With the advent of the Procurement Act 2023, finally coming into force on 24 February 20251, the Keating Chambers Procurement Roadshow2 addressed some of the areas in which public procurement law can be expected to change now that the former EU public procurement regime has come to an end. The topics which have been of most interest in discussions held during the Roadshow have been (i) exclusions and debarment; (ii) automatic suspensions; (iii) recovering damages; and (iv) limitation.
Exclusions and debarment
New tools under the 2023 Act include the duty on contracting authorities to disregard any tender from an excluded supplier (section 26(1)) and a discretion to disregard any tender from an excludable supplier (section 26(2)). There are wider mandatory and discretionary grounds under Schedules 6 & 7. A contracting authority also has a duty to notify the relevant appropriate authority within 30 days if a supplier is disregarded (section 60) and this authority will then decide whether to add the supplier to the debarment list (sections 60–61).
A supplier is excluded if:
- the contracting authority considers that mandatory grounds of exclusion apply to the supplier or an associated person;
- and the circumstances are continuing or likely to reoccur, or the supplier is on the debarment list as an excluded supplier (section 57(1)).
A supplier is excludable if:
- the contracting authority considers that discretionary grounds of exclusion apply to the supplier or an associated person;
- and circumstances are continuing or likely to reoccur, or the supplier is on the debarment list as an excludable supplier (section 57(2)).
An associated person is a person relied on by the supplier to satisfy conditions of participation (section 26(4)). A contracting authority must seek to determine whether any intended sub-contractors are on the debarment list (section 28). The Schedule 6 (mandatory exclusion) grounds are similar to those under the Public Contracts Regulations 2015 but are wider in scope and apply to the supplier or “connected persons”. The Schedule 7 (discretionary exclusion) grounds are wider and more detailed and apply generally to connected persons, except for poor performance. If a contracting authority considers there to be UK competition law infringements, there is no longer any need to show intent to distort competition.
The implications for suppliers are that they will have to carry out extensive self-audits and due diligence of associated / connected persons. If a self-declaration is wrong and is discovered, that would potentially be a mandatory exclusion from the procurement in question and certainly a discretionary exclusion from that and future procurements. If they do self-declare, they may need to demonstrate self-cleaning. Either way they could end up being excluded and debarred.
The implications for contracting authorities are that there is a lot more to consider and potentially get wrong; hence the potential for increased challenges, either from unsuccessful bidders discovering an exclusion ground which was missed or by excluded / disregarded suppliers challenging the grounds for exclusion. The relevant appropriate authority can also expect challenges under new rights of appeal.
Automatic suspensions
The Green Paper promised a new test, no longer based on that applied when granting interim injunctions, which was later promised to be a simple, single limb test which would provide for suspensions to be lifted where there are overriding consequences for the various interests concerned. The new statutory test, now found in section 102, provides that:
“In considering whether to make an order under subsection (1), the court must have regard to:
(a) the public interest in, among other things:
(i) upholding the principle that public contracts should be awarded, and contracts should be modified, in accordance with the law;
(ii) avoiding delay in the supply of the goods, services or works provided for in the contract or modification (for example, in respect of defence or security interests or the continuing provision of public services);
(b) the interests of suppliers, including whether damages are an adequate remedy for the claimant;
(c) any other matters that the court considers appropriate.”
In respect of the public interest in lawfulness, the Court has previously held (Edenred (UK Group) Ltd-v-HMT [2014] EWHC 3555) that the strong public interest in compliance with the law outweighed the public interest in avoidance of delay. However, Stuart-Smith J. in Openview, Kent and Alstom held that the undoubted public interest in procurement being carried out properly does not tend of itself to support the maintenance of the automatic suspension.
In Sysmex (UK) Ltd-v-Imperial College Healthcare NHS Trust [2017] EWHC 1824, it was held that if it was accepted that there was a serious issue, the parties should, except in exceptional circumstances, resist any further temptation to argue the merits. The judgment in Edenred did not mean that the public interest in lawfulness trumped everything else and was thus not automatically a point in the Claimant’s favour.
In Camelot UK Lotteries Ltd-v-Gambling Commission [2022] EWHC 1664, it was held that whilst there was no dispute that there was a public interest in awarding licences lawfully; the question of lawfulness was the very issue the court would be required to determine at trial. Once the parties had agreed that there was a serious issue, the dispute could only be resolved at trial and therefore did not assist in determining where the balance of convenience lay.
In respect of the importance of avoiding delay in bringing an application to lift an automatic suspension, the Defendant’s evidence is usually accepted. Procurements usually are urgent, as is often accepted by the Courts. In respect of the adequacy of damages, although there were arguments on the difficulty of assessment and the loss of reputation or for highly prestigious contracts, damages are usually adequate in large procurements, e.g. Teleperformance, since the primary loss of a commercial contract will be the loss of profits sustained by the losing bidder and this is capable of assessment by way of damages. In respect of reputational damage, the bar is a high one e.g. Camelot.
In conclusion, the former three-stage sequential test has been replaced. The adequacy of damages for the Claimant is no longer a threshold requirement, but will still be a factor for consideration. There is no express requirement for a serious issue to be tried, but the Government Guidance issued on Remedies states that the test in section 102(2) still requires the Court to consider the merits of the case to ensure that the interests of suppliers are considered alongside the public interest. Thus, all the same factors are to be considered as under the old law and there is no real reason to assume that the Courts will reach different conclusions about the relative importance of these factors.
