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John Cutt

Legal Remedies in Public Procurement – how they are used in Framework Agreements and Call-Off contracts

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Framework Agreements allow a contracting authority (buyer) to enter into an agreement with one or more economic operators (suppliers) for a set period of time.  Buyers can run mini tendering exercises to call-off contracts from the frameworks under Regulation 33 of the 2015 Public Contracts Regulations (PCR 2015).  In general, there are legal remedies which can be used where a supplier wants to raise a challenge against the buyer. These remedies operate differently for frameworks and call-offs from a framework. To read more about Framework Agreements, please follow this link to our previous blog.

So what are the remedies available where there is a breach relating to a framework or call off contract? It’s a complicated topic – there are four main remedies which are outlined below:

1. Notification and Standstill

The standstill period offers a 10 calendar day pause from the point when the contract award decision is notified to bidders, and the point when the final contract is finalised, during which time suppliers can challenge the decision and claim the call off from the contract or framework as ineffective. A court may preserve a contract for overriding reasons of public interest as per Reg 103(5) where there is a claim of ineffectiveness.  The ability to challenge the decision is a legal requirement imposed through the remedies directives. It is worth noting that it is not mandatory for a buyer to give notification and standstill for call-offs under a framework, but, they can voluntarily do so for above EU threshold frameworks made after a mini-tender.  Reg 99 states that frameworks will be ineffective where there is an illegal direct award, unless the authority believes it was lawful to do so and a VEAT (Voluntary Ex Ante Transparency Notice) is published and the standstill period is observed. This does not apply to call-offs.

2. Damages

Suppliers are limited to claim damages for call-offs and these can also available when there is a breach of the award of the framework agreement. This could happen when there are lost profits or loss of future profits and bid costs.  Individual call-offs do not require call for competition and cannot be classed as ineffective for failure to publish a call for competition, and in this instance the notification and standstill period would not apply either.

3. Automatic Suspension

A contract arrangement can only be brought to an end as a result of an application made by a buyer to the court requesting suspension of the contract.  If the court considers that automatic suspension is not an option, then it would not be appropriate to make an interim order suspending the award. Attendance at automatic suspension hearings and consequently at hearings to challenge the continuation of automatic suspension, adds substantially to the cost involved and places the emphasis firmly on the balance of convenience and damages as an adequate remedy, which can undermine a supplier’s ability to obtain an effective remedy

4. Freedom of Information

Freedom of Information Act 2000 (FOIA) enables anyone to request information from a public body which is to be answered within 20 days. The exceptions include prejudice towards commercial interests of any person, trade secrets, breach of confidence and where incompatible with EU law or any enactment.

The obligation to disclose information may be difficult when dealing with call-offs from a framework. Under Reg 55 buyers must provide suppliers with their decision in relation to the conclusion of a framework agreement. It is unclear how far this extends to call-offs. Buyers send a notice to those who submit an offer in a mini-competition/mini-tender when a notification and standstill period is applied in above threshold call-offs. The Crown Commercial Service guidance suggests that the notification and standstill information is to be sent to all supplier who consider themselves qualified to bid within 15 calendar days under Reg 55(2) (but it is not clear whether this does apply to call-offs or not).

PCR limits information obligations to suppliers and not to ‘concerned citizens’ or organisations. Only suppliers can seek remedies under the PCR which is a further limitation on enforcement for breach of the PCR, as special interest groups, individuals or trade unions who may wish to seek enforcement are required instead to seek a judicial review route.

Case Study

The first and most recent case in the UK to deal with the remedy of ineffectiveness under the PCR 2015 is of Lightways (Contractors) Limited v Inverclyde Council CSOH 169. The facts of the case are as follows:

