Challenging Decisions Under The Procurement Act 2023 – The Changing Landscape

The Procurement Act 2023 (the “Act”) will come into force on 24 February 2025¹, following a decision by the UK Government to delay this from its original implementation date of 28 October 2024². The Act, together with the Procurement Regulations 2024 and the National Procurement Policy Statement (which sets out strategic priorities for public procurement and which at the time of writing is under revision) provide a comprehensive regime for the award of public contracts in England, Wales and Northern Ireland replacing the Public Contracts Regulations 2015 and other regulations covering utilities, defence and concessions. The Act will govern new procurements which are started after it comes into force, and detailed transitional arrangements³ determine when a procurement is deemed to commence, which will need to be looked at where the commencement point is unclear. Procurements commenced prior to the Act coming into force, including competitions or contract awards after the Act comes into force but under framework arrangements and Dynamic Purchasing Systems entered into before the Act entered into force, will continue to be governed by the current regime, meaning that the two regimes will run in parallel for quite some time to come. 

This article looks at key points relating to challenges to contract awards under the Act. The Act also introduces other significant changes from a contentious perspective which will be considered in separate articles, including the introduction of a “debarment” list, and issues which affect in-life contract management such as the introduction of public reporting against KPIs and requirements to publish details of contract variations and terminations.     

While the new regime under the Act mirrors many of the underlying themes of the current procurement regulations, it does introduce some important changes to the landscape for issuing a procurement challenge. This article summarises important aspects of the Act that will be relevant to suppliers contemplating challenging procurement decisions which fall under the Act. We have addressed five key areas below:

1. Obligations owed to suppliers. Important changes have been made to the scope of an authority’s duties, only some of which are enforceable in civil proceedings, and we question if the “sufficiently serious” test will survive; 
   
2. Contract award notices and assessment summaries. The information that authorities must provide to tenderers has changed, with the loss of the “relative advantage” approach;  
   
3. Standstill period and automatic suspension. The length of the standstill period has been re-cast. Authorities will now only be prevented from entering into the contract if the challenge has been made before the standstill period ends, and a new test has been introduced for the lifting of the automatic suspension;
   
4. Remedies. New “set aside” conditions have been introduced, which are broadly similar to the “ineffectiveness” grounds; and
   
5. Time limits for commencing proceedings. These are broadly unaffected relative to the current position.
   

(1) Obligations owed to suppliers 

• Under the present regulations, contracting authorities are under an obligation to treat suppliers equally and without discrimination and to act in a transparent and proportionate manner. While using slightly different wording the Act imposes similar obligations requiring contracting authorities to treat suppliers “the same unless a difference between suppliers justifies different treatment”. If different treatment is justified the authority must take steps to ensure that it does not put the supplier at an unfair advantage. 

• In addition to the duty to treat suppliers the same, the Act requires contracting authorities to have regard to a number of objectives, namely: delivering value for money, maximising public benefit, sharing information to enable suppliers to understand the authority’s procurement policies and acting with integrity. Contracting authorities must also have regard to the fact that small and medium-size enterprises (SMEs) may face barriers to participation and consider whether such barriers can be removed or reduced. 
  
  
• Duties under the Act are owed to UK suppliers or suppliers from states with which the UK has entered into an international treaty in relation to procurement (which are set out in Schedule 9 of the Act) who have suffered, or risk suffering, loss or damage in consequence of a breach of duty. Whether the court’s current approach to damages for such a breach – which derives from EU law on breaches of Community law – will survive the introduction of the Act remains to be seen, in particular the requirement for a breach to be sufficiently serious to give rise to an award of damages (something that is not dealt with by the Act). However, the Act makes clear that certain duties owed by contracting authorities are not enforceable in civil proceedings, including the requirement to have regard to barriers facing SMEs and the obligation to have regard to the national policy procurement statement (although in the case of the latter an obligation to have regard to the national policy statement may nonetheless be relevant in an application for judicial review).  
  

(2) Contract award notices and assessment summaries

• Before entering into a public contract, the contracting authority must publish a contract award notice setting out the authority’s intention to enter into the contract as well as certain other information required by the Procurement Regulations 2024. Regulation 27 sets out the information which must be included in the notice, much of which is standard; for example, details of the contracting authority, the title of the procurement, and the contract subject matter. The end date of any standstill period must also be included in the contract notice.
  
  
• However, prior to publishing a contract award notice, the authority must also provide an assessment summary to each supplier that submitted a tender. Regulation 31 of the Procurement Regulations 2024 sets out the information to be included in the assessment summary. This includes how the tender was assessed against the award criteria and sub-criteria by reference to the scores, as well as an explanation for that score by reference to information in the tender. For losing bidders, in addition to receiving the scores of the winning bidder and an explanation for the scores, they will also receive “any further explanation of why the public contract is not being awarded to the supplier including where the tender was disqualified the reasons for the disqualification.” 
  
  
• Under the current regulations an unsuccessful bidder is entitled to, among other things, information regarding the “characteristics and relative advantages of the successful tender”. This is the first time in the current process that an Authority is required to compare bids directly against each other, and in our experience, failure to provide sufficient information as to the advantages of the winning bid is frequently a basis for challenge. Under the Act, while the assessment summary sent to a losing bidder will include the scores for the winning bid and an explanation for those scores, it appears that the losing bidder will be left to assess for itself why the winning bid was more advantageous than its own. This is likely to add an extra layer of pressure to the already time-constrained process of assessing whether a claim should be brought and may ultimately result in fewer claims being made. 
  
