This is the Procurement Pulse, DLA Piper’s bulletin for clients with an interest in developments in public procurement law. In this issue we report on recent case-law, policy and legislative developments including an update on the progress of the UK Government’s Procurement Bill.
Recent Court Judgments
Court finds contracting authority misused a framework agreement to make an unlawful contract award
The contracting authority ran a procurement exercise for a communications app for GPs. As part of the pre-procurement activity the claimant and another provider were asked to demonstrate their products. After the presentations the contracting authority decided to award the contract under a previously tendered framework agreement, which the claimant was not part of. The authority held a mini-competition involving only the other provider, who was then awarded the contract. The process was challenged by the claimant. The English High Court found that:
- the framework was misused by the authority to effect the direct award of the contract in breach of the principles of equal treatment and transparency.
- the mini-competition did not comply with regulation 33 of the Public Contract Regulations, not least because only one operator was invited to bid.
- two of the authority’s employees had conflicts of interest and appropriate measures weren’t taken to ensure they were not involved in the process.
- a non-member of a framework can challenge a call-off where a duty to the non-member is breached and loss is or may be suffered as a result, which was the case here.
The Court made an order for damages and also ordered the shortening of the contract to enable the authority to conduct a lawful procurement and an order for payment by the authority of civil penalties to the Minister for the Cabinet Office (remedies not before exercised, it is believed).
The judgment is essential reading for contracting authorities and contains important guidance on appropriate pre-procurement activity, the use of frameworks and mini-competitions and how conflicts of interest should be handled in a competition. For a detailed discussion of the case read our recent website article “A Warning to Contracting Authorities: Beware of the Consequences of Being Unfair to Incumbents”.
CJEU finds that contracting authority can’t rely on a framework agreement where the maximum value covered by the framework has already been reached
In this case a contracting authority agreed 21 frameworks of EUR3M to purchase lateral flow tests. The claimant challenged the frameworks and the contracts awarded under them on the basis that they were unlawful direct awards in that they exceeded the maximum value laid down in the frameworks. On a reference from the Federal Administrative Court of Austria the CJEU held that that a contracting authority may only make commitments up to the maximum value specified in a framework agreement and thereafter the framework agreement will have no effect. Consequently, the court held, that any contract awarded under a framework agreement whose maximum value has been exceeded would be unlawful and ineffective unless that award did not substantially modify that agreement for the purposes of Article 72(1)(e) of Directive 2014/24. The judgment is of note as it describes the principles to be applied where the maximum value covered by a framework has been reached. Even though the judgment is not binding on UK courts, it will be persuasive, as it reflects previous, binding, caselaw from the CJEU (Autorità Garante della Concorrenza e del Mercato Case C-216/17).
Policy, Guidance and Other Developments
UK Procurement Bill Update
The Bill is currently being considered line by line in Committee in House of Lords. The fifth day of committee stage took place on 18 July 2022 where a number of amendments were discussed. Further amendments will be discussed as consideration of the Bill in Committee continues. For details of the Committee reports to date and the amendments agreed to visit the UK Parliament website here. Of particular note is the number of amendments tabled by the Government on 27 June 2022, the scope and scale of which can be seen in the Keeling text available on the website.
The Welsh Government has published an update on the Welsh implication of the Procurement Bill. The update explains that the requirement to publish contracts valued over GBP2M on the Central Platform and the requirement not to make use of a pre-qualification stage for below-threshold procurements will not apply to Wales. It also states that Welsh Ministers will have standalone, equivalent regulation-making powers in most areas of the bill and will need to develop relevant secondary legislation.
We have produced a number of recent posts on aspects of the Procurement Bill which are available on our HM Government Blog:
- Webinar Q&A - The Procurement Bill - what is it, why is it here, an overview and initial thoughts on content, structure and its potential impact
Finally, we are running a further webinar on aspects of the Procurement Bill on 4 October 2022 covering planning a procurement, direct awards, commercial purchasing tools and the position in Scotland. If you would like to register to attend please contact: [email protected].
New Policy Notes
The UK, Scottish and Welsh Governments have recently published new and updated procurement policy notes covering a range of matters:
- PPN 01/22 on contracts with suppliers from Russia and Belarus and PPN 02/22 on the Consultancy Playbook, v1.1
- SPPN 04/2022 and 05/2022 on changes to Scottish procurement legislation to give effect to the Free Trade Agreement between the UK and Iceland, Liechtenstein and Norway and annual procurement reports for 2021/2022.
- WPPN 04/21 on deploying project bank account policy has been updated.
UK Government Publish Proposals to Improve Transparency of UK Public Contracts
On 30 June 2022 the UK Government published a policy paper outlining its proposals to improve transparency of UK public contracts and spending.
National Procurement Strategy for Local Government in England 2022 Published
The Local Government Association has published its National Procurement Strategy for Local Government in England 2022, which focuses on the role of councillors and council officers in procurement.
EU: International Procurement Instrument enters into force
The EU’s International Procurement Instrument entered into force on 29 August 2022. It allows the European Commission to impose measures limiting non-EU companies’ access to the EU public procurement market if these companies’ governments do not offer similar access to EU businesses. Separately the European Union has also reached an agreement on a regulation that would enable it to reject bids from suppliers that receive foreign subsidies that distort the EU internal market.