­The Road To Reform Section 9

Introduction

On 6 December 2021 the government published its response to the Green Paper on proposed reform to public procurement. A link to the response can be found here.

This is the ninth in a series of articles which the procurement law team at Bevan Brittan LLP are producing on what the proposed reforms will mean for the public sector and suppliers. Each article will give practical commentary on the different themes within the proposed reforms.

Here is a menu of what we will be covering, with links to each Part which will become live once each Part is published:

• Section 1 - An overview
• Section 2 - Principles and objectives, the National Procurement Policy Statement and the PRU
• Section 3 - Single set of Regulations with exemptions, interface with health procurement, light touch regime and concessions
• Section 4 - New procedures, including for urgent procurements, emphasis on pre-market engagement and planning
• Section 5 - Evaluation (MAT not MEAT), links to NPPS and other legislation
• Section 6 - Exclusion: grounds for exclusion, debarment register, past performance and supplier registration system
• Section 7 - Purchasing tools – new DPS+, new rules for open and closed frameworks
• Section 8 - Transparency – notices, debriefing, what has to be published and Open Contracting Data Standard
• Section 9 - Remedies: reforms to Court process, no independent review up front by the authority, disclosure, new test for automatic suspension, no cap on damages, no tribunal and alternative route via PRU
• Section 10 - Contract Management: prompt payment, amendments to contracts after signature

Remedies

In this, the ninth, of our Road to Reform series of articles we look at the Government’s response to consultation on reform of the remedies regime and consider what a procurement challenge might look like under the new regime.

Fast and fair challenges

The tension which exists in reforming the remedies regime is balancing the desire for a faster, cheaper, more straightforward review system with the risk that a more accessible system will generate more challenges and speculative claims increasing the administrative burden on authorities and holding up procurement processes.

The Government had proposed a number of relatively radical changes in the Green Paper including using an existing tribunal and a cap on damages. However, following consultation, the focus is more on speeding up and simplifying the existing procedures and mechanisms to achieve the desired objectives.

No independent contracting authority review

The idea was that contracting authorities would have to undertake a formal independent review in the event of a dispute. However, there were concerns around how this would be resourced, how authorities would achieve the requisite level of impartiality reviewing their own processes and the interplay with standstill and limitation periods. This has therefore been dropped. The consultation response instead refers to there being a focus on encouraging authorities to review the merit of challenges and to respond appropriately. In our experience this is already happening in the vast majority of cases and we often see authorities undertake work to improve systems, templates and training in the wake of a challenge.

No tribunal

What had been consulted on was not a procurement specific tribunal but the use of an existing tribunal to deal with low value claims and issues relating to competitions which are live. The main benefit of this proposal would have been (at least in theory) for these types of claims to have been dealt with more swiftly and in doing so relieving some of the pressure on the Technology and Construction Court which handles procurement challenges. There were concerns about setting the remit of the tribunal and likely also ensuring appropriate expertise. The proposal has therefore been dropped for now but there is confirmation that this will be kept under review and we can see this idea being revisited in a few years once the new regime has bedded in.

No cap on damages

The Government’s proposal was to cap damages at 1.5 x bid costs. This appealed to some of the consultation respondents as a means of reducing the risk of public money being spent on compensatory damages. However, the reality is that bidders are generally focused on pre-contractual remedies (setting aside the award of the contract) and the response notes that some respondents flagged that relatively few challenges resulted in contracting authorities paying large compensatory damages. The potential unintended consequence of the cap would be to increase litigation (and so court time) around the automatic suspension with questions around whether damages at this level would be an adequate remedy and whether authorities would be more likely to apply to lift the automatic suspension (in the knowledge that the damages exposure would be lower). The Government considers that the design of the new regime will allow challenges to be resolved before contracts are concluded making damages less of a concern and it is not therefore taking the damages cap proposal forward. 

Reforms to court processes

At this stage, we know that reform is coming and will focus on faster and more accessible routes but do not have the detail of what that will look like. The consultation response confirms that feasible options are still being explored but indicates that there will be changes proposed to the Civil Procedure Rules and/or the Technology and Construction Court Guide. These will be aimed at removing the delay associated with current Court timescales and the response mentions specific measures which might facilitate this such as early and enhanced disclosure, decisions being made on written pleadings and a dedicated procurement judge.

Disclosure

Increased transparency is an overarching theme in the reforms and this is set to have a significant impact on procurement challenges under the new regime. As we explained in article 8 of this series on debriefing, the Government has confirmed that evaluation documents will need to be disclosed to unsuccessful bidders at the award stage (their own and, if they are unsuccessful, those of the winning bidder (in redacted form)). The objective is to enable bidders to scrutinise the decision-making and provide sufficient information to permit a challenge to the decision. 

There is some concern amongst procurement law practitioners that this approach will lead to an increase in challenges as bidders will have more information to examine and dissect. That may be an initial consequence but in reality disclosure of the key decision-making materials will become necessary in any event where the challenger has made out a case. This change will reduce the time and money spent around disclosure issues at the early stage and avoid claims being issued to access key documents.  

The longer term consequence of this change is likely to be that the standard of contracting authority decision-making and record-keeping will improve resulting in more robust procurement processes and less cause for concern or suspicion by bidders. Litigation is therefore likely to be focused on substantive breaches, on manifest errors in scoring and unequal treatment, rather than the adequacy or otherwise of the authority’s audit trail. 

New test for the automatic suspension

The automatic suspension is triggered where a claim is issued before a contract has been entered into. The current test applied by the courts in deciding whether or not the suspension should be lifted has been developed from the test for whether injunctive relief should be granted (the American Cyanamid test)[1].

The Government has proposed a new procurement specific test. This will be a single limb test which provides for suspensions to be lifted where there are overwhelming consequences for the various interests concerned if the suspension remains in place. The relevant interests will include any impact on public service delivery if the authority is unable to proceed with award and might also include economic or commercial factors which would impact the authority. There is no stated primacy in respect of those interests so it will be interesting to see how the courts use existing case law to help them to determine whether there are “overwhelming consequences”.

Procurement Review Unit

The original proposal was for a new unit, with a wider remit than the PPRS, to oversee the integrity of the public procurement system with new powers to review and intervene in order to improve the commercial capability of contracting authorities. The proposals were generally welcomed but more clarity was needed around what was being proposed and there were some concerns that the powers of intervention (particularly if held in respect of live procurements) might stray into judicial territory. 

The response confirms that there will still be a new unit (the Procurement Review Unit (PRU)) but it will build on the existing powers of investigation held by the Minister for the Cabinet Office. The PRU will be made up of a small team of civil servants who will appoint subject matter experts from a pre-approved panel to support investigations.

In addition to replicating the role of the PPRS in investigating and making recommendations on cases of poor policy and practice reported by suppliers (including in respect of live procurements), the PRU’s main role will be to investigate systemic or institutional breaches of the procurement regulations identified by other government departments or based on data available on the new digital platform. The response indicates that these would be breaches common across authorities or repeatedly made by a particular authority.

Contracting authorities will be under a general duty to cooperate with an investigation and to respond to requests for information. They will also be under a duty to implement the recommendations made in respect of legal compliance.

The remit of the PRU to investigate systemic breaches has the potential to bring focus onto sectors and areas of procurement which have previously avoided it, either because bidders in that area are not prone to challenging (perhaps due to low contract values or lack of bidder resources or awareness) or because the structure obscures the issues (for example in the case of call off contracts directly awarded under frameworks).  

If you would like to discuss this topic in more detail, please contact Jessica Boardman, Associate.

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[1] American Cyanamid Co v Ethicon Ltd [1975] AC 396