Public Procurement Bill - Recent Amendments

As the Procurement Bill reaches its final stages before royal assent, we take a look at some of the changes made since its introduction in May 2022.

Whilst the Bill has not undergone radical changes, between the Commons and the Lords, there have still been some interesting additions. We will revisit these changes following consideration of Commons amendments scheduled for September 2023.

Regulated below-threshold contracts: duty to consider small and medium- sized enterprises

As previously explored in Shoosmiths’ article “SMEs, the Procurement Pie and Procurement Challenges”, some of the promised benefits for SMEs are more limited than advertised. There has been one addition to the Bill, at section 86, which may help SMEs who are competing for contracts that have a value of less than the applicable financial threshold. This is currently £213,477 (or £138,760 for central government procurements) in respect of services and supplies, but is subject to change through regulations. Before inviting the submission of tenders for such contracts, a contracting authority must have regard to the fact that SMEs may face particular barriers when competing for the contract, and must consider if such barriers can be removed or reduced. 

Whilst there is no obligation on the contracting authority to actually remove any identified barriers, having a duty to consider SMEs in this way is helpful to SMEs who are much more likely to bid for lower value contracts. It’s just a shame this kind of consideration is not also extended to higher value contracts.  

Minimum time period for contracts subject to negotiated tendering period

The Procurement Bill sets out minimum time periods for contracting authorities to allow for submissions of requests to participate in a competitive flexible procurement. Section 54 has been amended however, to allow for no minimum time period for contracts which are subject to a negotiated tendering period and are either a) a utilities contract, or b) being awarded by a non-central government authority.

At first glance this seems potentially onerous to suppliers as they will need to react quickly if there is a very short timeframe set, and suppliers should indeed prepare for this. However it is worth noting that this does only apply to a tendering period that is agreed between the contracting authority and pre-selected suppliers so suppliers will be aware if they have been pre-selected and can prepare for such an eventuality.

Abnormally low tenders

When assessing tenders following a competitive tendering procedure (under section 19(3) – (5)) a contracting authority will have the right to disregard any tender that offers a price that the contracting authority considers to be abnormally low. Before doing so, however, the contracting authority must notify the supplier and give the supplier reasonable opportunity to demonstrate that it will be able to perform the contract for the price offered to the contracting authority’s satisfaction.

This seems like a positive amendment for both parties: contracting authorities can test the strength of any low bids and be reassured that the contract can be delivered for the price offered; and suppliers can have greater comfort that they will not be undercut by lowball offers from competitors. However, this is likely to only be applied if one of the bids is so much lower than the others and so won’t allow for the testing of bids that seem a little bit low. Suppliers should be prepared to justify any low offers in terms of deliverability. 

Contracting authorities need to ensure that they comply with the requirements to notify and provide the supplier with an opportunity to respond and be confident that they have the right to disregard any tenders in order to avoid any subsequent challenges by suppliers.

Debarment provisions & interim relief

As mentioned in Episode 2 of our Public Procurement Podcast series significantly, the Procurement Bill will bring about the introduction of debarment register. This will be a centrally-managed list of suppliers excluded from competing for public contracts. Contracting authorities must notify their relevant appropriate authority (in England this is defined as a Minister of the Crown) if they exclude a supplier from participating or progressing in a competitive tendering procedure as a result of the supplier being “excluded” or “excludable” – we also discuss these grounds in the same podcast. Suppliers are added to the list following a ministerial investigation which concludes that the relevant exclusion grounds apply and decides that the supplier should be added to the debarment list.

Appreciating the severe consequences for suppliers incorrectly put on the debarment list, the Procurement Bill has been updated to allow for interim relief. Specifically, new section 63 introduces the right for the supplier to apply to the court for suspension of the Minister’s decision to enter the supplier’s name on the debarment list. Such an application must be submitted within the debarment standstill period, currently listed as eight working days, starting with the day on which the Minister gives notice to the supplier of the decision to enter the supplier’s name on the debarment list.

When considering the application for interim relief the course must have regard to (i) the public interest in ensuring that public contracts are not awarded to suppliers that pose a risk, (ii) the interest of the supplier including the likely financial impact of not ordering interim relief and (iii) any other matters the court considers appropriate. As interim relief, the court has the power to suspend the Minister’s decision until the appeal has been determined or discontinued, or no appeal has been made within 30 days of the date the supplier first knew or ought to have known of the Minister’s decision, or temporarily remove the supplier’s name from the debarment list.

In our view this is a positive addition for suppliers as the negative PR impact of being wrongly included on a list as well as the potential ramifications of not being able to compete for future public contracts as a result of being added to the list.  However, there is a very small window to challenge so therefore suppliers must act swiftly.  Suppliers also need to take into account the costs that will be involved in applying to the Court for suspension of the Ministers’ decision to enter their name on the debarment list however, invariably, the decision would always likely be made to proceed with such an application.

Debarment proceedings and closed material procedure

A further amendment has recently been made to the Procurement Bill in the context of debarment. Given that debarment proceedings may require the supplier to disclose sensitive information, new section 66 now allows for suppliers to request that their submissions are considered as a “closed material application”. This approach means the sensitive material in question will be kept confidential.

A court may make such a declaration if it considers that (a) the supplier would be required to disclose sensitive information to another person or would be required to make a disclosure were it not prohibited by certain conditions or (b) it is in the interests of the fair and effective administration of justice to make such a declaration.

Publication of modifications

Under the Procurement Bill as originally published back in May 2022, a contracting authority would be required to publish a copy of a modified contract with an estimated value of over £2million. During the passage of the Bill through Parliament, the threshold was amended to £5million and the contracting authority would have to publish either a copy of the contract as modified or the modification.

The latest amendments have shifted the position again such that the contracting authority would be required to publish a copy of the contract as modified or the modification in situations where the contracting authority would be required to publish a contract change notice – so in circumstances where the modification increases or decreases the estimated value of the contract by more than 10% for goods or services and more than 15% for works or the term is increased or decreased by more than 10%. In earlier versions of the Bill, light touch contracts, contracts awarded by private utilities were exempt from this requirement but recent amendments remove this distinction and so they would potentially also be caught by this requirement. It remains to be seen what the final position will be so this is one to watch. 

Record keeping

The final amendment to note is a recently proposed new section 96 which would require contracting authorities to keep records to explain material decisions made for the purpose of awarding or entering into a public contract. A decision will be treated as “material” if the contracting authority is required to publish or provide a notice, document, or other information in relation to the decision, or to make the decision. Contracting authorities will also have to keep records of any communication between the authority and a supplier that is made in relation to the award or entry into of a public contract and before the contract is entered into. These records must be kept for three years - from the date on which the contract is entered into or, if the contract is not entered into, from the date of award. This doesn’t affect any longer timescales that contracting authorities are required to observe in relation to record keeping.

As a result, in theory, contracting authorities will be subject to an additional administrative burden. In practice contracting authorities will already keep records of decisions, minutes of meetings and electronic communications on portals and so this may not be overly onerous. It does have the obvious effect that records can be produced for the purpose of court proceedings.

The next stage is the consideration of the Commons amendments scheduled for September 2023. We will continue to monitor the Procurement Bill and any final amendments that may be made before Royal Assent.