The next of our detailed posts on the Bill looks at changes for procurement challenges; time limits, remedies and increased transparency on contract award from the authorities. So, what is changing, and what impact might those changes have?
As discussed in our first detailed post, transparency is a key feature in the reforms and, in particular for challenges, driving efficiency in dispute management. However, many of the changes proposed in the Green Paper have not made their way into the drafting of the Bill – for example the original suggestion of a cap on damages. Further changes and rules in relation to procurement challenges / disputes will come by way of secondary legislation.
We've explained the key changes in the Bill below, along with our views on what impact these changes might have for bidders.
What is changing?
- Authorities will need to provide assessment summaries to bidders following the procurement decision and publish a contract award notice (CAN) Authorities will also have to publish a contract details notice shortly after entering into the contract, followed by publication of a copy of the contract.
- Standstill periods will now be for a period of 8 working days and a claim needs to be issued at court and notified to the authority before the end of that standstill period to get the benefit of the automatic suspension on contract award.
- A new, procurement specific, test for maintaining the automatic suspension is set out in the Bill.
Looking at these changes in more detail…
1. At the end of a procurement process, authorities will be required to provide all bidders who submitted an assessed tender with information about the assessment of that tender. All assessed bidders will also receive a summary of the assessment of the winning tender. However, it's not clear what level of detail will be required of the assessment summaries as this is not prescribed in the Bill. The word "summary" suggests an overview / something high level with only key points, whereas we know most unsuccessful bidders, whether considering challenge, would like more detail in relation to why they scored well or not so well, and what could be improved on in future.
Authorities will also need to publish a CAN setting out an intention to enter into a contract.
Finally, authorities will be required to publish a contract details notice within 30 days of entering into the contract (or 120 days for light touch contracts) and publish a copy of the contract (where the estimated value is over £2million) within 90 days of entering into the contract.
The Bill gives power to Ministers to make regulations that specify the form and content of such notices and how these notices are to be published. This suggests that secondary legislation will follow in due course.
2. A change from current procurement rules is the length of the mandatory standstill period – currently 10 calendar days from the standstill letter but changing under the Bill to 8 working days, beginning with the day of publication of the CAN. While not offering a challenging bidder much more time (if any), this does help avoid the difficulties of weekends and bank holidays falling within the standstill period and bidders having less working-day time to consider whether to issue a claim.
Limitation periods overall remain the same as currently (generally 30 days from the date of knowledge of the breach) but for claims to set aside a contract the period is now the earlier of the end of that 30 day period or 6 months from entry into the contract (currently the 6 month period applies regardless of earlier knowledge).
3. The Bill takes some risk away for authorities when it comes to signing contracts, as the automatic suspension on contract award will only apply if an authority has been notified of an issued claim within the standstill period. This means that if a bidder doesn't issue a claim, or notify the authority of its issued claim, by the end of the 8th working day, the authority is not prevented from entering into contract.
Where a suspension is in place, under current law, the test for an automatic suspension has developed from the test for injunctive relief from the American Cyanamid principles. The introduction of the Bill gave legislators an opportunity to develop a test that is specific and relevant to procurement processes. However, the current draft of the Bill does still utilise two principles of the three limb American Cyanamid test and explains how these can be interpreted in procurement challenges. The test will now be that in considering whether to maintain the automatic suspension, the court must have regard to:
(1) the interests of suppliers, including whether damages are an adequate remedy for the challenging bidder (the second limb of the American Cyanmid test): and
(2) the public interest (usually considered under the balance of convenience test of American Cyanamid).
The public interest provides for specific examples that should be considered and balanced, between:
- upholding the principle that public contracts should be awarded and/or modified in accordance with the law; and
- avoiding delay of the supply/services in the contract.
Cross undertakings in damages will also still be considered – i.e. the challenging bidder will still likely be required to provide a cross undertaking to compensate the authority if the suspension is maintained to trial and it is then found that the authority was not in breach of the rules.
What impact do these changes have on bidders?
1. SUMMARIES AND NOTICES
Probably not much different to what we have now in a standstill letter, though there is a risk from use of the term "summary" that some authorities could seek to provide less information on tender evaluation than they do currently. As now, bidders will need to check carefully both their own and the winning bidder's feedback, and be on the look-out for errors, for criteria that were not disclosed as being subject to evaluation, and anything else that doesn't look right. Bidders should also allocate resource to monitor for publications of CANs, contract details notices and copies of contracts (once we know where they are to be published) and be quick if you think there is an issue (see point 2 below).
As always, the need to act quickly remains, but there is an additional jeopardy for the challenging bidder under the new rules. If a bidder fails to notify the authority of an issued court claim before the end of the standstill period, they will not obtain the automatic suspension, whether the contract with the winning bidder has been signed or not.
There also seems to be a missed opportunity in this Bill by not providing legislation for standstill extensions and limitation agreements – these are proving popular tools for parties to agree terms to extend the tight time periods prescribed, in the hope that matters can be resolved and court challenges can then be avoided. Under the new legislation, to keep the benefit of the automatic suspension on issuing a later claim, bidders will need to not only seek the authority's confirmation that it won't award the contract but also that it will extend the standstill period (which many authorities often don’t want to do as it potentially tips off other bidders that there is a risk of challenge).
3. AUTOMATIC SUSPENSION
Currently it is extremely hard for bidders to maintain the suspension on contract award, unless the challenger is also the incumbent provider and special circumstances exist. Given the similarities in the new test to the American Cyanamid principles, it remains to be seen whether suspensions on contract award will be maintained in more situations, allowing challenging bidders the opportunity to seek more desirable remedies (we know that damages are often not a bidder's primary motivation for challenge). It also remains to be seen what, if any, secondary legislation might be introduced in an effort to streamline disputes and bring about a resolution / decision to challenges sooner (if at all possible).