Changes to public procurement regulations

Traditionally, contractors in the UK have found the decision to challenge a contracting authority they suspect of foul play in a tender process a difficult one. Not wanting to be seen to “bite the hand that feeds them”, has often resulted in contractors accepting a tender rejection they believe to be “a bit fishy”. However, in the depths of the economic downturn - where work is now harder to come by and every contract counts - this is changing. Contractors, in increasing numbers, are challenging tender processes which they believe do not satisfy the requirements of the Public Contract Regulations 2006.

Many of these complaints/challenges are dealt with amicably between the contractor and the public sector body before they reach the courts, but there have been an increasing number where contractors have sought to lodge formal proceedings and seek their remedy through judicial means.

Following a recent change in the Public Contracts Regulations 2006 contractors wishing to pursue remedies through judicial means will have a much shorter time period within which to do so (30 days instead of the previous three months). This change, set out in the Public Procurement (Miscellaneous Amendments) Regulations 2011, is a result of the ECJ ruling in Uniplex where it was held that the previous time limits were incompatible with European law. The court will still have the discretion to extend this time-limit where it deems there is a good reason for doing so, but only up to a maximum of three months from the contractor becoming aware of the breach.

Other amendments introduced include:

• Proceedings are now to be regarded as having been “started” (for the purposes of the 30 day limitation period) on the date that the contractor issues the claim form, rather than the date it is served on any defendant. However, the claim form can be served up to seven days after the date of issue, meaning that it could be served outside the 30-day limitation period.
• In relation to contract suspension, this is now effective when a claim form has been issued and the contracting authority “has become aware” that this is the case (rather than when the contracting authority is deemed to have been served with the claim form).
• Contracting authorities do not have to issue award decision notices to any tenderers whose offers have already been definitely excluded prior to the end of the process
• The list of mandatory exclusions from a process have now been expanded to include criminal offences under the Fraud Act 2006 and the Bribery Act 2010.
• The reduced time-limit poses new practical issues for both the contractor and the contracting authority:
• It is likely to encourage contractors to issue legal proceedings without being in possession of the full facts of the alleged breach in order to protect their legal position and discourage them from seeking an amicable resolution by requesting further feedback from the client and negotiating a solution, as this may take longer than the 30 day limitation period with the associated risk of asking the court for an extension of time.
• Requests for relevant information under the Freedom of Information Act 2000 will no longer assist contractors, as the provision of such information by a contracting authority is likely to fall outside the 30 day time-limit.
• Contracting authorities should consider, at the outset, structuring their procurement procedures in a way that allows for the speedy disclosure of relevant information in order to avoid additional legal costs being accrued in the event a contractor chooses to apply to the court for an extension of the 30 day limitation period.
• Recent UK case-law has shown that the courts are nearly always willing to lift an automatic suspension obtained by an aggrieved contractor under the new(ish) remedies regime. This trend is likely to continue if courts are faced with ill-prepared claims lodged by contractors who have not had the opportunity to obtain sufficient clarity as to the alleged breach.

Clarity of time-scales has therefore come at a cost and the overall impact of the 30 day time-limit is likely to produce a rash of scantily-detailed claims by contractors seeking to protect their position.

Rebecca Rees is a partner at Trowers & Hamlins LLP