Neither fast nor fair – proposals for challenges in the transforming public procurement Green Paper

This ebriefing is part of our series of ebriefings on the Government’s Green Paper: Transforming public procurement. It considers the Government’s proposals for challenges, as set out in Chapter 7 of the Green Paper entitled ‘Fast and fair challenges’.

The Government’s stated objective is to make the review process more accessible. However, the proposals in the Green Paper are likely to have the opposite effect.

Cost-benefit analysis
There are some proposals to speed up court processes and encourage claims being brought outside London. These are unlikely to reduce the costs of procurement challenges, which in practice exclude many tenderers like SMEs and voluntary organisations from challenging breaches of the procurement rules. Tellingly, there is no suggestion of reducing the court fee for challenges from its current figure of up to £10,000.

The proposed cap on damages (at 1.5 times bid costs) has received much comment and criticism elsewhere. The level of damages needs to strike a balance between what is fair to tenderers and what it is appropriate for contracting authorities to pay following a breach that has not been corrected. Currently, damages compensate the tenderer for what they have lost. Any cap on damages results in an aggrieved tenderer not being compensated for everything they have lost out on because of the breach.

A cap may also make it harder to settle procurement challenges. If the maximum amount payable on a claim is capped, it would be difficult to justify paying any more than that amount to settle a claim (which might be stopping a contract from being signed until it is settled).

Tribunal
We supported the proposal for a specialist tribunal to deal with lower value procurement challenges. We said that this should be a new, specialist body, rather than just tacking these functions onto those of existing tribunals.

We also suggested considering a process like adjudication for construction disputes.

Pre-contract remedies
We supported the proposals to prioritise pre-contract remedies over post-contractual damages, but with some concerns over court and tribunal delays potentially delaying the signature of important contracts.

We commented that the test for lifting an automatic suspension on signing contracts should depend on whether the proposed cap on damages is brought in. If damages are limited to a percentage of tendering costs, maintaining the automatic suspension is more important for tenderers. If substantial damages are still payable for a breach after the contract has been signed, the current balance in favour of lifting the automatic suspension can be retained.

Standstill letters
The green paper makes much play over the proposed abolition of standstill letters. However, this looks like a mainly ‘cosmetic’ change.

If contracting authorities are required to state in a notice the ‘reasons’ for the contract (or places on a framework) being awarded to a particular tenderer(s), the same care will need to be put into drafting these reasons as currently goes into drafting standstill letters.

Potentially, the requirement to make these ‘reasons’ public on a platform could mean that contracting authorities need to take even more care over preparing them than they take over standstill letters now. Standstill letters are currently sent just to individual tenderers. If the reasons for the decision are made publicly available in future, all tenderers will be able to see them. Potentially this could increase the likelihood of challenges if this feedback on the reasons for the contract award is considered by any of those tenderers not to offer a sufficient justification for the outcome of the tender process.

What happens next
The consultation has now closed. We have included these comments in our response to the consultation paper, which we submitted on 10 March 2021. We are now awaiting with interest the Government’s detailed proposals following the consultation.

For more information

For further information in relation to any of the above, please contact your relevant ACS contact or Andrew Millross.

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