Looking back at 2008 – an increase in procurement challenges
The last 12 months has seen an increasing level of successful procurement challenges. The high profile cases of Lettings International Ltd v London Borough of Newham and Risk Management Partners Limited v London Borough of Brent have highlighted the increasing scrutiny that potential suppliers, and their lawyers, are subjecting procurement processes to. This trend shows no sign of abating with a framework agreement awarded by the Northern Irish government recently being set aside in the High Court and a number of challenges from the general public to the appointment of sponsors of academy schools pending.
There are several reasons why this upward curve is likely to continue:
- Once suppliers have seen what is possible, more will follow. It may be an exaggeration to say that the floodgates have opened, but these successes will inevitably lead to further challenges.
- The level of litigation increases in a recession. With the government’s commitment to increase public spending in the recent pre-budget report there will be a scramble from suppliers to get their share of this spend. Those that miss out are not likely to go quietly.
- Law firms are likely to use these recent successes to encourage further challenges.
The points above do not even take account of the forthcoming remedies directive. Taking effect by the end of 2009, it will provide that even contracts in force are at risk of being declared void. Exactly what this means we do not yet know (the OGC is currently consulting on this subject), but it will mean more challenges and present a greater risk to public sector service delivery if a challenge is successful.
Looking forward to 2009 and beyond – what can be done to reduce the risk of challenge?
In light of the increased risks, it is even more important to carry out procurements in a compliant manner. The cases referred to above have highlighted some key points to take account of:
- Full details of the evaluation criteria must be disclosed to bidders. General headings will not suffice, any criteria and weightings on which the authority intends to rely, and which would affect the way in which bids are prepared, must be made available to all bidders.
- How a scoring system works and what points are available must also be clear (and fair).
- Company ownership does not automatically mean the Teckal in-house exemption will apply.
However, the requirements that apply to all procurements (fully regulated or otherwise) are numerous and wide. This means that there are many more areas which, if not managed properly, could lead to a challenge. For example:
- The European Commission is keen to clamp down on the incorrect use of selection and award criteria. Selection criteria apply to the bidder and may only be used at the pre-qualification stage. Award criteria apply to the bid and may only be used at the award stage.
- The manner in which call-off contracts are awarded under a multi-party framework agreement (without a mini competition) is likely to get more contentious. Suppliers that have committed significant resources to gain places on framework panels will not be pleased to see work awarded to their competitors (on or off panel) without competition.
Therefore, considering the lessons learnt from the above cases is important but will not suffice. Authorities need to ensure that their procurement teams are adequately resourced and that an extra level of quality assurance is added as part of the procurement process. While there may be an added expense in doing this it will prove far cheaper than the potential costs of litigation and the increased service delivery costs that will arise when procurement processes are delayed.