Public procurement law is currently being reformed. The Procurement Bill (which when finalised will become the Procurement Act) is currently making its way through parliament. The Procurement Act is expected to become law later this year.
Two areas of change in the Bill causing much debate are the powers authorities will have to exclude suppliers from procurements and the introduction of a debarment list. The government aim of toughening the rules to prevent companies with a track record of poor delivery, fraud or corruption from winning public contracts is obviously welcome. However, there are understandably concerns around how such powers will work in practice. In this two part series, we explain the main changes, and what suppliers should be doing as a result.
In the first article in this series we looked at what authorities will be looking at when considering exclusion under the Procurement Bill. This article considers:
- Who authorities are looking at
- How and when checks are being carried out
- And the consequences of debarment and exclusion
Who are authorities looking at?
Under the PCR authorities were required to consider whether the exclusion grounds existed for certain companies or entities linked to the supplier. In particular, those that the supplier was relying on to meet the selection criteria and, in respect of convictions for offences (mandatory grounds), any person with certain powers and control over the supplier.
Under the Bill these obligations have been expanded with the new, widely drafted definition of a Connected Person. Authorities must now consider whether the relevant offence, conduct or circumstances for each mandatory ground and each discretionary exclusion ground applies in respect of the Supplier, Associated Person or a Connected Person. As is the case under the PCR, authorities can also ask for information about subcontracting arrangements if they choose to in order to ascertain whether the subcontractors are excluded or excludable suppliers.
Significantly, suppliers must themselves be treated as “excluded suppliers” and excluded if an associated person, a connected person or a subcontractor are “excluded suppliers”. Similarly suppliers will be treated as “excludable suppliers” in equivalent circumstances. However, suppliers will be given a reasonable opportunity to replace an associated person or subcontractors who are excluded or excludable suppliers before this happens.
How and when are these checks carried out?
The current drafting of the Bill indicates that the timing of the authority’s consideration of whether a supplier is excludable or excluded will depend on the procedure.
At present, authorities consider whether there are grounds to exclude suppliers at the selection stage and the Standard Selection Questionnaire (SQ) is used to collect information from suppliers (with suppliers updating the authority of any changes through the process).
The Cabinet Office is yet to release further detail on what the exclusion checking process will now look like in practical terms. However, before deciding whether a supplier is excludable or excluded, suppliers MUST be given reasonable opportunity to make representations and provide evidence as to whether exclusion grounds apply and whether the circumstances giving rise to them are likely to occur again (provided the evidence requested is proportionate in the circumstances). It therefore seems likely that the SQ will be updated to invite this information from suppliers as well as to update the exclusion grounds.
Why does this matter? The consequences
There are two main consequences which suppliers need to be aware of:
- Exclusion from the current process:
- Where an authority determines that a supplier is an excluded supplier it MUST exclude the supplier from participating / progressing in a competitive tendering process and, if at tender stage, disregard any tender from that supplier.
- If the supplier is determined to be an excludable supplier the authority MAY exclude the supplier / disregard its tender.
- Notice to a Minister of the Crown:
- If the authority excludes a supplier / rejects a tender from an excludable supplier or excluded supplier on the basis of a mandatory or discretionary exclusion ground (with the exception of the ground of failure to cooperate in an investigation) it MUST give notice of this to the relevant appropriate authority (a Minister of the Crown or in Wales the Welsh Ministers).
- Notice MUST also be given where an associated supplier or subcontractor was replaced because that supplier was an excluded or excludable supplier.
- This may trigger a debarment investigation as explained above (although the Minister is not obliged to investigate and can choose to investigate at any time not only on receipt of such notice).
What should suppliers do to prepare for change?