As a follow-on to our update on the latest changes to the Procurement Bill, it's interesting to look back as far as the Green Paper and summarise which mooted changes didn't make it in to the Bill as presented to Parliament.

As a preface to what follows, the Bill does deliver on a large number of the promises set out in the Green Paper and is delivering on the promised simplification in many areas. But it remains complex and is likely to prove onerous for less well-resourced contracting authorities, for example, the proliferation of new required notices and guidance. A painful transition is likely, and it will be a pity if some of the difficult issues are left to be resolved through litigation, or (until judicially decided) to remain areas of doubt for clients and their advisers.

Arguably, the two most significant such issues are:

  • the possibility of a separate procurement tribunal: while mentioned in the Green Paper, it was clear from what was said there that this idea wasn't favoured by ministers. That's a pity because such a tribunal could have delivered speedy and more cost-effective justice in circumstances where High Court litigation can cause significant delay to the award process. It's likely that knowledge of that delay, and consequent bad PR, has a chilling effect on challengers' willingness to mount a claim in many cases;
  • the dropping of the idea of a costs-related damages cap: widely assumed to be a response to the £90M damages award in the NDA Case, it is to be welcomed that Government dropped this unpopular change.

What never made it in to the Green Paper? A number of areas spring to mind:

  • the lack of a so-called 'whitewash procedure' allowing transparency around potential infractions of the rules, and assuring contracting authorities that it would be safe to proceed after a period. Indeed, the concept of the voluntary transparency notice ("VEAT" or "VTN") has gone;
  • while there are changes to the rules around contract amendment, these have not gone as far as many would have liked, and arguably the new rules on contract change are narrower in some important respects than the existing rules. By way of example:
    • the carve-out which currently exists for contract transfer as a result of M&A or insolvency has been unaccountably narrowed;
    • the opportunity of rendering the 'safe harbour' provisions more useable in practice has not been taken up (see our previous article on this topic here);
    • the new carve-outs added, for materialisation of a known risk and protection of life, seem unlikely to be used frequently or to be of great value in practice.
  • the Declaration of Ineffectiveness remedy has not been amended: arguably, there would have been merit in (for example) capturing the Alstom and AEW v Basingstoke decisions; 
  • although (in common with the approach taken across the Bill) language has been altered to avoid the use of terms drawn from the Directives which were the basis of the existing rules, and there are some changes, there is no major extension to, or clarification of, what the Bill terms "Direct Award Justifications". These are the circumstances in which an open tendering procedure does not need to be followed.  The Direct Award Justifications are at least now grouped together helpfully in schedule 5. It is a pity that these exceptions have not been clarified as they have often proved difficult to apply in practice. It is also the case that, as with the existing rules, there is overlap between situations in which contract modification is permitted and situations in which direct award is justified. The former are contained in schedule 8. It might have been preferable to group these elements together, and perhaps to favour contract modification on the basis that this at least springs from an award procedure leading to the award of the contract which is being modified; the concepts of the possibility of modification or direct award do co-exist in the protection of life ground in schedule 8, for example;
  • It would have been helpful to clarify the status of universities and others who may be within or outside the (current) definition of 'bodies governed by public law' (now termed "public authorities"). In this regard, language changes may at least consign troublesome EU concepts such as "industrial or commercial character" to the history books, although the concept remains in new clothes as a test of whether the entity concerned is "operat[ing] on a commercial basis". Admittedly, such matters may be covered in the promised extensive accompanying guidance, though the hackneyed phrase "authorities must rely on their own legal advice" may well be extensively deployed in these and other tricky areas!

There is still the opportunity for amendment as the Bill makes its way though the House of Commons. Those seeking to lobby for a different approach still have time.

Key Contacts

Jonathan Davey

Jonathan Davey

Partner, Commercial
United Kingdom

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Ewan Hutton

Ewan Hutton

Associate, Commercial

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