I was today years old when I discovered this about the Procurement Act: 5 things that might surprise you
If you work anywhere near a procurement team in an authority at the moment then you are probably getting a bit of Procurement Act fatigue by now: deep dives, training and briefings at every turn, but there are some quirks in the Procurement Act 2023 which you might not yet have discovered.
Alison Walton, partner and head of our procurement team, gives her top 5 “wow” moments.
1. Working days – beware of how you calculate this!
This one could really catch some authorities out. The new standstill period will, of course, be eight working days rather than the previous 10 calendar days.
Day 1 will be the day on which the Contract Award Notice is published on the Central Digital Platform (unless you are publishing it on a non-working day for some reason!).
But did you realise that the definition of “working day” in the Act excludes any day that is a bank holiday anywhere in the UK?
As Scotland and Northern Ireland have different bank holidays to England, this could well catch some authorities out and the consequences are huge if it does – if the minimum standstill is not observed this can lead to grounds for set aside of the contract if it is challenged.
The government has this very handy tool that inserts all UK bank holidays into your Outlook calendar and I would strongly recommend that you do this!
2. Poor performance notices
We all know by now that high-value contracts will include Key Performance Indicators (KPIs) and authorities will need to report at least annually on the supplier’s performance against those KPIs in a Contract Performance Notice.
However, there is also a mechanism in the Act which applies to any over-threshold contract and requires an authority to report the supplier’s poor performance in a separate notice known as a “poor performance notice”.
In fact, there doesn’t even need to be a breach of the contract. All that is needed is for the authority to consider that the supplier is not performing the contract to the authority’s satisfaction, the supplier has been given a chance to improve their performance, and has failed to do so. All very subjective wording!
If this applies then the authority has no choice, it must publish a poor performance notice. This can have huge consequences for a supplier… keep reading!
3. Termination for poor performance of any public contract – an implied term of every contract
The Act implies a term into each public contract (whether the parties like it or not) that allows the authority to terminate the contract if at any time the supplier becomes an excluded or excludable supplier whilst the contract is in force.
Now, a supplier becomes an excludable supplier if (among other things) it has a poor performance notice published in relation to it.
This means that if an authority isn’t happy with the way a contract is being performed, the supplier doesn’t rectify this to the authority’s satisfaction within 30 days, then every single public contract that supplier has is then at risk of immediate termination under that implied term.
A very powerful supplier management tool for authorities and this will be the subject of a more in-depth briefing from us in due course.
4. Standstill on direct award
There is now a requirement for a mandatory standstill period if an authority directly awards a contract without a tender process.
The only circumstances in which this does not need to happen is where the direct award is being made for reasons of extreme urgency, in which case it is fairly obvious that there will be no time for a standstill period.
In all other cases, however, the authority must first tell the market that it is about to directly award a contract and why that is permissible under the Act, using a Transparency Notice, and then issue a Contract Award Notice setting out details of the standstill period it will observe, and then finally it must issue a Contract Details Notice once the contract has been signed.
Maximum transparency for a process which used to go somewhat under the radar under the PCR.
5. Automatic suspension during standstill only – never extend standstill!
Under the PCR, a supplier wanting to challenge a contract award has a decision to make – they can cause real problems for an authority if they issue court proceedings at any time before the contract is signed.
If they wait until after the contract is signed, they can usually only claim monetary damages if successful. But pre-contract, the issue of a claim form by an aggrieved supplier puts in place what is known as the “automatic suspension” – a bit like an automatic injunction without having to apply to court.
This stops the authority from awarding the contract to the successful supplier until a court has agreed to lift the suspension (which it might do if the authority applies for this) or until the full trial is concluded (which could take months).
For this reason, under the PCR, authorities are usually willing to delay contract signature until any aggrieved suppliers are satisfied because otherwise, the authority might just force a supplier to issue proceedings to protect their position whilst they investigate their suspicions further.
Under the Act, this position is slightly different, which we think is going to lead to different types of behaviour in future.
The automatic suspension will still fall into place on issue of a claim form at court, but only if the claim form is issued during the eight-working day standstill period and not after that period has concluded, even if the contract has not yet been signed.
This means aggrieved suppliers are going to have to act very quickly if they want to benefit from the automatic suspension.
They may request extension of the formal standstill period to preserve this right, or they may make use of the alternative provisions in the Act which allow them to apply for an injunction to stop the award, but this is a much bigger (and more expensive) step.
Authorities on the other hand are going to be very wary of agreeing to extend the standstill period, and we may well find them agreeing not to award the contract but refunding to extend the formal standstill period. It is not clear what the view of the courts will be to this nuanced position but time will tell.
For more information, or if you have any general queries about the Act, please contact Alison Walton using [email protected] or 0191 211 7850.