Reforms to the system of challenging procurements

Melanie Pears and Tim Care look at what remains of the Government's proposals for changing the regulations enabling a challenge to a procurement decision.

What the Green Paper said

This was one of the lengthier sections of the Green Paper, containing a number of interrelated proposals and aimed at simplifying an overly complicated and often costly system. An effective system of challenge was seen to be important due to its function of ensuring that contracting authorities are attentive to procurement rules, and by giving aggrieved parties a means of redress. However, a new system needed to be cheaper and faster and incorporate an overall aim to reduce the number of challenges going through to court.

Proposals included reform of the court system itself, including the use of a Tribunal system and allowing contracting authorities to undertake a formal internal review of a complaint before the court process commences. Recognising that many potential suppliers challenge a decision because they want to be awarded the contract, rather than because they want to be awarded damages, the Green Paper proposed an emphasis on pre-contractual measures rather than post-award remedies. With the aim for less focus on damages and more on processing claims quickly and at an earlier stage, it also proposed the capping of the level of damages to 1.5x of the bid costs, which would also reduce speculative claims and lessen the impact on the public purse of large pay-outs to unsuccessful bidders where the procurement process was found to be flawed.

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The Green Paper proposed the removal of the provisions for automatic suspension where a contract has been awarded using the limited tendering in a crisis or extremely urgent situation, hoping to encourage the use of a competitive process even in these instances. Finally, the Green Paper proposed the removal of the requirement to provide each bidder a debrief letter at the end of the procurement process. This was seen to be too onerous on contracting authorities, particularly where there were a number of bidders, and also less necessary once the new transparency measures and digital platform were implemented.

Results of the Consultation

Respondents to the consultation clearly supported a cheaper and faster challenge process, but recognised that improving access to challenge may increase the number of challenges and in fact slow the system down. The Government is continuing to review both court processes and wider options so the proposals here are far from complete.

Reponses to the consultation persuaded the government not to press ahead with a contracting authority review process, or to instigate a tribunal system for claims. Instead there will be reforms to the court processes themselves, including written pleadings and a dedicated procurement judge. They will also not implement the proposed cap on damages, and linked to that the proposal to give pre-contractual remedies primacy over post-contractual damages will be dropped.

Proposals which will be taken forward include a new test for automatic suspension, the removal of automatic suspension where an informal competition has been used in a crisis or extremely urgent circumstance, and the removal of the requirement for a debrief letter to unsuccessful bidders. The government believes that the amount of information available due to the transparency measures, including information present in the Award Notice, will mitigate the need for personalised letters.

What this means

Of the proposals listed in the Green Paper, at least half of them are not being put forward further, and of the others there is significant further work for the government to do to decide the processes. A proper understanding of the reforms to the system for challenging a procurement decision is therefore going to have to wait until the publication of the draft Bill later this year, but the reform might not be as wide-ranging as the Green Paper had initially suggested.

Melanie Pears and Tim Care are partners at Ward Hadaway.

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