Whilst the government is in summer recess and there is a pause on the progress of the Procurement Bill, the world of procurement law continues. This update focuses on recent procurement law developments which will be of interest to both contracting authorities and private sector entities who engage in public contracts. It details recent caselaw developments, legislative developments (including a new PPN on Standard Contracts) and the latest position on the progress of the Procurement Bill through Parliament.
Caselaw developments
InHealth Intelligence Ltd v NHS England [2023] EWHC 352
The recent case of InHealth Intelligence Ltd v NHS England serves as a stark reminder of the limits to an authority's discretion to accept late bids, and the importance for bidders of leaving plenty of time to upload their bid in accordance with the authority's instructions. InHealth brought a claim against NHS England when it failed to submit its bid before the deadline due to a human error. InHealth uploaded a document to the wrong lot which then led to the bidder being unable to re-upload the document to the correct lot before the deadline because the InTend e-portal used by NHS England did not allow a document with the same filename to be uploaded twice. The court was clear that the failure to submit the bid was InHealth's fault as it was due to human error rather than a technical problem with the e-portal and if InHealth had prepared its bid with plenty of time to submit it would likely have realised its error and been able to correct and submit the bid on time. The court concluded that it would not generally be within the bounds of discretion to waive non-compliance with a stated deadline. However, if the failure to submit a bid was clearly the fault of the contracting authority and this led to one or more bidders being unfairly prejudiced it may be appropriate to waive non-compliance with the deadline in order to ensure equal and fair treatment to bidders.
International Game Technology Plc v Gambling Commission [2023] EWHC 1961
This case held that a sub-contractor of an unsuccessful bidder has no standing to challenge a contract award or seek damages under the Concessions Contracts Regulations 2016 (CCR). The court considered the definition of 'economic operator' under Regulation 2 of the CCR, determining that only unsuccessful bidders can fall within the definition due to them being the only entities who have an interest in obtaining the contract. This finding may also have implications for future cases brought under the Public Contracts Regulations 2015 (PCR) or Utilities Regulations 2016 given that the definition of 'economic operator' under those regimes are the same. It is important to note that there are limited circumstances where someone who had not made a bid can bring a challenge provided they can show that they would have made a bid but did not due to a discriminatory provision within the invitation to tender.
Dukes Bailiffs Ltd v Breckland Council [2023] EWHC 1569
This case provides welcome guidance on the relationship between the PCR and the CCR and provides the first detailed judicial analysis of what constitutes a 'concession contract'. Dukes Bailiff challenged a contract award for debt enforcement services under the PCR however Breckland Council successfully argued that the PCR did not apply as the contract was in fact a concession contract. As the value of the contract was below the threshold under the CCR, those regulations did not apply so Dukes Bailiff did not have any basis for a claim. It is important for contracting authorities to understand the distinction between the PCR and the CCR, not least because the rules are not the same and the financial threshold in the CCR for services and supplies is much higher than that in the PCR so impacts whether or not a procurement falls under a regulated regime at all.
The court summarised the five stage test to determine if a contract is a services concession contract:
- What is the relevant contract?
- Was the relevant contract for a pecuniary interest?
- Is the contract "concluded in writing by means of which one or more contracting authorities or utilities entrust the provision and management of services (other than execution of works) to one or more economic operators, the consideration of which consists either solely in the right to exploit the services that are the subject of the contract or in that right together with payment"? (Regulation 3(3)(a) CCR)
- Will the award of the contract "involve the transfer to the concessionaire of an operating risk in exploiting the services encompassing demand or supply risk or both"? (i.e. there is no guarantee of breaking even in normal operating conditions) (Regulation 3(4)(a) CCR)
- Does the part of the risk transferred to the concessionaire "involve real exposure to the vagaries of the market such that any potential estimated loss incurred by it shall not be merely nominal or negligible"? (Regulation 3(4)(b) CCR)
Legislative developments
Procurement Policy Note 08/23: Using Standard Contracts (PPN 08/23)
PPN 08/23 introduces new 'Standard Contracts' to be used when in-scope organisations are purchasing bespoke goods or services or where goods or services cannot be procured through a suitable government framework. The in-scope organisations are Central Government departments, their executive agencies and on-departmental public bodies. The Standard Contracts to be used are:
- Model Services Contract – for complex services procurements which will require formal dialogue/negotiation with potential suppliers, generally where the contract value is £20m or more or is rated 'Gold' by the Cabinet Office Tiering Tool
- Mid-tier Contract – for goods and/or services procurements which are not particularly complex nor do they require dialogue or negotiation, where the contract value is above the procurement thresholds but falls below approximately £20m
- Short Form Contract – for low value goods and/or services procurements (i.e. where the contract value is likely to be below the relevant procurement thresholds).
The PPN advises that the Standard Contracts do not need to be used if there is a more suitable form of contract available, for example departmental terms and conditions and industry specific contracts such as for construction. It is also recommended that In-scope Organisations always seek legal advice as the Standard Contracts will need to be tailored to be procurement specific. In-scope organisations should apply the PPN as soon as practicable. For further information, click here.
Social Partnership and Public Procurement (Wales) Act 2023 (SPPPWA 2023)
On 29 July 2023, particular provisions of the SPPPWA 2023 came into force by the Social Partnership and Public Procurement (Wales) Act 2023 (Commencement No 1) Order 2023 (SI 2023/794) (Order). The provisions now in force provide for the establishment and operation of the Social Partnership Council for Wales. The Order also brings into force further provisions on 1 April 2024 relating to the social partnership duty (sections 15 and 16 SPPPWA 2023). The social partnership duty requires a public body so far as is reasonable to seek consensus or compromise with recognised trade unions when carrying out sustainable development objectives under the well-being duty (under the Well-being of Future Generations (Wales) Act 2015). Alongside the social partnership duty there is an accompanying obligation to prepare social partnership reports each financial year which detail what the public body has done to comply with the duty (section 18 SPPPWA 2023).
Procurement Bill developments
The Procurement Bill progressed through the Commons Report and Third Reading stages in June and will now begin the 'ping-pong' stage on 11 September 2023 in the House of Lords. There were several key issues raised at Report Stage including national security and surveillance equipment, modern slavery and human rights, tax transparency, direct award and workers rights. Once both houses reach agreement on the Bill it will proceed to Royal Assent.
The government is planning to commence the new regime in October 2024 and as such is planning to release learning and development materials incrementally over the course of the next year, the first of which will launch in November 2023, in order to prepare for the implementation of the Bill.
Part 1 of the public consultation on the secondary legislation recently closed on 28 July and Part 2 of the consultation recently opened. This part focuses on transparency provisions and notices to be used by contracting authorities to comply with the Bill as well as transitional arrangements for those procurements which will be underway at the point the Bill comes into force. The consultation closes on 25 August 2023. For more information, please click here.
If you have any queries about the recent procurement law updates detailed in this article or if our expect procurement lawyers can be of assistance to you, please do not hesitate to get in touch.