Recovering damages
Does a Claimant need to demonstrate that any breach of duty it can prove is sufficiently serious to justify an award of damages? Put another way, is the decision of Coulson LJ in Braceurself Ltd-v-NHS England [2024] EWCA Civ 39 good law, where he stated:
“In a public procurement claim, where an unsuccessful bidder claims damages against the contracting authority, the claimant must prove, not only a breach of the Public Contracts Regulations 2015 (“PCR”) but also that the breach is ‘sufficiently serious’ to warrant an award of damages (sometimes called Francovich damages). Although this is a concept originating in European Law, it remains unamended by the new Procurement Act 2023.”
Indeed, is the decision of the Supreme Court in Energy Solutions EU Ltd-v-Nuclear Decommissioning Authority [2017] UKSC 14 per Lord Mance still good law, where he held:
“In these circumstances, there is in my view very clear authority of the Court of Justice confirming that the liability of a contracting authority under the Remedies Directive for breach of the PP Directive is assimilated to that of the state or of a public body for which the state is responsible. It is in particular only required to exist where the minimum Francovich conditions are met, although it is open to states in their domestic law to introduce wider liability free of those conditions.”
For if not, then the judgment of the Court of Appeal in Energy Solutions EU Ltd-v-Nuclear Decommissioning Authority [2015] EWCA Civ 1262 may (once again) be regarded as good law in respect for any claim for damages for breach of Procurement Act 2023; see judgment of Vos LJ who held:
“For all of those reasons, I have no doubt that, if national law lays down criteria that provide a less restrictive remedy in damages than would be provided by the application of the Francovich conditions, national law will prevail for the benefit of those harmed by the relevant infringements…Under English law, as I have said, the primary claim under the Regulations is a private law claim for breach of statutory duty.”
“In these circumstances, the question resolves itself into an analysis of whether the claim for damages under the Regulations is a discretionary one. For the reasons the judge gave, I am sure that it is not, at least not in the sense that the NDA contends. There is no requirement in English law for a breach of statutory duty to be shown to be “sufficiently serious” before damages must be awarded. A breach is a breach. Once a breach is established, the victim of that breach is entitled to be compensated in damages such as to put the victim in the position he would have been in had there been no breach.”
Moreover, even if the decision of the Supreme Court were otherwise still technically binding, there is a good argument that it did not survive Brexit and the end of Implementation Period Completion Date on 31 December 2020. This is because European Union (Withdrawal) Act 2018 section 5(A4) provides:
“No general principle of EU law is part of domestic law after the end of 2023”.
and the EU (Withdrawal) Act 2018 section 5(6) & Schedule 1 paragraph 4 provides:
“There is no right in domestic law on or after [IP completion day] to damages in accordance with the rule in Francovich.”
On the assumption that this does not do away with the right to damages altogether for breach by the State of EU law or law implementing EU law, this must mean that there is no longer any need to comply with the Francovich conditions in an action for breach of statutory duty. The principles in Francovich can no longer have any effect on a domestic action for breach of statutory duty.
The Procurement Act 2023 is not an EU law or a regulation implementing into UK law an EU directive. Rather, it is an act of primary UK legislation passed by the sovereign UK Parliament. Therefore, any breach of the duty now found in section 100(1) PA 2023 is a fortiori a claim for breach of domestic statutory duty. All the Claimant must prove on a claim for damages (as a pre-contractual remedy under section 103(2)(c)) or (as a post contractual remedy under section 104(2)(b)) is breach of duty, causation and loss.
Limitation
Section 106 PA 2023 provides for time limits on claims. Section 106(1), which broadly corresponds to regulation 93 of the Public Contracts Regulations 2015 provides:
“A supplier must commence any specified set-aside proceedings before the earlier of:
(a) the end of the period of 30 days beginning with the day on which the supplier first knew, or ought to have known, about the circumstances giving rise to the claim;
(b) the end of the period of six months beginning with the day the contract was entered into or modified.”
Section 106 (2), which corresponds to regulation 92 of the Public Contracts Regulations 2015 provides:
“A supplier must commence any other proceedings under this Part before the end of the period of 30 days beginning with the day on which the supplier first knew, or ought to have known, about the circumstances giving rise to the claim.”
This has simplified the legislation and resolved the uncertainty which could exist in relation to claims for a declaration of ineffectiveness (specified set aside proceedings). Following the decision of the Court of Appeal in Lancashire County Council v Brookhouse Group Limited [2024] EWCA Civ 717, where the Court held that it was not open to a contracting authority to rely on the shortened thirty-day time limit (under regulation 93(5)) where there has been no competitive tender procedure, even if the challenger had had the requisite knowledge for more than thirty days. The outcome of the Appeal, and thus the entire application to strike out, would most likely have been different under the PA 2023, since section 106 is concerned only with when the Claimant knew or ought to have known about the circumstances giving rise to the claim.
1 The Procurement Act 2023 (Commencement No. 3 and Transitional and Savings Provisions) (Amendment) Regulations 2024 (SI. 2024 No. 959).
2 Thus far held in Cardiff and Bristol on 30 January 2025 and Leeds on 11 February 2025.
