the current time limits for seeking a declaration of ineffectiveness). There will continue to be an automatic suspension on concluding the contract in the event of a challenge, but it will be triggered only if proceedings are brought (and the authority is notified of them) during the standstill period (cl. 90(3)) – potentially placing that improved Christmas period at new risk.

Claimants will retain the ability to seek damages, although the Bill provides no clarification of what losses are recoverable (cll. 92, 93). If the wording of these provisions remains unchanged, the legislation may re-open the question as to whether (or when) lost profits from the contract are recoverable on a loss of a chance basis by a bidder which was unsuccessful.

Claimants will also retain the ability to seek a declaration of ineffectiveness (now known as “an order setting aside” the contract). This will be possible if a “set aside condition” is met. The “set aside conditions” are slightly different from the existing grounds for ineffectiveness – for example, failure to publish a (prior) “tender notice” does not give rise to setting aside, but failure to publish a (post-award) “contract award notice” does (cl. 94). Perhaps most importantly, setting aside will be possible if “the breach became apparent only after the contract was entered into”, which is a potentially broad category and seems likely to give rise to significant litigation.

The Bill includes a separate Part entitled “Procurement oversight”, providing for investigations by the “appropriate authorities” of compliance with the procurement legislation. This seems designed to enable scrutiny of contracting authorities’ general practice (or perhaps their conduct of very large-scale procurements), and seems relatively unlikely to lead to the overturning of individual award decisions in normal circumstances (see e.g. cl. 97(3)).

Devolution and divergence

As noted already, the Procurement Bill is designed to apply across the United Kingdom. However various powers to make subordinate legislation (among other things) are granted to the devolved administrations (as “appropriate authorities”), with the consequence that the Bill seems likely to bring about substantially different procurement regimes within the different nations.

For example in relation to Wales, the Welsh Ministers will set strategic priorities for (most) Welsh contracting authorities in the “Wales procurement policy statement” (cll. 11, 99(3) and (4)). The Welsh Ministers will also have power to make subordinate legislation as to the “notices, documents or other information to be published or provided” for procurement purposes, and thus to lay down a separate transparency regime for Wales (cl. 86). This may in turn mean different arguments in any legal challenges to Welsh procurement decisions – which must normally be determined by the Welsh courts (CPR 7.1A).

The Welsh Ministers will be entitled to set different financial thresholds (Sch 1, para. 3), and to determine a separate list of “light touch contracts” for Wales, with what appears to be significant flexibility (cl. 8). There seems to be a good chance that these powers may be used to remove a significant proportion of Welsh healthcare procurement from detailed regulation, given that the power in clause 108 to disapply the legislation to NHS procurement applies only to England.

Conclusion

These are merely some of the interesting points in the new draft legislation. The Bill would also make important changes to the process and substance of contract modifications (for example), and those provisions merit close reading.

All these matters are provisional, as the Bill is likely to be amended in the course of scrutiny in Parliament. The Government has indicated that any new regime “is unlikely to come into force until 2023 at the earliest”.

Jorren Knibbe is a barrister and mediator practising in public contracts and procurement.

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