Although the "Mystery Shopper" has been around since February 2011, with the release of the Public Procurement Note 09/15 ("PPN 09/15") on 1 June 2015, we can expect to see a rise in the number of procurement investigations.
PPN 09/15 explains the new rules which come into force on 26 May 2015 under the Small Business Enterprise and Employment Act 2015 (the "SBEE"). It applies to certain contracting authorities who need to comply with procurement investigations. These procurement investigations are carried out by the Crown Commercial Service Mystery Shopper service on behalf of the Minister for the Cabinet Office (the "Mystery Shopper").
Who might get 'mystery shopped'?
PPN 09/15 applies to the bodies that fall under section 40 of the SBEE. Therefore it will apply to contracting authorities covered by the Regulation 2 of the Public Contracts Regulations 2015 ("PCR 2015") that do not fall within the following exceptions:
- bodies exercising functions that are wholly or mainly devolved, namely Northern Irish, Scottish or Welsh devolved functions;
- maintained schools and academies; and
- procurement of Healthcare Services that fall within the National Health Service (Procurement, Patient Choice and Competition) (No. 2) Regulations 2013.
Ministers of the Crown and government departments are not directly covered by section 40 of the SBEE. However, PPN 09/15 makes it clear that central government departments, their arms-length bodies and non-departmental public bodies are still expected to comply with the Mystery Shopper through normal interdepartmental cooperation and therefore should be aware of PPN 09/15 and its implications.
What does PPN 09/15 mean if it applies to you?
The Mystery Shopper now has a statutory basis for its procurement investigations under the SBEE. It currently covers procurements under the Public Contracts Regulations 2006 and 2015, the Defence and Security Public Contracts Regulations 2011, the Public Contracts (Scotland) Regulations 2012 each as amended from time to time. The SBEE requires relevant contracting authorities to assist with procurement investigations and to provide the relevant information and/or documents to the Mystery Shopper within 30 days of the notice being given. Additionally, the results of the procurement investigation may be published online. You should note that investigations may also cover preparatory steps to a procurement and contract management e.g. late payment of invoices.
Although you will have a duty to reply with all the relevant information within 30 days, PPN 09/15 states that the Mystery Shopper will expect you to reply sooner, usually within two weeks, where the issue relates to a concluded procurement.
Therefore, relevant contracting authorities should consider whether they can comply with these expectations and if there are any practical ways that they can speed up responses, for example, effectively storing documents.
What happens if you don't comply?
There are no formal sanctions for falling to comply with the SBEE or PPN 09/15. However, should you fail to assist with a procurement investigation, the Mystery Shopper can issue a formal statutory notice obliging you to comply.
Should you continue not to comply, you can expect to be "named and shamed" by the Mystery Shopper when the results of the procurement investigation are published. Whilst this is not a direct sanction, you may want to consider the impact that this will have on your reputation. It may also be picked up on during an audit process.
What is coming next?
All contracting authorities covered by Regulation 2 of PCR 2015 (bar those exercising devolved functions as noted above) may also find themselves subject to new regulations in relation to “the exercise of functions relating to procurements" in the future.
Section 39 of SBEE gives the Minister of the Cabinet Office the right to make such regulations including in relation to the preparation for entering into contracts and the management of contracts. There is a non-exhaustive list of areas that this might cover - such as procurements being in an efficient and timely manner.
There will be appropriate consultation before any new regulations come into force and the government may also issue guidance for the purposes of such regulations.
Given that the SBEE has only recently come into force, we do not as yet have any direct examples of regulations under this Act. However, some of the provisions in Part 4 of PCR 2015 might give us an inkling as to the type of regulations that we should expect. As a reminder, Part 4 sets out “national” procurement rules which are additional to those provided for in the European legislation and which include, for example, obligations as regards the payment of undisputed notices within 30 days and the banning of PQQs for certain contracts.