Procurement Pulse December 2022
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
English Court Decides that Breach of Procurement Rules Not Sufficiently Serious to Merit Damages
This case related to the procurement of orthodontic services by the NHS. The claimant had narrowly missed out on winning the contract due to a mistake made by evaluators who had misunderstood a solution which they had suggested. The English High Court decided that had this error not occurred the claimant would have won the competition, however, in determining whether damages should be awarded the court decided that the breach was “not sufficiently serious” enough to justify such an award. The key factors in the court’s decision were:
- The mistake was simple, unintentional and excusable.
- The impact of the loss on the claimant, who had remained in business, was limited.
- The breach had low impact on public access to orthodontic treatment.
The decision is a helpful one for contracting authorities as it suggests that the court may be prepared to overlook a damages award where an error is made which is excusable and has no serious effect on the claimant’s business. However, for bidders, it is another reminder that the court will not automatically award damages even where an error is made by the contracting authority in the evaluation of a tender.
European Court Issues Judgment on Abnormally Low Tenders
Veridos GmbH v Ministar na vatreshnite raboti na Republika Bulgaria, Mühlbauer ID Services GmbH – S&T
In this case a Bulgarian Court sought a preliminary reference ruling from the European Court on identification and challenges to abnormally low tenders. The background to the case was that an unsuccessful bidder had challenged the award of a contract in Bulgaria on the basis that the successful tender was abnormally low. There were only two bidders involved in the competition and the Bulgarian Commission for Protection of Competition had taken the view that it was not possible to calculate the average value to assess whether the tender was abnormally low. The Bulgarian Court had sought guidance from the European Court on various questions.
The ECJ decided that:
- a contracting authority cannot avoid the obligation to identify and investigate tenders which they suspect to be abnormally low.
- if a contracting authority suspects that a tender is abnormally low, it is required to check whether this is indeed the case, considering the specifications and call for tenders.
- when a contracting authority has not initiated a verification procedure concerning a possible abnormally low tender, its assessment may be subject to judicial review.
Whilst the case was brought under European Directive 2009/81, contracting authorities in the UK are subject to similar obligations under Regulation 69 of the Public Contracts Regulations 2015 and can therefore take useful guidance from this judgment.
Policy, Guidance and Other Developments
UK Procurement Bill Update
The line-by-line examination of the Bill by Committee in the House of Lords concluded on 26 October and the Report Stage concluded on 30 November 2022. Several amendments have been agreed to so far including:
- Debarment: The Bill has been amended to require contracting authorities to establish whether a tenderer intends to sub-contract any part of performance of the contract and, if so, to seek to determine whether any of the intended sub-contractors are on the debarment list.
- Contract Modifications: Amendments have been introduced to clarify what is meant by a modification “materially” changing the scope of a contract.
- Preliminary Market Engagement: Amendments have been made which require contracting authorities to either issue a Preliminary Market Engagement notice prior to issuing a tender notice or provide reasons in the tender notice for why it elected not to do so.
The Third Reading of the Bill in the House of Lords took place on the 13 December 2022 and the Bill has now passed to the House of Commons for consideration.
We have produced several recent articles on the Procurement Bill which are available on our HM Government Blog:
- The Public Procurement Bill – delegated powers – 'to delegate, or not to delegate: that is the question'
- Set menu or smorgasbord: will the Procurement Bill help to streamline planning and commencing procurements?
- Webinar Q&A – Planning and Commencing a Procurement
UK Government Publish Planning and Preparation Checklist for New Procurement Regime
The Government Commercial Function has published a checklist relating to the new procurement regime proposed under the Procurement Bill. The checklist provides initial actions in four key areas - policies and processes, systems, people, and transition - where early consideration will help contracting authorities with their preparation. A learning and development package for contracting authorities on the new procurement regime has also been outlined by the Cabinet Office
Wales: Legislative Consent Memoranda on the Procurement Bill
The Welsh Parliament Legislation, Justice and Constitution Committee has published a report on its seven recommendations relating to the legislative consent memorandum on the Procurement Bill 2022-2023. The Committee notes the Welsh Government’s reasons for making provision for Wales in the Bill, as set out in the memoranda; and that there are some areas of disagreement between the Welsh Government and the UK Government on which clauses of the Bill require the Senedd’s consent.
New Policy Notes
The UK, Government has recently published procurement policy note 03/22 “Updated Guidance on Data Protection Legislation”. This note updates and replaces PPN 02/18 and contains guidance and updated legal clauses which take into account the UK's exit from the EU.