  
• Under the Act, assessment summaries are to be provided to both the winning bidder as well as to unsuccessful bidders. This does not mean, however, that the winning bidder is provided with information about the unsuccessful bids. The move to assessment summaries is therefore unlikely to resolve winning bidders’ concerns about being at a disadvantage in the event that the procurement is re-run. 
  
  
• There are certain circumstances under the Act where contracting authorities may award contracts directly without competition. These include where the goods or services are required as a matter of extreme and unavoidable urgency, as well as where the contract is a defence and security contract and certain conditions are met. Contracting authorities may also switch from a competitive procedure to a direct award including in circumstances where suitable tenders have not been received. Before a direct award can take place, however, the contracting authority must publish a “transparency” notice stating that it intends to award the contract directly together with certain prescribed information. This is a change from the current position, where it is advisable to publish a voluntary ex ante transparency notice (or VEAT) to protect against ineffectiveness arguments, but this is not a mandatory step.  
  

(3) Standstill period and automatic suspension

• Under the current regulations the announcement of the decision to award the contract is followed by a standstill period of 10 days during which a contracting authority may not enter into the contract. Under the Act the position is not very different, with the mandatory standstill period being eight working days. The standstill period is, however, now triggered by the contract award notice (rather than, as at present, the standstill letter). This provision does not apply to contracts where direct awards are permitted under section 41, for example, in cases of extreme urgency.
  
  
• Under the current regulations, where a claim has been issued before the contract has been entered into (whether or not the standstill period has expired) and the contracting authority has become aware of the claim, then an automatic suspension applies and it may not enter into the contract until such time as the suspension has been lifted. Under the Act, the contract may not be entered into if proceedings have been issued during the standstill period and the contracting authority has been notified of that fact; but if the standstill period has expired, no automatic suspension will take place even if no contract has been entered into. This is a significant shift from the current position. 
  
  
• When considering whether to lift or modify the automatic suspension the Act sets out specific matters that the court is required to have regard to, namely (a) the public interest in (i) upholding the principle that public contracts should be awarded in accordance with the law; and (ii) avoiding delay in the supply of goods or services; (b) the interests of suppliers, including whether damages are an adequate remedy for the claimant; and (c) any other matters the court considers appropriate. Presently the court is required to consider whether it is “appropriate” to lift the suspension which it does by reference to the well-established principles in the American Cyanamid case, including whether there is a serious issue to be tried and whether damages are an adequate remedy. While the explanatory notes to the Act state that the new test referred to in the Act will replace the American Cyanamid test, it remains to be seen how that approach will differ.
  

(4) Remedies 

• The position with regard to the remedies available to the court broadly remains unchanged. If the contract has not been entered into then the court can set aside the award decision, award damages or make any other order the court considers appropriate. However, once the contract has been entered into then a supplier will be confined to a remedy in damages unless it can demonstrate that a “set aside” condition is met as a result of which the supplier was denied the opportunity to seek a remedy. Set aside conditions are broadly similar to the grounds for establishing ineffectiveness under the current regime and include where a contract award notice was not published or the contract was entered into prior to the expiry of the standstill period.
  
  
• If a supplier is able to establish that a set aside condition is met then the court must make an order setting aside the contract (which is to be treated as being without effect from the date of the order) unless the court is satisfied that there is an overriding public interest in not setting aside the contract, in which case the court may reduce the term of the contract or the goods or services to be provided under the contract. Again, this is similar to the position under the current regulations although there is no longer the power for the court to order that the contracting authority pay a financial penalty.
  

• Finally in relation to remedies, it is worth noting that the Act introduces the Procurement Review Unit, which will (amongst other things) incorporate the work undertaken by the current Public Procurement Review Service of investigating supplier complaints regarding poor practice in relation to individual procurements. Although this does not provide a statutory remedy, a complaint to the PRU is one which some bidders may wish to consider depending on their particular circumstances. 
  

(5) Time limits for commencing proceedings

• Time limits in which to bring a challenge remain broadly unchanged. If a supplier wishes to challenge the award, and is not seeking to set aside the contract, then it must commence proceedings within 30 days from the date on which it first knew or ought to have known about the circumstances giving rise to the claim. This may be extended for up to three months where the court considers there is a good reason to do so.

• If the supplier is seeking to set aside a contract that has been entered into then it has 30 days to commence set-aside proceedings from the date it knew or ought to have known of the circumstances giving rise to a claim with a long stop date of six months from the date the contract was entered into. Again this period may be extended where there is good reason to do so although not beyond six months from the date the contract was entered into.

• The current statutory requirement that the Claim Form be served within 7 days does not appear in the Act and it remains to be seen whether this omission will be addressed by further legislation or by amendment to the Civil Procedure Rules.
  

With thanks to Tom Ward for his contribution to the drafting of this article.

¹With the exception of a limited number of provisions which are already in force, and certain obligations concerning transparency for which no date has yet been set.
²Following a written ministerial statement dated 12 September 2024 and given effect by The Procurement Act 2023 (Commencement No. 3 and Transitional and Saving Provisions) (Amendment) Regulations 2024
³The Procurement Act 2023 (Commencement No.3 and Transitional and Saving Provisions) Regulations 2024.