Transforming Public Procurement: Part 3

What’s the future of bid challenges?

16 March 2022

On 6 December 2021, the Cabinet Office published its response to the consultation following the release of the Green Paper 'Transforming Public Procurement' (the 'Government Response'). We provided a 'first glance' summary and reported on the original Green Paper proposals on our Burges Salmon blog.

The publication of the Government Response is a key milestone in the move towards comprehensive reform of the UK public procurement regime. It provides a clear indication of the Government’s direction of travel in relation to reform: highlighting principles and objectives that will be key to procurement decisions going forward, and confirming which elements of the existing system we can expect to stay (either in their current form or reshaped) and to go.

Given the importance of the Government Response paper for both procuring entities and their suppliers, we have taken a deeper dive into the proposals. This is the third of a series of updates which will provide further detail on the likely future of:

  • procurement policy;
  • procurement routes;
  • bid challenges; and
  • management of publicly procured contracts.

Although these articles use the term 'UK', at present the proposed new procurement regime will only apply to public bodies in England, although the Welsh Government has confirmed that it expects the new legislation to also make provision for Welsh contracting authorities, and we understand that discussions are ongoing with the Northern Ireland Executive. As procurement is a devolved matter in Scotland, it’s not expected that the proposed reforms would apply to Scottish contracting authorities. It remains unclear, however, how the new legislation is intended to interact with the Scottish procurement regime (a concern raised by the Law Society of Scotland in its consultation response but not dealt with in the Government Response).

You can also read our previous articles on this topic here: 

What’s the future of bid challenges?

The overarching goal of the Green Paper is to speed up and simplify public procurement – this was stated to apply as much to bid challenges as to the tender process. Whilst there continues to be significant support for a faster, cheaper and more accessible system to deal with challenges to procurement decisions, the Government Response suggests that it is more a case of evolution than revolution.

With a view to rolling out the new legislative regime in 2023 at the earliest, the Government has confirmed that the following three key areas will be the focus of ongoing engagement with stakeholders and interested parties:

  • review systems;
  • remedies; and
  • debriefing.

Review systems

The Government Response reaffirmed commitment to explore alternative 'feasible options for faster and more accessible routes for valid challenges of procurement decisions'. The Courts will remain the main forum for challenges, following the withdrawal of proposals for a process of independent contracting authority review and a re-think of procurement tribunals.

It is likely that any reforms will be based on the existing Court structure by potentially remodelling the Technology and Construction Court Guide and formalising any changes in a set of new procurement specific Civil Procedure Rules. The areas for immediate consideration include:

  • the appointment of a dedicated procurement judge in the Technology and Construction Court;
  • defining set timescales and a maximum recommended length for pleadings to facilitate applications being dealt with on paper rather than by oral hearing (where appropriate); and
  • adopting measures to encourage more comprehensive disclosure throughout the lifetime of a claim, and particularly early on in proceedings.

It is hoped by the Government that these measures will reduce the time and costs incurred, on both sides, when dealing with a procurement challenge. The Government has therefore withdrawn its proposal in the Green Paper to use a new non-Court based tribunal system to hear low value claims, though it remains 'under review' pending an assessment of the new regulations and their impact on Court processes.

Remedies

The Green Paper set out a number of radical reforms when it came to remedies. Interestingly, the most controversial – the introduction of a cap on damages for claimants – has been withdrawn, in light of concerns that such a measure could potentially result in an increase in legal challenges and the creation of an unbalanced system. Respondents highlighted that limiting the financial exposure of contracting authorities to 1.5x bid costs (save for in exceptional circumstances) could mean accidentally incentivising poor procurement practices, meaning an increase in non-damages claims. The Government Response concluded that 'the implementation of the cap could result in unintended consequences which are more problematic than the issues the cap was trying to address'.

However, one area of consensus among respondents was the need to reform law and practice surrounding the automatic suspension. Currently, if an unsuccessful bidder believes a procurement was conducted in breach of procurement law, it may choose to commence Court proceedings against the procuring entity. Provided the claim is brought before the contract is signed, the procuring entity will be prevented from awarding the contract until the suspension is lifted by the Court or the challenge is withdrawn.

To reduce the risk of delay to contract signature, procurements run in cases of crisis and extreme urgency are to be excluded from the automatic suspension regime. This step will likely be widely welcomed by contracting authorities, not least because the need for authorities to procure goods and services in extreme urgency was brought into sharp focus during the Covid-19 pandemic.

In keeping with the Government’s aim to improve transparency in public procurement, procuring entities wanting to rely on crisis and extreme urgency will need to publish:

  • a notice (prior to, or at the same time as, contract award) setting out why the procurement is considered a ‘crisis and/or extremely urgent’ procurement; and
  • a subsequent notice containing the details of the contract.

The remedy of ineffectiveness will remain, allowing a challenge to be brought if it appears that the extreme urgency grounds have been relied on inappropriately.

The Government also intends to revise the legal test that must be applied when a contracting authority applies to lift the automatic suspension at Court. As it stands, the American Cyanamid test is as follows: (1) Is there a serious issue to be tried? (2) Would damages be an adequate remedy for either party? (3) If not, where does the balance of convenience lie – in maintaining or lifting the suspension?

The American Cyanamid test has historically often resulted in the lifting of the automatic suspension, as the Court has often found that damages are an adequate remedy for a disappointed bidder. A new, single limb test – applicable only in a procurement context – will therefore be introduced to try and meet the specific circumstances of procurement challenges. However, in the absence of further detail at this stage, it is difficult to assess whether the new legal test will be more or less appropriate than the current American Cyanamid principles or whether it will result in more or fewer suspensions being maintained.

Debriefing

The Government intends to simplify the debriefing process following feedback that the current bidder debriefing requirements at the end of a procurement process are – at times – burdensome.

In competitive procedures, the mandatory requirement to prepare an individual debrief or ‘standstill letter’ will be withdrawn. Instead, procuring entities are to provide each participant with 'certain evaluation documents for the winning bidder (redacted for commercial sensitivity)', as well as a bidder’s own original evaluation documents.

The change in debriefing requirements will mean that bidders will no longer have to engage in lengthy pre-action correspondence in order to obtain key evaluation materials; the original information will now be provided to each bidder alongside the Award Notice. Bidders should therefore be in a better position to assess for themselves (by comparing the 'relative advantages of the winning bid against their own') whether a challenge to the procurement decision is viable, as well as to identify areas for improvement in future tender responses. With evaluation documents being automatically provided to bidders, it puts greater focus on the underlying procurement process and ensuring it is properly documented from the outset. 

For successful bidders, it is difficult to assess the level of control they will have over disclosure of their evaluation material to other participants at the award stage. The Green Paper proposals currently do not have this level of detail. However, clearly there will need to be engagement with the winning bidder on what it considers to be confidential information before documents are provided to competitor organisations at the award stage.

Further information on changes to the debriefing requirements applicable to call-off contracts or contracts procured through Dynamic Markets is awaited.

How can we help?

We will be releasing further updates on other aspects of the proposals shortly, and holding workshops on the new regime throughout 2022. Please contact Richard Binns, Ian Tucker and Chris Jackson in our specialist procurement disputes team if you would like to receive updates, including if you are interested in tailored workshops on issues specific to your organisation.

Key contact

Ian Tucker

Ian Tucker Partner

  • Dispute Resolution
  • Procurement Disputes
  • International Trade

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