PPN 01/19 revisits discretionary and mandatory exclusion grounds from public procurements, and discusses ‘conflict of interest' and ‘whistleblowing’, to ensure the integrity of UK’s procurement system
On 22 February 2019, the Cabinet Office issued Procurement Policy Note 01/19 offering further guidance in relation to the selection criteria of public procurements (the 'PPN'). In particular, the PPN elaborates on mandatory and discretionary exclusion grounds in procurement procedures, conflicts of interest, and whistleblowing.
The PPN includes a Guide for Commercial and Procurement Professionals Annex (the ‘Guide’), and a FAQ Annex, and is addressed to all Central Government Departments, their Executive Agencies and Non Departmental Public Bodies procedures, (referred to as ‘In-Scope Organisations’) including also the NHS and the wider public sector when conducting procurements regulated by the Public Contracts Regulations 2015 (‘PCR’), the Utilities Contracts Regulations 2016 and the Concession Contracts Regulations 2016.
Mandatory exclusions: In-scope Organisations must exclude bidders when they, or a person that has control or managerial power in the bidder (usually directors or members of executive board), has been convicted of a crime within an exhaustive list of offences under Regulation 57(1) of PCR. The Guide explains that mandatory exclusions may only be disregarded in exceptional circumstances such as due to overriding reasons relating to public interest. A bidder must also be excluded where they have been found to be in breach of tax and social security obligations unless the bidder has committed to remedy, or has remedied, this breach or the breach is so insignificant that an exclusion would be disproportionate. Self-cleaning (see below) may also be a way to circumvent a mandatory exclusion.
Discretionary exclusions: discretionary exclusion grounds do not cover specific criminal offences and do not apply to persons or entities beyond the bidders. However, such grounds can cover serious criminal offences that are not outlined in the mandatory exclusions, where such offences would render bidder's integrity questionable. In relation to tax offences, an In-Scope organisation may also exclude a bidder where they can demonstrate by any appropriate means a breach of the bidder's tax or social security contributions obligations. As the Guide goes on to explain, this is different to mandatory exclusion insofar as it does not require a final judgment or order to that effect.
The procedure of self-declaration: under the Regulations, bidders must declare whether they meet the selection criteria and that no exclusions apply to them. While self-declaration forms will depend on the type of procurement, In-Scope Organisations must always accept the European Single Procurement Document. Additionally, each bidder and sub-contractor must provide their own self-declaration separately, regardless of whether they are applying as a consortium or group.
Verification: In-Scope Organisations must request up to date evidence from the winning bidder before a final award of the contract, where such evidence cannot be found on the public domain free of charge. If the bidder fails to provide the relevant information within the appropriate timeframes or the In-Scope Organisation realises that a mandatory exclusion applies, the contract must not be awarded. In such cases, the contract may be awarded to the second bidder where no exclusion grounds apply to them and they have made a satisfactory bid, or alternatively the procedure can come to an end.
Self-cleaning: bidders may prove to the In-Scope Organisation that, despite any existing exclusion grounds, they should not be excluded as they have undertaken steps to remedy the situations giving rise to the exclusion. The steps are outlined in Regulation 57(15) of PCR, and include paying compensation for the damage caused under the offence. It is for the bidder to demonstrate and satisfy the In-Scope Organisation of self-cleaning, while the latter must take into account the gravity and particular circumstances giving rise to the ground for exclusion.
Conflicts of interest: In-scope Organisations must take appropriate measures to avoid and remedy conflicts of interest during procurements, in order to prevent any distortion of competition and to ensure equal treatment of all bidders. If this cannot be achieved, a bidder may be excluded, although this is to be assessed on a case by case basis. In specific cases where a bidder has acted in an advisory capacity to the In-Scope Organisation, either in the context of preliminary market consultations or in the preparation of the procurement procedure, the In-Scope Organisation must take steps to ensure that competition is not distorted by the prior involvement of that bidder. This can be achieved by communicating to other bidders all the materials and communications that bidder had prior access to. In line with the general principle of equal treatment, where this cannot be achieved, then the bidder may be excluded. To consider any conflicts, In-Scope Organisations should refer to internal guidance and/or procedures on identifying, reporting and managing conflicts of interest or the National Audit Office report 'Conflicts of Interest'.
Whistleblowing: Civil servants concerned about perceived wrongdoing within a procurement activity should follow their organisations’ relevant whistleblowing policy which will outline what relevant steps should be taken. Alternatively, Civil servants can speak to their line manager or nominated officer. Evidence of criminal or unlawful activity should be reported to the police or other appropriate regulatory Authorities, while concerns that are in conflict with the values in the Civil Service Code can be raised directly with the Civil Service Commission.
The FAQ answers more specific questions in relation to the above, such as what constitutes grave professional misconduct in relation to discretionary exclusions, or what happens when it is discovered post-award that the bidder was subject to mandatory exclusions. Additionally, the FAQ looks at whistleblowing, verification, and self-cleaning in more depth. It explains the legal protections afforded to whistleblowers, and where the whistleblower should direct any concerns. In relation to verification, the FAQ looks at when and how verification should take place, what evidence should be required, and draws particular attention to the consequences of a self-declaration being purposely misleading. In relation to self-cleaning the FAQ looks at how bidders can avoid exclusion through a non-exhaustive list of steps, such as through cooperation with relevant authorities processing convictions, dismissal of offending staff, and enhanced training.