Webinar 1 – 27th June 2022 – Q&A
Response to questions and comments raised.
- What are the long-term implications of the current apparent omission of ‘labour’ considerations (e.g. as per current EU) under the ‘Public Good’ principle?’ In today’s ever increasingly ‘tense’ UK employment relations position with current strike actions, are not the Trade Unions and others bound to comment on this in the future in relation to say, pay and TU membership.
As currently drafted, the Procurement Bill refers to “maximizing the public benefit” as one of the procurement objectives that a contracting authority must have regard to but there is little detail as to what this may encompass and whether secondary legislation and/or guidance will pick up the currently omitted references to labour considerations. Clause 86 provides a wide power for Ministers to prescribe the form and content fo tender documents, which could potentially allow the inclusion of such requirements in addition to anything in a national procurement policy statement. Where and to the extent this is not clarified and it is left to the discretion of contracting authorities as to how labour considerations such as levels of pay and trade union recognition are applied in their procurements, then we can envisage an increased level of pressure being applied to contracting authorities to adopt certain positions e.g. payment of a living wage, co-operation with trade unions as a wide policy piece so as to avoid ongoing labour issues such as those being faced by various industries (e.g. rail) at present. The requirement for a contracting authority to have regard to the national procurement policy statement may offer a “hook” for trade unions to apply pressure for improved labour conditions, particularly given the increasing focus on “social value” as a key component to this policy statement. It is worth noting that amendments tabled by various members of the House of Lords make express reference to a requirement to take into account wider labour considerations including fair pay, fair conditions and access to union representatives and it will be interesting to see to what extent such amendments make their way into the final Bill after its passage through the House of Lords.
- Noting the comments made about encouragement of better planning, what extent do the changes envisaged by competitive flexible approach differ from the current ‘Competitive Dialogue’ status quo; what ‘lessons learnt’ from CD are going to be utilised to make CFD better?
In the absence of specific guidance around the use of the competitive flexible procedure, then it is likely that many contracting authorities will tend to revert back to the methods and processes they have applied prior to the new legislation, which in many cases will likely involve taking some of the better practice from competitive dialogue procedures (and competitive procedure with negotiation/negotiated procedure) and applying these to procurements under the new procedure.
As has ever been the case, the key to this will be in the planning stages and making sure that decisions around what it is the contracting authority is seeking to achieve through the procurement are made sufficiently early in the process so as to guide how the procurement is run and evaluated from the outset. A little bit more time spent at that stage of the procurement is likely to go some way to enabling contracting authorities to achieve their objectives and may well save time later on in the procurement process. The slightly more active encouragement on early planning in the bill (early market engagement, publishing notices etc.) will hopefully drive these behaviours and guide contracting authorities into making key decisions earlier in the process. Ultimately though, it would not be any great surprise if many of the procurements run under the new rules look very similar to those under the current legislative regime and there is nothing in the Procurement Bill that would prevent that from being the case. Similarly, the main ways of engaging with suppliers during the process – bids, dialogue and site visits – remain unchanged. We would expect contracting authorities may well view the established ways, at least initially, as being the low risk option.
- Is there a concern that the one size fits all approach won’t fit the wide range of public sector procuring authorities e.g. the greater autonomy to ‘shape your own procurement’ will doubtless be hugely welcomed by Central Government departments on multi-billion procurements, but for local authorities procuring for day to day needs, the loss of ready made structures and the ‘blank piece of paper’ approach may be less helpful?
Although the Bill does allow for people to try out new ideas, our view is that, without prescriptive guidance, many will stick to what they have always done. In respect of very large and high profile procurements it might be quite bold to try and implement something very different which might open the procurement up to risk if it doesn’t work quite as expected. We think it is quite likely that local authorities will revert to what they have always done – without a prescriptive approach under the Bill, the safest course will be to adopt a tried and tested approach – if you are given a blank piece a paper adopting the usual approach might well be the default position until you see other practices or variations working well.
- Do the panel think the change in language and absence of case law will lead to more legal challenge?
In short yes – almost inevitably the boundaries will be pushed in terms of interpretation and there will be a need for judicial interpretation as to how new language and concepts should be applied. This will still be the case where there is guidance as parties will always look to push into the grey areas to try and interpret new provisions in a certain way when circumstances require it. But, with no alternative to the High Court proposed, it may lead to higher costs to bidders and contracting authorities in aggregate to resolve these questions.
- Local Authorities often have a legitimate objective to give fair opportunity (if not ‘favour’) local contractors to promote the local economy. So again, a real difference in perspective between major central gov procurements and (relatively minor/boring) routine procurements.
There is nothing to suggest that this legitimate objective will not remain the case under the new procurement regime. The national procurement policy statement makes explicit reference to local priorities being considered in procurement activities and leveraging public procurement to support (inter alia) local outcomes for the public benefit. Some of the amendments proposed in the House of Lords also seek to include express objectives around local economic growth and social value. Notwithstanding this, there will remain the overarching requirement to ensure equal/fair treatment of suppliers which includes “treaty state suppliers” (i.e. those from countries which the UK has signed up to trade agreements with (including those captured by the World Trade Organisation’s GPA)). As such, the treatment of suppliers and prioritisation of competing policy objectives (the local vs the national) may remain very much as per the “status quo”.
- Clause 11 of the Bill requires contracting authorities to have regard to the importance of the new procurement objectives. Contrast with regulation 18 in the 2015 Regulations where a CA is under a positive duty to apply the procurement principles. Any thoughts? Seems to be a recipe for trouble with contracting authorities simply recording that they have had regard to them and then choosing not to apply them or to attach more importance to one objective over others.
