Public Procurement Reform in the UK: 3 key take-aways from the Government response to the Green Paper Consultation on Transforming Public Procurement

On 6 December the Cabinet Office published its response to the consultation on Transforming Public Procurement, in which it clarifies its proposals for reforming the UK’s public procurement regime set out in the Green Paper published in December 2020 (see our previous blog here). Many of these proposals concern changes to the remedies regime that allows aggrieved bidders to challenge public procurement decisions.

In its response, the Government has confirmed it will not proceed with several of the more radical proposals, and provides further detail regarding others it intends to implement. Here we consider the impact of three key clarifications to those challenging – or defending – public procurement decisions.

The proposal to cap damages

One of the Green Paper’s most controversial aspects was the proposal to cap damages for public procurement breaches to 1.5x the claimant’s bid costs. Unsurprisingly, this caused a stir among those who were concerned that this would deprive aggrieved bidders of an adequate remedy (among other things). However, the Government has abandoned this proposal on the basis that it may result in unintended consequences, including a potential increase in the overall number of legal challenges, and the risk that the cap would make it less likely that the automatic suspension would be lifted (since damages may no longer be seen as an adequate remedy).

Changing the test to lift the automatic suspension to entering into a contract

Another focus area for the Government has been the test for lifting the automatic suspension. The existing “American Cyanamid” test for granting interim relief – which has been applied to procurement cases to date –  is widely criticised as being skewed in favour of contracting authorities since the purported adequacy of damages makes it difficult for suppliers to succeed in maintaining suspensions. The Government has now confirmed that it intends to introduce a new simple, single limb test into legislation, which will provide for suspensions to be lifted where there are “overriding consequences for the various interests concerned”, including impact on public service delivery.

The Government has also confirmed that, as part of their wider reforms relating to urgent procurement, automatic suspensions will not apply to contracts awarded using the limited tendering procedure in situations of extreme urgency.

Other proposals from the Green Paper that have been abandoned include:

• using existing tribunals to deal with low value claims and issues relating to ongoing competitions;
• requiring contracting authorities to perform an independent review of procurement decisions in the event of a dispute; and
• expressly giving pre-contractual remedies primacy over post-contractual remedies.

Faster and simpler resolution of procurement disputes

The Government also confirmed its intention to introduce reforms that will facilitate pre-contractual remedies, so that breaches of public procurement law can be corrected before a contract is signed, and speed up and simplify challenges to contract award decisions. Amongst these are proposals to:

• encourage contracting authorities to review and respond to challenges made while the procurement process is ongoing;
• introduce court process reforms to enable decisions to be made on written pleadings;
• introduce early enhanced disclosure;
• appoint a dedicated procurement judge; and
• amend the Civil Procedure Rules and/or Technology and Construction Court Guidance to align with the statutory reforms.

Comment

Overall, the Government’s response is likely to be welcomed across the board given the balance it strikes between public and private interests. It does, of course, remain to be seen how such proposals will be implemented. Government contractors – particularly those bidding on high-value contracts – will be glad to see the abandonment of the proposed damages cap, while contracting authorities and contractors alike will welcome procedural amendments to make challenging decisions quicker, easier and cheaper given the existing rules are widely seen as unsuited to the specific challenges of public procurement disputes.

In terms of what comes next, these proposals (along with others relating to other aspects of the procurement process) will eventually be enshrined in the new Procurement Bill, which will then need to pass through Parliament (which may take several months) before secondary legislation is introduced. The Government has not confirmed when it plans to introduce this Bill, but as things stand it is unlikely that any reforms will come into effect before 2023.