Regulated procurement | UK Regulatory Outlook June 2023

Update on the Procurement Bill

The Cabinet Office has recently announced that it is now planning for an October 2024 "go-live" date, following a six month preparation period. This has been pushed back from the previous go-live date of early 2024.

The first consultation on secondary legislation required to implement the new regime, which covers calculations and further definitions, has been published and closes on 28 July 2023. The second consultation on transparency provision notices is due to launch in July. While the go-live date has been pushed back once again, businesses should still be familiarising themselves with the changes and starting to prepare for the upcoming new rules.

In terms of the bill's passage through Parliament, on 13 June, it returned to the House of Commons to be read at Report Stage, following which it had its third and final reading and has now moved to the House of Lords for members to consider the Commons' amendments. If the Lords do not agree to the Commons' changes, then we may see the Bill "ping-pong" between the two houses until an agreement on amendments has been reached. Following this agreement, it will then proceed to Royal Assent.

A list of the tabled amendments made by the House of Commons be found here. These include an amendment to include a new public interest obligation when deciding to outsource or insource public services, a new clause on record keeping which would require contracting authorities to retain records explaining certain decisions, and new measures have also been introduced to strengthen national security by:

• Establishing a National Security Unit for Procurement. The new team, which will be based in the Cabinet Office, will investigate suppliers who may pose a risk to national security, and assess whether companies should be barred from public procurements.
• Introducing new powers to ban suppliers from specific sectors, such as areas related to defence and national security, while allowing them to continue to win procurements in non-sensitive areas.

If you missed our recent "Eating Compliance for Breakfast" session looking at what we know now about the Procurement Bill, then you can find the recording and the slides. (If you did not initially register for this session, please click "register here" in the right hand summary column and then you will be able to access it.)

We will also be running a series of events in September on the Procurement Bill, so please keep an eye out for your invitation.

PPN 05/23: Implementing new Free Trade Agreements

In line with the introduction of the Public Procurement (International Trade Agreements) (Amendment) Regulations 2023 (see our previous Regulatory Outlook for more on the changes these regulations introduce) a new procurement policy note (PPN) has been published.

PPN 05/23: Implementing new Free Trade Agreements sets out the changes to public procurement obligations arising out of the UK’s new free trade agreements (FTAs) with Australia and New Zealand. The PPN notes that while these amendments arise from these particular FTAs, they apply to all procurements going forward, not just those involving Australian and New Zealand suppliers.

The PPN applies to all contracting authorities which come within the scope of UK public procurement regulations, including Central Government Departments, their Executive Agencies and Non-Departmental Public Bodies, the wider public sector, local authority and NHS bodies and utilities.

NHS and net zero: Evergreen Sustainable Supplier Assessment

NHS England has recently published the Evergreen Sustainable Supplier Assessment (ESSA) which is an online reporting tool for suppliers to engage with the NHS on their sustainability journey set out in the NHS net zero supplier roadmap.

The ESSA is a tool that allows supplier to share their sustainability information with the NHS. After completing the assessment, suppliers will receive a sustainability maturity score against NHS priorities, which signposts their current position and pathway to progress. While the assessment has not been designed to be included as a scored or evaluated requirement in procurement, it may be of interest to some suppliers who want to further evidence their sustainability credentials.

High Court rules on substantial modification test in the UK Public Contract Regulations

In the recent case of James Waste Management LLP v Essex County Council, the High Court considered whether a modification to the council's integrated waste handling contract was a substantial modification resulting in a potential breach of the Public Contract Regulations (PCR) 2015.

Since the seminal cases of Pressetext and Edenred in this area, there has been little judicial consideration of the principles of Regulation 72 in England and Wales. While the application of the factors in Regulation 72(8), which lead to a modification being substantial, is specific to the integrated waste handling contract in question, the judgment provides a detailed discussion of those factors that will be of general interest for parties considering a potential modification to a public contract. See our Insight for more.

Time limits in a procurement challenge

The recent case of Altiatech Ltd v Birmingham City Council examined time limits in a procurement challenge. In this case, the council had entered into a call-off agreement with the claimant and exercised a termination for convenience provision and terminated the contract without explanation, following which the council then made a direct award to another company. 

Subsequently the claimant notified the council by letter of its concerns about the termination, stating it had been deliberately excluded from the procurement process and was considering making a claim for breach of the Public Contracts Regulations 2015 (PCR). The claimant sent a pre-action letter requesting for further information to which the council replied that it had discovered a potential conflict of interest which had prompted the termination of the claimant's contract. The claimant considered that the authority was in breach of its equal treatment and transparency obligations under PCR and issued a claim.

This judgment examined whether the claimant had brought proceedings within the 30-day time limit under Regulation 92(2) of the PCR and the Civil Procedure Rules (CPR). In particular, it focused on when the claimant had sufficient knowledge of the breach alleged and when the 30-day period started. The court held that the claimant had issued its claim form within the 30-day time limit, as it was not until the contracting authority had explained why it had terminated its contract with Altiatech that it had sufficient knowledge of the breach. 

There was a secondary issue relating to the time limit for service of particulars of claim in a public procurement action. Under CPR 7.4(1) and 7.4(2) read with Regulation 94(1) PCR, this is seven days from service of the claim form. The court held that the claimant had served its particulars of claim one day late, however the claimant was granted relief from sanctions in connection with this. 

This judgment provides helpful guidance for procurement teams on limitation periods in a procurement challenge and when the 30-day period starts to run.