03 June 2024

The PA23 intends to consolidate and streamline the current procurement regulatory framework, which is currently based on legacy EU law, and in doing so simplify the procurement process to better meet the UK’s needs.

This article, which is part of a series of deep dives into the new procurement lifecycle, will focus on the provisions governing challenges to procurements (note that there is a separate regime for challenging debarment and exclusion decisions, which we have covered here).

A ‘new’ challenge system?

In summary, while there are significant linguistic changes from the existing challenge regime, which will no doubt be tested in Court in due course, the challenge mechanisms will be very familiar to those who have been involved in procurement challenges before. Certainly, things have changed a lot less than was originally contemplated in the Green Paper: there has been no move to cap damages or to make the remedies regime primarily into a pre-contractual remedies track and procurement law claims will continue to be the jurisdiction of the High Court, rather than being dealt with in a tribunal system. Damages and ineffectiveness (which will be called set aside) will remain potentially available to disappointed bidders on similar principles.

Nevertheless, there have been some key changes away from the current remedies regime. In particular, in relation to the standstill period and the test the Court will apply in relation to whether an automatic suspension on contract signature should be lifted at an interim hearing.

The need for speed

The limitation period for a disappointed bidder to challenge a potential procurement law breach will, in most cases, still be just 30 days. 

While the automatic suspension on contract signature will remain a potentially powerful feature in the early stages of procurement litigation, in a move away from the current regime it appears that automatic suspensions will only be triggered where claims are issued within a standstill period, even if the contract is not entered into until later. The mandatory standstill period will run for just 8 working days from publication of the standstill letter/award notice.

It will, therefore, remain essential for any potential challenger to move quickly to put itself in a position to issue proceedings. Challengers will need to make a go/no go decision swiftly (within the standstill period if they wish to benefit from the automatic suspension) and will likely need to be able to particularise their grounds of complaint earlier than before.

That may be balanced, to an extent, by the scope of the new assessment summaries, which must be provided to bidders with contract award notices and are intended to involve the provision of early, enhanced explanation of how the authority reached its decision on the most advantageous tender (covered in our Award Stage article). However, while the Procurement Regulations 2024 prescribing the required content of assessment summaries have been made, the statutory guidance remains in development, so watch this space.

Changes to the automatic suspension on contract signature

Under the current law, if a challenger issues proceedings and notifies the contracting authority before it contracts with the successful tenderer (not necessarily within a standstill period) the automatic suspension will apply that suspends the ability of the authority to contract until that suspension is lifted either by the end of proceedings or Court order.

There are cases where the suspension remains for the duration of the claim (the Court may also order an expedited trial). However, frequently, the contracting authority will apply to lift the suspension at an early interim stage and the Court will apply the well-known American Cyanamid legal test to assess whether the suspension should be lifted. 

In the majority of cases to date, the Court has lifted the automatic suspension based on this test, largely then restricting the challenger to a remedy in damages. To then obtain damages, a challenger must prove the breach by the contracting authority is “sufficiently serious” – a concept that has recently been the subject of Court of Appeal authority.

Under the new Act, while issuing proceedings will give rise to the same automatic suspension, the test the Court will apply in deciding whether to lift the suspension at an early hearing is now prescribed in statute and takes some different issues into account. Under the new test, the Court will consider:

(a) the public interest in, among other things:

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

(ii) 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);

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

(c) any other matters that the court considers appropriate.

The Court may require the provision of undertakings (such as a cross-undertaking in damages from the challenger) or impose conditions if it decides the suspension should stay in place at the interim hearing.

Different remedies are available depending on whether the contract has been entered into or not, so whether the automatic suspension remains in place will have a formative effect on any proceedings. As most bidders are interested in winning the contract, not damages, the impact and practical application of this new test by the Courts will be of significant interest. Whether it will in practice lead to different outcomes will only become clear in application as cases under the PA23 start filtering through.

Other remedies

The primary remedies for challengers will largely be the same as under the current law. Broadly, they are:

  • Damages (pre- and post-contract): potentially very significant in relation to high-value contracts
  • Orders setting aside a decision or requiring the contract authority to take any action (pre-contract): the Court will have explicit powers under the Act to require contracting authorities to take specific actions
  • Set aside (previously known as ineffectiveness) or contract shortening (post-contract): it is unclear whether the requirements under the PA23 in relation to determining whether or not there is an overriding public interest in not setting aside the contract will result in these remedies being approached differently from under the current law.

Grounds of challenge

Most procurement challenges under the current regime relate to allegations of breaches of the general principles of procurement law (such as transparency and equal treatment) or manifest error by the contracting authority.

Given the movement away from these general principles towards specifically framed objectives, and the broader changes to contracting authorities’ obligations under the PA23, different grounds of challenge will doubtless emerge, although the law on manifest error in relation to evaluation processes is well developed by the Courts and will likely remain a major challenge ground. 

How can we help?

We will be releasing further updates on other aspects of the PA23 shortly and holding workshops on the new regime throughout 2024. Please contact Richard Binns or another member of our procurement team if you would like to receive updates, including if you are interested in tailored workshops on issues specific to your organisation. 

Read previous articles in the series here >>>

Key contact

Richard Binns

Richard Binns Partner

  • Dispute Resolution
  • Procurement Disputes
  • Procurement and Subsidy Control

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