  • In 2015 the Council ran a mini-competition and a call-off of a CCS (Crown Commercial Service) Framework agreement for street lighting services. It was awarded to “Amey Public Services LLP”. The contract was entered into and had been previously awarded to this company in 2013.
  • Lightways was not on the framework and challenged the award on the grounds that Amey were not appointed under the framework and the contract award was in breach of Regulation 19(3) of the Public Contracts (Scotland) Regulations 2012, where only call-offs could be made to those appointed to the framework. Amey was in fact a different company, as it was “Amey OWE Limited” that was on the framework.
  • Amey OWE and LLP both had links to Amey, but were substantially different as the LLP company was a joint venture between Amey and Lanarkshire Council, and Amey OWE’s principal activity was in engineering consultancy. Each company had their own assets, employees and were separate.
  • Lightways’ argument was accepted and it was held that they had a right to challenge even though they were not party to the framework. The ruling did not accept the principle of proportionality applied to allow the court to correct the council’s mistake and substitute Amey OW to Amey LLP.
  • The court concluded that the Council had no defence to the challenge under Reg 19(3) and therefore made an order for ineffectiveness. Lord Tyre concluded that the contract had been awarded to a non-framework provider without being advertised and, as a result, a breach of the Procurement Regulations had occurred.

Where an ineffectiveness order is granted, the court is also obliged to fine the contracting authority. At the moment, the level of the fine in this case has not been stated, but it is obviously a concern for authorities in times of austerity. Any fine would be payable along with any with potential compensation payments to the exiting provider as well as potential damages to the challenger – so it could get costly. Inverclyde Council have been granted leave to appeal and, at present, the ineffective contract will continue until the appeal has been resolved.

Overall, the UK does seem to provide a satisfactory system of legal remedies with regard to the Public Contracts Regulations 2015. While the range of remedies appears satisfactory, there is a relatively small number of reported procurement judgements in the UK.  This can also suggest that the system is not being used to its full potential.

Shedding Light on the Shadows

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For those of us who enjoy scaring ourselves stiff with fictional nightmares, the run up to Halloween always sees a welcome upsurge of horror films on the television schedules. In the archetypal “haunted house” story, an inexplicable and increasingly threatening paranormal force torments the unfortunate victims. As with all good storytelling, our empathy for the characters derives from our own hopes and fears: we can be suspicious or even fearful of things we don’t understand, and this fear of the unknown leaves the fictional characters – and the viewers – feeling insecure and powerless.

Sometimes, though, the victims turn the tables on their tormentors by learning to fight back. With the right resources and assistance – silver bullets, holy water, mediums or exorcists – even the most terrifying ghoul can be cast out.

Just like a haunted house, the real world can sometimes be unnerving and disconcerting. Brexit – whether it fills you with hope or dread – has swept away old certainties and created a future filled with potential pitfalls and possibilities. For now, the level of access UK suppliers will have to the EU market – and almost everything else about the final deal and it’s consequences – remain frighteningly unclear.

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Like a terrified victim in a horror film, it is easy to feel powerless in the face of uncertainty. As the old gives way to the new, do you cower under the covers and hope for the best or pluck up the courage to face down your demons? Like a vampire hunter arming themselves with silver bullets and wooden stakes, we should seek out the knowledge and expertise needed to defeat the mysterious forces undermining our confidence.

Millstream can’t protect you from things that go bump in the night, but we can certainly shed light on the shadows of public procurement and clear the cobwebs away. Do you find bid writing frightening? Does the ESPD give you the heebie jeebies? Our team of experts includes procurement professionals and experienced bid writers who know how to take the fear factor out of public sector tendering.

If your first or fiftieth bid fills you with foreboding, our newly updated training courses can help you to cast out the evil spirits holding you back. Our consultancy services have a success rate of over 80%, and 98% of delegates who attend our training courses would recommend them to others. So, if your company is haunted by a lack of experience or success in bidding for public contracts, Millstream could be the silver bullet you need.

Happy Halloween!

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Building on the outcome of Brexit

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Brexit: we don’t know what the impact on public sector spending will be and whether the approach to procurement as a result of the leave vote will change. The construction industry has seen uncertainty growing more recently and the impact of a potential EU exit is unknown.

Despite increasing uncertainty in the run-up to the referendum, over 1,900 public sector construction tenders were published, an increase of 29% compared to the six months prior and mirroring growth seen over the last two years with a particular increase in tenders for roads infrastructure, renewable energy and new build housing.

The public sector has a large construction project pipeline which includes new and ongoing infrastructure projects such as HS2 and the completion of affordable housing projects across the country which remain in high demand. Regardless of the leave vote, projects of this nature will carry on and continue to create future opportunities.