The new bill doesn’t impose the same level as duty and there will be a potential defence that the objective was considered but not applied. However, if a contracting authority is going to consider it and decide to disregard it, it will need to have reasons for doing so (and that decision making process should be appropriately recorded and audited). The decision to disregard would be subjected to established public law principles. It will be interesting to see whether arguments are run that the procurement objectives clash in certain circumstances and so it is justifiable to have regard to one but to prioritise a different one.
- How do you think the Government would handle the situation where a Supplier persistently breaches a ground and is likely to do so again therefore ought to be debarred, yet the Government is totally dependent on the products or services from that Supplier and has no realistic ability to switch due to its monopolistic position? Does that lead to a dual approach i.e. one rule for most Suppliers another for the monopolies?
As a starting point, it is worth remembering that debarment doesn’t exclude a contractor from contracts it is already working on (i.e. it doesn’t cause automatic termination).
The way the debarment process develops will be dependent on how the discretions available to the Minister in the legislation are implemented and it will be interesting to see how this plays out. At one end of the scale, the approach may well be closer to business as usual and debarment will only occur for the very serious breaches (flowing from a mandatory exclusion). However, if that was the case, we have to question the purpose of all the new contract management requirements in the Bill. At the other end of the scale, we might see a much more draconian approach to the debarment process with contract performance being more readily considered as a route to the debarment list – this could be a nasty surprise for the supplier community as one bad contract could contaminate their wider business regarding public contract work. At this end of the scale, we can see a situation where the Minister sets a mark in the sand – where smaller suppliers are debarred for a particular type of incident / breach and then a key large supplier to Government does the same thing and the Minister has to decide how to exercise his discretion. Generally, as the questioner suspects, it may be easier to be hard on the small players compared to the key suppliers and it will be interesting to see how this plays out in practice.
- Why change language and terminology if not necessarily needed and will cause confusion?
This is a very fair question. The hope would be that some of the “confusion” that may exist in the existing drafting may be ironed out as the Bill passes through Parliament. The move away from existing terminology and concepts is likely a function of the aim that the new public procurement regime enables the UK to take advantage of the post-Brexit environment to reduce some of the administrative and legislative burden in, and seeking to simplify and demystify, the existing procurement process. As part of this, there has inevitably been a clear (if not necessarily directly stated) movement away from existing principles and language and it seems unlikely that this direction of travel is going to significantly change before the Bill becomes law.
- Six months implementation once agreed doesn’t seem long enough, to ensure training is rolled out, changes internally within buying organisations, ensuring buyers at local level feel ready and confident, familiarisation etc.
We agree that 6 months feels like a tight transition period. What it will mean is that people need to start engaging now to try and familiarise themselves with what is coming to try and make the transition period as useful as possible.
- Is there a risk of suppliers claiming there clearly isn’t a breach if you haven’t notified the breach?
There appears to be three reporting obligations which will be relevant:
- Reporting performance against the KPIs;
- Reporting a breach if it resulted in termination, a damages award or a settlement agreement; and
- Reporting where a contract is not being performed to the contracting authority’s satisfaction and in such circumstances, it has notified the supplier of this and the supplier has not rectified the issue.
In respect of points 2 and 3 above, the obligation to report only kicks in when there has been an established breach (point 2) or when there has been actual engagement on the performance issue with the supplier (point 3). In those circumstances any failure to comply with the statutory reporting obligations should not undermine the contracting authority’s legal position regarding the contractual performance of the supplier.
In respect of point 1, however, this is potentially a concern. If the contracting authority doesn’t raise concerns regarding the performance of the KPIs when reporting on an annual basis but instead gives a clean bil of health, then it may look inconsistent if the contracting authority raises an issue and the supplier is able to state they are performing as they always have done and no issues have been raised in the statutory reports. The fact that issues were not reported could undermine the contracting authority’s position, but it will be very fact specific.
Similarly, we can see this requirement could cause difficulties in situations where you are dealing with a complex and difficult contract – in such a situation, it will be quite rare when you have acceptance of who is at fault for delays/performance issues. In those circumstances, if a contracting authority issues a report blaming the supplier in respect of contractual problems regarding the KPIs, the supplier may not accept those public reports (especially given such a report might have a negative impact on its reputation and ability to secure future contracts).
- Have the procurement system suppliers understood the key changes, particularly as regards notifications?
Clearly there is going to be a requirement that the system is fully functional by the time the Procurement Act is in force. At present we don’t know how advanced their preparations are and it may be difficult for them to finalise those until the Secondary legislation and guidance has been released and the Bill is near to final form. This is particular the case with the regulations under clause 86 concerning the form and content of the various notices and documents required.
- To Martyn’s point on MEAT v MAT and the Bill not including reference to Sustainability – as I understand it, in the proposed Bill, Contracting Authorities must take regard of the wider benefit to the UK, with Social Value and Net Zero being addressed as part of this wider value via the new National Procurement Policy Statement (NPPS).
Contracting Authorities can structure the evaluation criteria to meet their requirements and in doing so they will have to ensure they have regard to the NPPS. The opportunity to stress the importance of sustainability in the Bill has not been taken but we agree that there will be an obligation to have regard to the content of the NPPS. In practice, we don’t see the removal of the express focus on ‘Economic’ factors from the criterion as making a significant practical difference and our main point is that if Contracting Authorities are to be encouraged to give more weight to other factors when deciding who to contract with such as environmental concerns or social value, it would help if there is express signposting in that direction and that is not found in the Bill.
- If you were designing this new Bill, what would you have done differently – either added in, changed or removed?
Given the shift from the Green Paper (and even the response to the consultation) we can see that there would have been a benefit in having allowed the community to have reviewed and commented on the Bill in draft before it was published, as demonstrated by the significant number of Government amendments to the Bill. However, the key now is to make sure what is there works from the start, with sufficient clarity in the drafting and sufficient guidance to ensure that it runs as smoothly as possible.