The Procurement Bill - Contract Management, Exclusions and the Challenge Process

We recently ran The Procurement Bill - Contract Management, Exclusions and the Challenge Process webinar. Please see below the Q&A.

Does the way the bill is drafted impact on the devolved regulations that apply in Scotland?

Please see the slides attached on the applicability to Scotland.

 

What is classed here as a material change to the 'economical balance' of a contract re the modification?

At this stage there is no clear guidance as to what would be considered to be a material change in the context of the economic balance of a contract and this would need to be considered on a case by case basis dependent upon the particular circumstances of that contract and the proposed change, including from a proportionality perspective.

In the first instance, the courts may be minded to look to the existing statutory position and the perceived intent of this drafting (from the Pressetext case) which is to prevent collusive scenarios between contracting authorities and their favoured suppliers whereby public contracts are awarded at a relatively low price with a tacit understanding between the parties that the supplier will seek to improve the terms in its favour once in contract.

To that extent, the general baseline principle will likely remain that a supplier should not benefit from amendments that result in them being paid more for doing the same amount of work under a contract and nor should they benefit from amendments which mean they are paid the same for providing a lesser scope of work or services than was originally envisaged.

What the introduction of materiality will likely mean is that in borderline scenarios where it is not readily apparent whether there is actually a change in economic balance in favour of the supplier, it will be very difficult to claim that these would be classed as material changes which should not be permissible.

 

Does the publishing of KPIs relate to framework agreements awarded over GBP5m or just the contract awarded under the framework?

The obligation to publish at least three KPIs will not apply to framework agreements. This is expressly provided for in section 52(5)(a) of the Procurement Bill.

 

What about scenario of original contract below threshold and modification value takes contract above threshold for notices? Is it the value of the modification that is subject to notice?

Subject to any guidance or case law emerging on this point, our view is that as long as the original value has been identified in good faith as genuinely below threshold, then the contract is not caught by the notice requirements under the Bill and a subsequent permissible modification taking the contract above threshold would not change this.

 

Would rival suppliers be lining up to JR Authorities if under performance isn't being picked up per the requirements in slide 14?

Excluding suppliers for poor contractual performance is a discretionary ground of exclusion and therefore it would be very difficult for a rival bidder to challenge a decision not to exclude a supplier on these grounds. What rival bidders may do is flag to contracting authorities that a notice (or more than one notice) has been published about a rival’s contractual performance and ask that the contractual authority exercise its discretion to decide whether to exclude that bidder. If the contracting authority considers the issue and decides not to disqualify then, as the decision is at their discretion, there is no strong ground for challenge. If it was established that a contracting authority had not been aware of a notice identifying poor contractual performance or had not properly considered the discretionary right to exclude, then a rival bidder may seek to challenge that failure to consider the point. However, the court would simply require the Authority to exercise its discretion and the authority may then decide not to exclude.

 

Couldn't contract performance be better dealt with within the tender question set rather than reference to a published notice?

The fact that there is a discretionary ground to exclude a supplier if a notice has been published about a supplier’s contractual performance on a contract, does not prevent a contracting authority from specifying the information it requires around relevant contractual experience in deciding whether a bidder should be considered for a contract. The notice ensures that other contracting authorities can be made aware that a contracting authority was not satisfied with the supplier’s performance under that contract and an authority can decide whether that issue causes it sufficient concern to exclude the supplier under its discretion. It may well be that authorities will be very reluctant to exercise this discretion unless a repeated pattern of notices is identified.

 

Presumably the definition of a "Minister of the Crown" includes Welsh Ministers for contracting authorities in Wales?

This question has been asked in the context of the discussion in the section of the webinar on debarment, where the Minister of the Crown is responsible for keeping the debarment list (see section 62). The Minister of the Crown does not include Welsh Ministers. The Minister of the Crown means the holder of an office in Her Majesty’s Government in the United Kingdom. However, Welsh Ministers come within the definition of an “appropriate authority” within the Bill. Section 122(1) of the Bill provides that an “appropriate authority” means:

• a Minister of the Crown,
• the Welsh Ministers, or
• a Northern Ireland department. The Bill provides for a process whereby an appropriate authority can undertake an investigation under section 60 as to whether a supplier is an “excluded” or “excludable” supplier.

The Welsh Ministers or a Northern Ireland department may then refer the case to a Minister of the Crown for the Minister’s consideration as to whether it is an “excluded” or “excludable” supplier and the Minister may enter the supplier’s name on the debarment list.

 

Would poor performance of a contract let under the current regime, trigger debarment under the new regime?

There is nothing we can see within the current drafting of the Procurement Bill which appears to preclude, as a matter of principle, poor performance under Schedule 7 paragraph 12 (Breach of contract and poor performance) in relation to a contract let under the current regime from triggering debarment under the new regime. Schedule 7 paragraph 12 refers to “relevant contracts” which are contracts to which a regulated authority is party, and the definition of a regulated authority includes a contracting authority, another public authority or an authority outside the United Kingdom that the decision-maker considers to be equivalent, none of which are defined by reference to this Act specifically. We note however that there may be transitional provisions which deal with points such as this in draft secondary legislation that is yet to be published.