UK government reviews public procurement procedure post-Brexit

Will a simpler, more efficient process to help achieve national strategic goals trigger unintended consequences?
 
The purpose of the paper and accompanying consultation is to set out a road map for future procurement policy and make the procurement process more simple and effective. 

There paper poses 42 questions, underpinned by a number of proposals for change – some of which are more radical than others.

Consolidated regulatory framework

Central to the proposed reforms is the idea that there should be a single regulatory framework for all contract awards, irrespective of whether they are for works, services or utilities.

The single framework would replace what is currently a complex regulatory landscape, which comprises more than 350 separate regulations. 

The Concession Contracts Regulations 2016, the Utilities Contacts Regulations 2016, the Public Contracts Regulations 2015 and the Defence and Security Public Contracts Regulations 2011, which each use different language and contain different rules, would each be repelled and consolidated within a single piece of legislation. 

Less choice of procedures

A further proposal is that there should be a reduction in the number of procurement procedures available for use in the award of contracts.

Currently, the most commonly used and popular procedure is the open procedure. This would be kept in place for "off the shelf" procurements.

The negotiated procedure without prior publication would also be retained, albeit rebadged as the "limited tendering" procedure. 

More freedom to shape procurement

The government's intention is to give Contracting Authorities more autonomy in relation to the design of procurement processes for their benefit.

The green paper anticipates that such freedom will encourage engagement with the market early, giving bidders the ability to create solutions for contracting authorities and help them shape the outcome of the competition.

Rapid challenge process

The government also wants to create a framework in which challenges to procurement decisions can be made quickly and cost-efficiently. 

The proposals involve the introduction of an expedited process outside the Technology and Construction Court (TCC) – i.e., a public procurement tribunal – making access quicker and cheaper. 

While the current system is trusted and rigorous, it is also regarded as lengthy and complex.

The green paper offers evidence that a typical procurement challenge in the UK compares unfavourably with those in EU Member States, which have rules imposing a maximum duration for review proceedings. 

16 Member States currently have limits in place, with review periods ranging between 15 to 60 days, compared to an average of 300 days in the UK for first instance pre-contractual, non-interim proceedings. Unsurprisingly, the median cost of UK review proceedings is estimated as the second highest in the EU for a typical €10 million contract, with a very small number of proceedings going to full trial.

A separate tribunal system also has the benefit of freeing up TCC judges.

A further element of the proposal to reform review proceedings is to cap damages, with a view to discouraging applications.

There is something confused about lamenting the consequences of settled cases as being the loss of an opportunity to correct a breach, while simultaneously seeking to cap damages to discourage claims from being brought in the first place.

It is proposed that there be a presumption that claims be reviewed solely on the basis of written pleadings in most cases, removing the need to be represented at hearings by expensive lawyers.

Culture change: For better or worse?

These proposals to overhaul the procurement challenge process are intended to create a culture change by embracing efficiency.

However, the proposals are not without controversy. On one level, capping damages available to disgruntled bidders is likely to be viewed with enthusiasm by contracting authorities, but received coolly by potential bidders. 

Making the process of challenge more straightforward could also, inadvertently, encourage more challenges, as it has in some jurisdictions, where a bid protest culture has evolved almost into an industry itself. 

The underlying ethos of the proposals is simplification and to encourage contracting authorities to procure in a way that is consistent with national strategic priorities. 

The consultation expressly states that contracting authorities can use past poor performance by bidders as a means of evaluation and may include criteria that go beyond the subject matter of the contract to encourage suppliers to operate in a way that contributes to environmental, economic and social outcomes. 

Details of the proposals will follow once the consultation period has come to an end. 

Fieldfisher will highlight the likely implications of the proposed changes as more details become available and will offer independent analysis of their benefits and drawbacks.

This article was authored by Cecily Davis, construction and projects partner at Fieldfisher.