OGC issues guidance on mandatory procurement blackballing

The Office of Government Commerce has issued guidance on the mandatory requirement for contracting authorities to blackball suppliers, contractors and service providers where they have been convicted of certain offences.

The guidance note provides advice on how contracting authorities can ensure compliance with this provision, which was introduced by the Public Sector and Utilities Procurement Directives and implemented by the Public Contracts and the Utilities Contracts Regulations 2006.

Under previous directives the contracting authority had a discretion over whether to exclude a particular economic operator.

Both sets of 2006 regulations require contracting authorities not to select an economic operator where they have “actual knowledge” that the economic operator or its directors “or any other person who has powers of representation, decision or control” of the economic operator has been convicted of a relevant offence.

The list of offences includes participation in criminal organisations, corruption, money laundering and fraud.

A contracting authority can disregard the prohibition “if it is satisfied that there are overriding requirements in the general interest which justify doing so in relation to that economic operator”.

However, the guidance says this exception should only be used “in the most serious of circumstances, for example in the case of a national emergency”. Approval of the Accounting Officer or Minister should be sought in such cases, it adds.

The guidance sets out the steps a contracting authority can take to establish whether an economic operator has been convicted of a relevant offence – as a minimum it should seek a declaration from all operators, either in the PQQ or the ITT, confirming that they have not been convicted of any of the relevant offences.

Subsidiaries or sub-contractors who may be engaged by the economic operator to perform some of the work under the contract are not covered by the definition of “economic operator”.

The guidance also explains:

• What a contracting authority should do if it needs further information
• Who is the “competent authority” for information on conviction of individuals
• The levels of disclosure – basic and standard – in relation to convictions relevant to procurement
• How a contracting authority applies for further information on convictions of individuals from the relevant authorities
• What happens in the case of corporate convictions, and
• What exceptions there are to the mandatory exclusion.

The OGC said the guidance “is not intended as a substitute for project specific legal advice, which should always be sought by a contracting authority where required”.

The guidance note is likely to be updated further to reflect ongoing discussions in the European Commission and after the Bribery Bill receives Royal Assent.