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Consultation on Reform of the UK’s Public Procurement Rules:  Some Christmas Food for Thought from the UK Cabinet Office

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For anyone interested or involved in the way the UK spends £290bn of public money each year, the Cabinet Office’s Green Paper on Public Procurement which can be found here will make interesting reading.

Even the most curmudgeonly Remainer would have to admit that the Paper is bristling with innovation and presents an opportunity to make the UK a much more effective, and therefore attractive, public sector marketplace.  A deadline of the end March 2021 has been set for consultation and there is much to think about.

The Paper is very much a creature of its times.  The backdrop is the UK’s independent accession to the GPA following the end of the EU Exit Transition Period.  The opportunity is being taken to streamline rules, assert UK priorities, promote innovation and agile procurement, deal with some historic bugbears such as supplier past performance, allow for crisis procurement and wrestle with the vexed topic of remedies, noting the parallel and perhaps not unconnected Independent Review of Administrative Law

The Paper is 78 pages long and presents 43 questions for consultation.  In the New Year we will produce a detailed response as a firm which we will share with the market.  In the meantime, if the festive period is too much and you feel like diving into the Paper, here is a very brief summary of the main proposals:

  • A new set of principles of UK public procurement principles, building on well-established EU and GPA principles, including value for money, public good, integrity and efficiency, coupled with a National Procurement Policy Statement
  • A single set of rules and regulations, possibly with sectoral chapters ( e.g. defence or NHS) and doing away with the multiplicity of EU-derived regulations and UK native legislation, said to total 350+
  • Three simple and flexible procedures replacing the current seven in the Public Contracts Regulations, including a new crisis ground for tendering (and directly addressing some of the issues that have arisen from the application of the current rules to the Covid crisis) which can be found in some of the latest Procurement Policy Notes
  • A shift in the way contracts may be awarded, allowing Authorities in certain circumstances to look beyond the subject matter of the contract, and even their own point of view, which may prove to be an interesting potential dilemma for Accounting Officers
  • Tightening the grounds for exclusion, including in relation to supplier past performance
  • A more flexible approach to frameworks and an enhanced dynamic-purchasing system, looking more like the GPA multi-use lists in other countries
  • Transparency by default throughout the government contracting process, including after contract award through contract amendment notices (watch out contract managers!)
  • A significant shift in remedies. There is very much a two-edged sword here
  • On one hand the Government proposes an enhanced and streamlined review process, including a tailored fast-track process, the possibility for written pleadings in some cases, reducing the heavy burden of disclosure through the new transparency regime, although it remains to be seen how this will work, and in a nod to ‘levelling-up’, increasing Court capacity outside London
  • Potential claimants may be less happy at the prospect of a proposed cap on damages to 1.5 times bid costs plus legal fees or about the removal of automatic suspension.  The reference to ‘speculative claims’ in the Paper is consistent with a common current theme across Government, be it administrative law or immigration appeals.

In addition to the many firm proposals in the Paper there are some areas which are still being considered and which will draw much debate.

One of these is the possible introduction of a ‘debarment list’ – here the Government is considering the feasibility of such an approach, however how feasibility will be considered is not quite clear. Although there is reference to a right of appeal and ‘self-cleaning’ as per the current PCR, this will no doubt send shivers down the spine of the Government contracting industry.  The potential  ‘debarment’ is tied up with a proposed much tougher approach on past performance of Government contracts (citing practice in the US and South Africa), moving away from the very narrow approach currently enshrined in the PCR.

Another area being considered is whether a specialist Procurement Tribunal should be introduced for a sub-set of procurement challenges, to complement the streamlining of the processes of the TCC.  We have considered this ourselves in our Procurement Law Reform paper and have quite a positive experience of specialist tribunals in jurisdictions such as Germany where they currently operate.

In addition to these numerous ideas, there are also some gaps.  For example, there is only a passing reference to the applicable regime in the other Home Countries in the UK.  This row has been simmering for some time.  Under the EU system to date, Scotland implemented its own version of the EU Public Contracts Directive and the ability of the devolved nations to shape their own procurement rules and priorities is a likely flash-point, as is evident from the reaction outside England to the Internal Markets Bill.

Another gap is the how public transport services will be treated in the future.  These currently have their own but overlapping regime as is evident from the recent rail franchise litigation.  We’ve already mentioned NHS and defence which have their own regulatory regime, priorities and polices.

A final thought: if the opportunity is being taken to streamline procurement processes, can the same lens be applied to Government approvals processes?   If the proposals in the Green Paper lead to a more effective buying process, as they surely will do, then the time it takes for the machinery of Government to endorse a contract award recommendation, at least for major programmes, will seem disproportionately long.

Authored by Richard Bonnar with contributions from Robert Smith, Martyn Scott and Paul Stone.

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