The remedies regime under the Procurement Act 2023 (“2023 Act”), coming into force on 24 February 2025, will contain key changes to legal challenges for breaches of procurement law, including updates to automatic suspension and the deadline for service of proceedings.

Remedies

The remedies available pre-contract and post-contract will generally remain the same, with some slight tweaks to the terminology and grounds for ineffectiveness (renamed ‘set aside’) under the 2023 Act:

Although the set aside conditions set out in section 105 are different to the grounds for ineffectiveness under the PCR 2015, the underlying intention is said to be the same.

Notably, the 2023 Act does not specify how the Court is to exercise its discretion in deciding whether to make an award of damages and, in particular, whether a breach will need to be sufficiently serious in order to merit an award of damages. We anticipate that this is something which will be explored in future case law to determine whether this principle, derived from the Francovich decision of the Court of Justice and applied by the Courts since 2017, will continue to be applied by the Court when deciding whether to make an award of damages. We anticipate that the Court will be asked to determine this issue definitively at an early stage under the 2023 Act, but until that point, expect parties to work on the basis that the present position continues to apply.

Standstill periods

Calculating the standstill period under the 2023 Act is different to that under the PCR 2015.

Under regulation 87 of the PCR 2015, the duration of the standstill period can be different, depending on the method used to issue regulation 86 notices (commonly known as debrief letters), and is calculated by reference to a number of calendar days, with more detailed provision for circumstances where the standstill period would expire on a non-working day set out in the interpretation provisions in regulation 2 of the PCR 2015.

Under section 51 of the 2023 Act, the mandatory standstill period is always a period of eight working days beginning on the day on which a contract award notice is published. However, care should be taken around bank holidays.

The definition of working days in part 13 ‘General’ in the Act states any day other than a Saturday or Sunday or a day which is a bank holiday in any part of the United Kingdom under the Banking and Financial Dealings Act 1971.

This means that a contracting authority will need to factor in all of the bank holidays in England, Wales, Scotland and Northern Ireland when calculating the standstill period. An example later this year is that for a standstill period under the 2023 Act, Monday 1 December will not be counted for the purpose of the standstill period in the eight working days as this is a substitute bank holiday day for Sunday 30 November (St Andrew’s Day), even though it will be a ‘working day’ for contracting authorities in England and Wales.

Automatic suspension

Under regulation 95 of the PCR 2015, contracting authorities are prohibited from entering into the contract where a claim form has been issued, the contracting authority has been notified and the contract has not been entered into – regardless of whether the standstill period has expired or not.

Under section 101 of the 2023 Act, the automatic suspension will only apply where during any applicable standstill period:

1. proceedings are commenced in relation to the contract (generally, when the court has issued a claim form at the request of the claimant); and
2. the contracting authority has been notified of that fact.

The automatic suspension will then prevent the contracting authority from entering into or modifying the relevant contract until the proceedings have been determined, discontinued or otherwise disposed of (where the Court has not made an order to extend the automatic suspension).

This avoids the situation where a standstill period ends and the contracting authority takes steps towards contract signature, but a claim is then received before the contract is actually signed, at which stage the automatic suspension kicks in.

The 2023 Act does not expressly state whether the automatic suspension will continue to apply where a contracting authority has agreed to extend the standstill period (although the Cabinet Office guidance indicates that this will be the case). This will be one to watch as claims are brought.

Applications to lift the automatic suspension

Contracting authorities will continue to be able to apply to lift the automatic suspension under section 102 of the 2023 Act, but the principles which the Court must consider when deciding whether to lift an automatic suspension under the PCR 2015 (presently based on the American Cyanamid general principles, and which have been criticised for not fully reflecting the circumstances of bidders in procurement processes, leading to the majority of applications being successful), will change.

Under section 102(2) of the 2023 Act, the Court must have regard to the following factors in considering whether to make an order for an interim remedy, including an order lifting the automatic suspension:

• the public interest in, among other things:
  • upholding the principle that public contracts should be awarded, and contracts should be modified, in accordance with the law;
  • avoiding delay in the supply of the goods, services or works provided for in the contract or modification (for example, in respect of defence
    or security interests or the continuing provision of public services);
• the interests of suppliers, including whether damages are an adequate remedy for the claimant; and
• any other matters that the court considers appropriate.

The differences from the present test are not as substantial as many had expected, although the Court is perhaps more likely to make a holistic assessment of all relevant factors when applying the new test rather than the staged approach often adopted at present, potentially reducing the significance of the adequacy of damages in the assessment (where many challengers struggle to show that they could not be satisfactorily compensated in damages). This is an area where we will need to wait and see how the Court applies these principles when considering applications under section 102 of the 2023 Act and, in particular, whether it changes the prospects of such applications in favour of claimant suppliers.

Time limit to serve proceedings

It will remain the case that in most cases under the 2023 Act, suppliers will continue to need to commence proceedings within 30 days from the date when they knew, or ought to have known, about the relevant circumstances giving rise to the claim. However, the Act will alleviate a great deal of the pressure after issuing proceedings at Court, when compared to the PCR 2015, and pass some of the onus onto contracting authorities to proactively manage claims issued by suppliers.

Under the PCR 2015, regulation 94(1) of the PCR 2015 and rule 7.4(2) of the Civil Procedure Rules 1998 (“CPR”) require suppliers to serve their claim form and particulars of claim on the contracting authority within seven days after the date of issue. This can be a challenging timetable as the preparation of particulars of claim can be a substantial and costly task, made more challenging if a supplier has not yet received full disclosure from the contracting authority.

The 2023 Act does not contain any specific provisions regarding the timing of service of a supplier’s claim form. As a result, the default position under the CPR will apply and a supplier will be allowed:

1. until 11.59pm on the calendar day four months after the date of issue of the claim form to take the step required to effect service of the claim form under CPR 7.5(1); and
2. if they are not contained in the claim form, a further 14 days in which to serve its particulars of claim under CPR 7.4(1)(b) (provided the particulars of claim must still be served no later than the latest time for serving the claim form under CPR 7.4(2)).

CPR 7.7 permits contracting authorities to serve notice on a supplier requiring them to either serve the claim form or discontinue their claim within a period specified in the notice, which must be at least 14 days after the notice is served. If the notice is not complied with, the contracting authority may make an application for the court to dismiss the claim or make any other order it considers just.

Suppliers challenging a procurement will likely still wish to obtain pre-contractual remedies, such as orders setting aside a decision or required a contracting authority to take particular steps, rather than being limited to the post-contractual remedies which will most often result in an award of damages. As a result, suppliers will be under greater pressure to issue claims within the initial standstill period of 8 working days than is presently the case.

As suppliers will be able to delay preparing and serving their particulars of claim under the 2023 Act, it seems likely that suppliers will choose to issue more protective claims and then delay preparing and serving their particulars of claim on the contracting authority in order to delay their own costs and those incurred by the contracting authority. Where a supplier takes this approach, the onus will be on the contracting authority to decide whether to serve notice requiring service of the particulars of claim and, if they are not served in time, to make an application to dismiss the claim.

How we can help

Our procurement team specialises in providing pragmatic advice to both contracting authorities defending a challenge and suppliers seeking to challenge the outcome of a procurement.

If you have any questions regarding this update then please get in touch with Helen, Sam and Andrew or one of our specialist procurement team.