Exclusions and debarment under the Procurement Act 2023

The Procurement Act 2023 (“2023 Act”), which is now expected to come into force on 24 February 2025, will introduce a number of significant changes to the regime for exclusion of suppliers from procurements where they have been convicted of certain offences or misconduct or otherwise might pose a risk to public procurement, including the introduction of a new debarment regime.

Excluded and excludable suppliers

The 2023 Act introduces new terminology for suppliers who are subject to a mandatory exclusion ground (“excluded supplier”) or discretionary exclusion ground (“excludable supplier”). The new terminology is defined in section 57 of the 2023 Act as follows:

Before implementation of the 2023 Act, contracting authorities will need to familiarise themselves with the new definitions of excluded and excludable suppliers, including the mandatory and discretionary exclusion grounds in Schedules 6 and 7 to the 2023 Act.

A number of new mandatory and discretionary grounds will be introduced, such as conviction for corporate manslaughter, conviction for dishonesty offences such as theft and failure to cooperate with a debarment investigation, and there will be revisions to the existing grounds, with a number of grounds being extended. The duration of exclusion for discretionary exclusions will be increased to 5 years so that the period is aligned for mandatory and discretionary grounds, with additional rules to provide for the transition.

The 2023 Act also clarifies when suppliers must or may be excluded because an exclusion ground applies to:

• associated persons (consortium members or first tier sub-contractors that the supplier is relying on to satisfy one or more conditions of participation);
• connected persons (persons and entities that are connected with a supplier, such as a director, subsidiary company or person with significant control); or
• subcontractors

Changes to procurement processes to accommodate new exclusions regime

Contracting authorities will have increased obligations under the new exclusions regime under the 2023 Act and should review and update their processes and standard procurement documents now in preparation for go-live in February 2025.

Supplier information regarding exclusions grounds will be captured and stored in the Supplier Information System on the central digital platform.

When designing their competitive tendering or direct award procedures, contracting authorities should ensure that their processes include provision for the contracting authority to determine whether suppliers are excluded or excludable as the first step in the process and, depending on the nature of the procedure, again at appropriate stages, so that it can exclude suppliers where appropriate.

Where an excluded or excludable supplier is identified, the contracting authority must (for excluded suppliers) or may (for excludable suppliers):

• disregard a tender in a competitive tendering procedure;
• exclude the supplier from participating in or progressing as part of a competitive flexible procedure;
• not make a direct award to the supplier (subject, in the case of excluded suppliers, to an exemption where there is an overriding public interest in the award of the contract to that supplier);
• remove the supplier from a dynamic market (subject to notification requirements);
• exclude a supplier on a framework from participating in any selection process to award a contract based on the framework, with necessary terms implied into the framework (subject to notification requirements).

Contracts awarded under the 2023 Act will contain implied terms to allow termination where a supplier has become an excluded or excludable supplier since the award of the contract and certain conditions are satisfied.

Self-cleaning

The 2023 Act will provide contracting authorities with greater flexibility when assessing evidence of self-cleaning.

Before determining whether a supplier is excluded or excludable, contracting authorities will be obliged to give suppliers reasonable opportunity to make representations and provide evidence as to whether exclusion grounds apply and whether the circumstances leading to the situation are continuing or likely to occur again.

Contracting authorities will now have greater flexibility to consider what factors they deem appropriate when considering self-cleaning. The list of three specific factors which a supplier must have proven in order to self-clean under the Public Contracts Regulations 2015 has been replaced with a list of factors which contracting authorities may consider in deciding whether the supplier is excluded or excludable. Going forward under the 2023 Act, contracting authorities will not be permitted to require particular evidence or information unless they are satisfied that such requirements are proportionate.

Debarment

One of the significant changes in the 2023 Act is the introduction of a new centrally published and maintained debarment list which will be publicly accessible as an additional protection against unfit suppliers being awarded public contracts. Excluded or excludable suppliers will be added to the debarment list following an investigation by the Minister of the Crown, which may be prompted by the Cabinet Office’s own knowledge of supplier misconduct or following a referral from a third party (including a contracting authority running a procurement).

Contracting authorities in England will have a legal duty to notify the Procurement Review Unit (PRU) within 30 days of excluding a supplier from a procurement. Where the Minister (usually via the PRU) carries out an investigation, the contracting authority will have a legal duty to comply with reasonable requests for documents and other assistance. As part of their review of their processes, it would be sensible for contracting authorities to consider how debarment notifications and information requests from the PRU will be managed.

From a supplier’s perspective, if the Minister decides to carry out an investigation, the Minister must notify the supplier of the exclusion grounds under investigation, how and when to make representations and any other information specified in regulations. The Minister may ask the supplier or a connected person to provide relevant documents or give other assistance before a particular deadline and, although compliance is not mandatory, there is a mandatory exclusion ground which could be applied for failure to cooperate with an investigation.

Following their investigation, the Minister will prepare a report on their findings and will usually publish the report and provide it to the supplier unless they consider it necessary not to. Before adding the supplier’s name to the debarment list, the Minister must notify the supplier of their decision (together with the supplier’s rights of appeal and other information specified in regulations) and observe an eight working day debarment standstill period starting from the day on which that notice is given.

The 2023 Act contains a mechanism for suppliers to require that entries made on the debarment list be removed or revised, where there has been a material change in circumstances or new information has come to light, and suppliers are able to issue court proceedings in order to appeal decisions to add them to the debarment list.

Court proceedings relating to debarment decisions will be subject to short time limits. Where a supplier wishes to suspend the decision to add them to the debarment list, they must make an application to the Court within the debarment standstill period. Court proceedings to appeal a decision in relation to the debarment list must in any event be commenced within a 30 day period commencing on the date on which the supplier knew or ought to have known of the decision.

It may be, however, that in many cases the more likely trigger for a supplier to consider legal challenge will arise at the point a supplier is excluded under a procurement process, in which case the supplier will challenge the contracting authority who has excluded that supplier to seek to argue that the potential exclusion is not lawful.

How we can help

Our specialist procurement team is presently assisting a number of contracting authorities who are reviewing and updating their procurement processes and documents in readiness for implementation of the 2023 Act. If you have any queries regarding the impact of the 2023 Act on your processes and standard documents, please do not hesitate to contact our specialist procurement team.