PLC Public Sector reports:
The clock is ticking, and it is now less than three weeks until the Public Contracts (Amendment) Regulations 2009 (Regulations) come into force to implement the new Remedies Directive in the UK.
In this post, PLC Public Sector reports on concerns highlighted by speakers at the Procurement Lawyers’ Association (PLA) event on the implementation of the new Remedies Directive last night and also outlines how we will be updating our materials to take account of the forthcoming changes to the procurement regime.
The speakers at the PLA event highlighted several important issues that are likely to cause confusion (or “mayhem and panic” as one speaker put it) when the Regulations come into force on 20 December 2009. The major issues highlighted are set out below. Helpfully, a representative from the OGC legal team was present and provided his own, informal view on some of these issues, obviously such views should not be taken to be views or policy of the OGC itself:
- Issues of confidentiality in debrief: While not new, the front loading of the debrief stage to require the “characteristics and relative advantages” of the successful tenderer’s bid to be sent to all unsuccessful tenderers with the “alcatel” letter (rather than those that request a debrief), is likely to exacerbate confidentiality concerns.
OGC representative’s view: as this is not anything new, there was no comment from the OGC.
- What does “characteristics and relative advantages” actually mean? Concerns over confidentiality are likely to be heightened by a lack of understanding about what information needs to be provided. Particularly as unsuccessful bidders are always likely to claim that the information they are sent is not sufficient.
OGC representative’s view: the Regulations do not introduce anything new in this regard. Bidders have always been entitled to this information, all that has changed is that the information must now be provided up front.
- How serious does a standstill failure need to be to open the door to ineffectiveness? The concerns snowball further, as if there has also been a breach of the public procurement regime during the tender process, a failure to comply with the standstill debrief requirements can lead to a contract being declared “ineffective” (that is, void). However, it is not clear whether any breach of the standstill debrief requirements will suffice or if it must be a serious breach.
OGC representative’s view: the Regulations make it clear that the standstill debrief failure must have denied the unsuccessful tenderer the opportunity to seek legal redress before the contract was entered into. Therefore, the breach should be material.
- What will the impact of the new automatic suspension provisions be? One of the most significant changes introduced by the Regulations is that when an unsuccessful bidder starts court proceedings alleging faults in a procurement, the contracting authority is automatically barred from executing the contract. There is no longer any need to apply for an injunction. If the authority wishes to execute the contract it will have to apply to the court to have this automatic injunction lifted. It is unclear what principles the court will apply when considering whether to lift the injunction:
- Will American Cynamid principles apply?
- Will cross-undertakings for costs be required?
OGC representative’s view: the OGC stated that it felt that the Regulations as drafted make it clear that usual injunction principles should be applied by the courts when considering any application to lift the automatic suspension.
- How will Pressetext variations be dealt with? It is unclear what the implications will be if a contracting authority amends an existing contract and it is subsequently held that the amendments amounted to a new contract that should have been advertised. Will the ineffectiveness provisions void just the variations or the whole contract? Could an authority publish a voluntary transparency notice drawing attention to the changes?
OGC representative’s view: it would seem sensible that the offending variation be subject to the ineffectiveness provisions rather than the contract as a whole. Contracting authorities may also want to consider agreeing with their contractor the implications of a finding that a variation is a new contract and therefore ineffective. There is no reason why a court could not take a “blue pencil test” approach to the contract taking account of such agreement.
Finally, one of the most concerning issues raised was for major projects reliant on the support of funders. Funders are notoriously conservative and issues such as those set out in this post are only likely to make it more difficult to bring projects to a close.
One solution
The changes will only apply to procurements advertised after 20 December 2009. Everyone expects the next three weeks to see a glut of OJEU notices being published in an attempt to avoid the changes. However, even then contracting authorities may still be at the mercy of courts taking a purposive approach to any dispute and applying the revised provisions in whole or part in any case.
Our materials
We will be updating all of our procurement materials to take account of the changes prior to them coming into force on 20 December 2009. We will also be publishing a new practice note on Remedies and new standard documents for use in the debrief processes of procurements commenced after 20 December 2009.