Public procurement is governed by UK regulations which originate from EU Directives, there won’t be any change for some time as the UK negotiates its exit. The current regulations will remain in force until they are repealed or revised. As we can see the Government has much higher priorities than revising a system that generally works well. So what could happen if the UK continues to have access to the Single Market? there will be very little change to public procurement and without it, the UK will likely operate under the World Trade Organisation’s Government Procurement Agreement (GPA). This provides similar access to bidders from the countries that are signatories meaning that UK construction contractors will be able to bid on contracts in Europe, whilst at the same time European contractors will be able to bid here in the UK.

For now, the approach from construction suppliers looking to bid for public sector work will not be altered by any changes to regulations.  Companies must ensure that they continue to meet the requirements set out in the tender, demonstrate efficiencies and remain competitive against the competition – it’s business as usual.

Ultimately, there is no reason why leaving the EU should mean that the public sector ‘downs tools’ on construction projects. Continued investment in the sector will have a direct, positive impact on confidence, growth and continued recovery. For now, we will just have to keep a watchful eye on proceedings…

Confronting collusion in public procurement

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Back in June, the Competition & Markets Authority (CMA) published an open letter to procurement professionals announcing new guidance and learning resources designed to help combat collusion between suppliers bidding for public contracts. Along with a text summary, the new resources include an e-learning module and some admirably accessible and informative animated videos. Unsurprisingly, this development in the battle against illegal anti-competitive practices received a warm reception in procurement circles, with the Chartered Institute of Procurement and Supply and the Local Government Association making the resources available to their members. This move can be seen as a small but positive step forward in efforts to protect the public sector’s reputation as a fair and transparent place to do business and should be applauded.

 

We last touched on this subject in 2009 following a round of fines imposed by the Office of Fair Trading (superseded in 2014 by the CMA) on over one hundred construction firms found to be guilty of bid rigging. The size and stature of many of the companies involved was surprising: not so much dodgy purveyors of rickety garage conversions, more a who’s who of premier league construction companies. Some in the industry expressed concern over potential job losses resulting from the fines, but we felt that these sanctions were not overly punitive when framed as a percentage of turnover. Indeed, some of the firms had their fines reduced substantially under the CMA’s leniency policy in return for confessing when first confronted.  Continue reading “Confronting collusion in public procurement”

Wales: a clarification

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After drawing Wales in the Euro 2016 office sweepstake a few weeks ago, I may have inadvertently given the impression to my colleagues that I was in some way not utterly ecstatic at the outcome. I now accept that my use of various profanities and the term “unmitigated disaster” may have misconstrued my true feelings on the subject. I am happy to clarify that I have always had the utmost confidence in the Welsh national team, fully expected them to make it to the semi-finals as a minimum and consider it a privilege to have invested £2.00 in their endeavour to stay in Europe (albeit for football and binge drinking only).

Although Millstream specialises in public procurement rather than football punditry, we have been impressed by the interest shown by some attendees of the tournament in our area of expertise: it was particularly gratifying to see a fringe element of Remain supporting England fans attempting to stimulate French public sector expenditure by facilitating massive overtime payments to the Gendarmes and street sweepers of Marseilles and Lille. Faced with a wave of criticism after the abject humiliation of his team of spoilt divas being defeated by plucky Icelandic amateurs, England manager Roy Hodgson reluctantly agreed to face the media despite being privately encouraged by Boris Johnson to follow his lead by abdicating all responsibility for the outcome.

Continue reading “Wales: a clarification”

Watching the weather change

As we all realise to our horror that developing a beach body in time for summer is now completely out of the question, we can at least take comfort in the knowledge that cold weather is now firmly behind us. With the exception of those of the ski holiday inclination, our experience of life is undeniably lessened by the harsh winter months. Perhaps the miserable success rate of the solemn resolutions we make to ourselves at the turn of each year has more to do with January being an inopportune time to enact behavioural change, rather than a personal lack of willpower: cravings for unhealthy snacks are more difficult to combat while enduring sub-zero temperatures, a glass of wine never so tempting than when stuck indoors on a wintry evening. But as we wake to sunshine and birdsong instead of darkness and rain, personal renewal feels more like an urge than an effort. Imagine you had felt as energised as you do on a day of blazing sunshine and outdoor activities when you were lazing on the couch gorging on chocolate in the first months of the new year… you could have had a beach body by now.

