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Public procurement reform … the times they are a-changin’

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On 6 December 2021, the Cabinet Office published its much-anticipated response to its consultation on the 2020 green paper, “Transforming Public Procurement”. Over the next few weeks, DLA Piper will publish a series of posts considering in detail the proposed changes to procurement. In this post, we summarise the response and give our initial views on the proposed reforms.

Summary of the key proposals

  1. The Government will introduce primary legislation, supported by regulations and guidance. It will also provide for a 6-month standstill period once the new legislative regime is in place to allow contracting authorities time to adapt. Given the scale of the reforms, the Cabinet Office predicts that the legislative regime will be in force by 2023 “at the earliest”. 
  2. The Government will legislate to consolidate the existing set of procurement regulations (i.e. the Public Contracts Regulations 2015, the Utilities Contracts Regulations 2016, the Concession Contracts Regulations 2016 and the Defence and Security Public Contracts Regulations 2011) into a single uniform framework. The legislation will retain a number of exemptions and flexibilities (to be determined) for certain utilities and defence-related procurements.
  3. Under the consolidated framework, the new legislative regime will provide for several principles and objectives. The Government will retain the principles of transparency and non-discrimination and introduce a new principle of “fair treatment of suppliers”, encompassing the existing principle of equal treatment and a new principle of “procedural fairness during procurement procedures”. The principle of proportionality will not be retained as an over-arching principle. Instead, aspects of the principle will be incorporated into the new procedural fairness principle and it will be introduced as a requirement in specific provisions.

The other principles identified in the original green paper are now described as “objectives”, with the aim of influencing decision-making. These objectives are the public good, value for money and integrity, and these will be joined by an additional objective of promoting the importance of fair and open competition.

  1. The Government proposes to replace the existing set of procurement procedures with three new procedures:
  • most procurements will use the “flexible competitive procedure”, which is intended to give “buyers freedom to negotiate and innovate to get the best from the private, charity and social enterprise sectors”;
  • for “simpler, ‘off the shelf’ competitions”, contracting authorities can use the “open procedure“; and
  • a “limited tendering procedure”, which contracting authorities could use in certain circumstances, such as extreme urgency.

The Government had previously proposed a new “crisis” ground. In its response, the Government has significantly changed its approach. It now proposes to allow a Minister of the Crown (via a statutory instrument) to declare “when action is necessary to protect life” and “allow contracting authorities to procure within specific parameters without having to meet all the tests of the current extreme urgency ground.” The Government notes in its consultation response that this “legislative mechanism … would only be used extremely rarely and would be subject to parliamentary scrutiny.”

  1. The Government will legislate to embed new transparency measures throughout the lifecycle of a procurement. Given the burdens that this will likely impose on contracting authorities, the Government intends, in respect of these measures, to set a threshold (of £2M) and will publish guidance to assist contracting authorities in meeting the new requirements.
  1. The Government will legislate to provide for a “centrally managed debarment list“. Features of this regime will include the following:
  • suppliers will be considered for debarment when they are excluded by a contracting authority during a procurement;
  • certain categories of contracting authorities, likely to be central government contracting authorities initially, will additionally be able to refer suppliers they want Cabinet Office to consider to be added to the debarment list, without having excluded them;
  • the new Procurement Review Unit (to be based out of the Cabinet Office) will be responsible for considering cases, investigating evidence of misconduct and self-cleaning by suppliers, and making recommendations to the relevant Cabinet Office Minister;
  • suppliers will be entitled to apply for early removal from the debarment list before the end of the five year period of exclusion, if they can show they have self-cleaned; and
  • suppliers will be entitled to appeal a decision to put them on the debarment list to the Court.
  1. In respect of procurement challenges, the Government has, in light of consultation feedback, abandoned many of the reforms outlined in green paper. In brief, the Government will not:
  • introduce a process of independent contracting authority review;
  • use a tribunal system to consider low value claims;
  • introduce a cap on damages; or
  • legislate to provide for primacy of pre-contractual remedies over post-contractual damages.

Instead, the Government will primarily focus its reforms on a series of practical measures. For example, it will continue to work with the Civil Procedure Rules Committee to provide for early and enhanced disclosure. The only proposed substantive reform will be to make the test for lifting the automatic suspension clearer.

  1. On changes to existing contracts, the Government will continue with its proposals to amend the current regulation 72 of the Public Contracts Regulations 2015 (and equivalents). In addition, it is considering introducing a new provision to assist in the amendment of complex contracts. This will seemingly allow amendments where changes have occurred outside the control of the contracting authority or supplier. This, it would appear, will enlarge the current regulation 72(1)(c) for complex contracts.

Our initial views

Many of the proposed changes are welcome as they will assist contracting authorities in managing procurement exercises. However, we continue to have some concerns about several intended reforms. For instance, we maintain that the proposed replacement for the “crisis” ground is likely to be unworkable if it relies on making a statutory instrument. Similarly, it is not clear how the new principles and objectives relate to the existing principles of public procurement law. The new objectives, in particular, appear likely to create novel, freestanding grounds of challenge for disappointed bidders and public interest groups.

As noted above, DLA Piper will, over the coming weeks, publish further posts considering the different elements of the Government’s proposals.  Please watch this space.

Authors:

Jonathan Blunden
Steve Condie


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