A prior civil or criminal conviction for a company is no longer catastrophic for public tenders, thanks to a recent change in the law.

The UK public sector spent nearly £250 billion in 2013/14 procuring works, goods and services – consequently it is no surprise that businesses are eager to take part in public tenders.  Some however experience difficulties bidding for public contracts, as prequalification questionnaires often require companies to disclose a company’s conviction record – often a “pass/fail” question which can mean that companies are excluded from the procurement.

A recent change in the law within the Public Contract Regulations 2015 (the 2015 Regulations) can provide companies with the ability to answer positively to “pass/fail” conviction questions by providing information about the company’s rehabilitation and the steps taken since the conviction, known as the “self-cleaning” process. This means that companies with prior convictions can bid for public tenders, safe in the knowledge that local authorities will have to consider the company’s response in a fair and transparent manner before deeming their response unsatisfactory.

Which public tenders does this cover?

Certain public bodies (such as central government, local authorities, NHS trusts etc. known as “contracting authorities”) and bodies that are governed by public law are required by the EU to follow a special procurement regime when they purchase certain works, services or supplies above a particular value threshold. Most of these purchases are covered by the 2015 Regulations, but certain tenders run by utilities (such as Network Rail, the National Grid and others) are subject to broadly equivalent provisions in the new Utilities Contracts Regulations 2016, due to be in force from April this year.

How does the self-cleaning process work? 

Contracting authorities are required to exclude bidders in certain circumstances (often when a company has committed a serious criminal offence) and may exclude bidders in other circumstances from submitting a tender. A common pitfall for bidders is when they have a conviction in relation to environmental, social and labour law, or are guilty of professional misconduct. In this instance, a contracting authority is permitted to exclude bidders for up to three years from the date of a conviction or other relevant event. 

When presented with a prequalification question regarding past convictions, companies should carefully complete the response to this question to ensure that it does not include information that it is not required to provide (depending on the cut-off point specified in the 2015 Regulations). The measures that have been taken to demonstrate reliability should also be set out to such an extent that the contracting authority is able to decide whether or not that  company should be excluded from the competition.

What information should the “self-cleaning” response contain?

The focus of the regime is to show that a bidder has been rehabilitated. Therefore, the company should include any evidence showing that it has:

  • Paid compensation in respect of any damage caused by an incident.
  • Actively collaborated with investigating authorites (such as the Health and Safety Executive or the Environment Agency) and fully clarified the facts and circumstances behind an incident.
  • Taken significant (and appropriate) technical, personnel and organisational measures to prevent such an incident happening again.

A contracting authority must use its discretion when evaluating whether to pass or fail a bidder that has taken the above steps. However, if a contracting authority believes that the response to an incident is unsatisfactory and does not sufficiently demonstrate reliability, it must give a statement of reasons explaining why it believes the company should be excluded from the procurement. This allows the company to improve its tender response for future procurements or potentially challenge the decision made to exclude it from the procurement if it is unsatisfied with the contracting authority’s reasons for its decision.