31 May 2022

The Procurement Bill 2022 – new procurements, same old challenges?

Introduction to the Procurement Bill

On 12 May 2022, the Procurement Bill was published in the House of Lords and is currently being debated. The intention is for the Bill to make its way through the legislative process and obtain Royal Assent sometime in 2023, with a minimum period of six months’ notice before ‘going-live’.

The Government has stated that the Bill will: create a simpler and more flexible system for public procurement; open up public procurement to new entrants such as social enterprises, allowing them to compete for and win more public contracts; and embed transparency throughout the commercial lifecycle so that public spending can be properly scrutinised.

As stated in a previous Hempsons’ article, the Bill is lengthy and there will be much to consider over the coming weeks and months. Changes are likely, to at least some extent, prior to Royal Assent and we are informed that much of the detail may be included in (yet to be published) secondary legislation. However, one aspect of the Bill which does not, on its face, appear to make revolutionary changes to the current regime is around procurement challenges and remedies. The remedies available to bidders remain broadly the same.

Remedies available

Prior to a public contract being entered into, the remedies of an order (a) setting aside a decision of the contracting authority (b) requiring the contracting authority to take certain action(s) and (c) for the award of damages, all remain available.

The Bill maintains the concept of the automatic suspension on contract making in circumstances in which a claim is issued prior to the contract being entered into. However, interestingly, this appears to be limited to circumstances in which a claim is issued during the standstill period, as opposed to any point prior to the contract being entered into, as is the case under the current legislation (it is worth noting that the standstill period outlined in the Bill is a period of eight working days from the publication of a contract award notice rather than the current 10 calendar days running from the issuing of standstill letters).

It was envisaged that the current test applied by the Court in deciding if the automatic suspension should be lifted (i.e. is there a serious issue to be tried?; are damages an adequate remedy for the parties?; where does the balance of convenience lie? (known as the American Cyanamid Test)) would be replaced by a simple, single limb test which provided for suspensions to be lifted where there were overriding consequences for doing so.

The Bill, in fact, requires the Court to take into account:

(a) the public interest, including the public interest in:

(i) upholding the principle that public contracts should be awarded, and contracts should be modified, in accordance with the law;

(ii) avoiding the delay in the supply of goods, services or works provided for in the contract or modification;

(b) the interests of suppliers, including whether damages are an adequate remedy for the claimant; and

It will be interesting to see how such a test (which is, in many ways, arguably not dissimilar to the existing one) is applied by the Court, how different the analysis will be in practice and the extent to which the existing case law will be applied.

Post award, the remedy of ineffectiveness essentially remains, but will now be known as the remedy of “set aside”. Damages will also be available in such circumstances, although the need for the Court to impose a civil financial penalty when making an order of set aside is not included.

Also, set aside will be available if the Court is satisfied that the claimant was denied a proper opportunity to seek a pre-contractual remedy because “the breach became apparent only after the contract was entered into”. This is new and, if it remains, may well be the focus of much (satellite) litigation.

Limitation Periods

The general 30 day limitation period, commencing from the date the claimant knew or ought to have known of the circumstances giving rise to the claim, in which a claim must be issued remains the same (as does the ability of the Court to extend this period to a maximum of three months).

The “long stop” date by which a claim for set aside must be started is six months from the date of the contract was entered into, as is the case with a claim for ineffectiveness under the current regime. However, how that long stop date interacts with the 30 day limitation period is seemingly different and may need some clarification.

Proposals not adopted

On publication of the Government’s response to the consultation which followed the publication of the Green Paper, Transforming Public Procurement, it was clear that several of the original proposals made, such as imposing a cap on the level of damages available to claimants, were not, in fact, going to be adopted.

One proposal in the Green Paper which was of particular interest to procurement litigators was the abandoning of the need for contracting authorities to issue standstill letters following evaluation and prior to entering into the contract with the preferred bidder. It had been proposed that the contracting authority would, instead, disclose to each bidder a suite of documentation created during the evaluation, both in relation to its own bid and that of the preferred bidder (redacted as appropriate). It was felt by many litigators that this could lead to a great deal of complaints/litigation/requests and applications for disclosure. Despite the Government’s response to the consultation confirming its intention to proceed in this way, the Bill, in fact, requires contracting authorities to issue to each bidder an “assessment summary”, setting out information regarding the assessment of that bidders bid and that of the preferred bidder. The type of information and level of detail to be included in such a document is not specified but it may well be that this document will essentially replicate standstill letters as we know them now.

Regarding practicalities of procurement of claims, such as the use of written pleadings to expedite claims and reduce costs; a fast track system; and enhanced (early) disclosure requirements, these previously raised proposals are not addressed in the Bill. It appears that issues such as these may be dealt with via a revision of the current Technology and Construction Court (“TCC”) Guidance Note on Procedures for Public Procurement Cases and/or through amendments to the Civil Procedure Rules.

Conclusion (and a note of caution)

Therefore, as stated above, the changes may not be revolutionary. However, if introduced, they will no doubt generate points of dispute whilst those involved in procurement get to grips with the new landscape.

Finally, a warning. Whilst procurement professionals will continue to watch, with interest, how the Bill develops over the coming months, it is, of course, essential to remember that the existing legislation will apply until the new regime goes live. Compliance with the current rules remains essential.