One of the pleasures of this time of year is the spectacle of the previously barren natural world flourishing with life and colour once more. In the countryside, fledgling crops of all kinds grow in the fields as farmers hope for a bountiful harvest in the autumn. While some of us may be inspired by springtime in our own efforts to grow, farmers are beholden to the seasons in a material sense. While the ancient endeavour of agriculture was initially driven by subsistence, in modern times it is an industry like any other. While most of us do not make a living from the soil, the acquired wisdom of a veteran farmer can be of use to a company in any sector: sow only the finest seeds, plant varied crops in different fields, use ever more efficient and productive techniques. Above all, avoid over-reliance on the same field lest the nutrients be drained from the soil. Like farmers, we would do well in our personal and professional lives to learn the lessons of past harvests and change our methods accordingly.

Continue reading “Watching the weather change”

Where is the love?

This weekend, millions will take part in the annual celebration of love and commitment that is Valentine’s Day. Vows and promises will be made; hopes and dreams will be shared. There will be fine dining, expensive presents and special moments. Meanwhile, some of us will cower alone in our bedsits, recoiling from the grotesque displays of happiness on our news feeds. Displays of love, however, are not the sole preserve of romantically involved couples. It is often said that love is based on respect; showing respect can be something as simple as making time for a friend, complimenting a colleague on a job well done, or being kind to a stranger. Maintaining high standards of behaviour in our professional and social lives – showing a little love, if you will – is the cornerstone of a civilised society.

This is not merely an issue of social cohesion: there is a solid business case for companies to actively promote a culture of respect in their internal and external relationships. In recent years, the concept of corporate social responsibility has become increasingly prominent in many organisations, with substantial emphasis placed on health and safety, security, sustainability and equality in the formulation and implementation of procedures and processes. Awards and accreditations in these fields – along with the provision of various employee-focused schemes – have become the norm in the business world. Accordingly, developing your organisation in these areas is not merely about prestige: it is about maintaining a competitive edge. Public sector organisations have led the way in this respect; at Tenders Direct we see frequent procurements for services such as quality assurance and accreditation, employee assistance and counsellingemployee engagement and corporate values, benefit schemes and teambuilding events. More than ever, public and private sector organisations are recognising the material and cultural advantages of an enlightened approach to organisational management and development.

Continue reading “Where is the love?”

The commercialisation of space

In case you hadn’t heard – “Star Wars: The Force Awakens” is released in the UK today. We decided it was too good an opportunity to pass up without a related blog entry. NO SPOILERS are included below…

Recently I was intrigued to discover a contract notice entitled “Space Mission” published in the global hub of space exploration that is Swindon. Alas, it was not a design and build contract for the Death Star. Instead, UK Shared Business Services were seeking a contractor to assist in opening up the US space sector to UK entrepreneurs. While the private sector has always provided the logistical backbone of space flight – hugely successful conglomerates such as Raytheon, Lockheed Martin and Boeing flourished as suppliers to NASA during the Space Race – humanity’s reach for the stars is increasingly facilitated by private contractors. Indeed, there are growing indications that commercial interests may ultimately replace the quest for scientific knowledge as the primary driver of innovation in the space sector.

NASA now outsources its unmanned supply missions to the International Space Station to California based contractor SpaceX. Retirement of the Space Shuttle in 2011 left a capability gap for manned flight; with a replacement platform still some way from fruition, NASA now depends on Russia’s Federal Space Agency to transport its astronauts to the ISS. Reliance on a foreign rival is seen by some in the US as damaging to national prestige and has undoubtedly catalysed the development of private sector expertise in space flight technology. NASA’s decision to award contracts for manned crew rotations to the ISS earlier this year to both SpaceX and Boeing – provisionally scheduled for 2017 – can be seen not only as an attempt to reinstate domestic capability, but also a pragmatic reaction to budgetary pressures. NASA – like so many public sector bodies – has recognised the monetary benefits of outsourcing and the potential of private investment to drive innovation. Richard Branson’s Virgin Galactic – a bold attempt to apply the business model of commercial airlines to orbital flight – epitomises the drive to transform space travel into a profit making enterprise.

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Remember Remember Your Tenders in November!

Alone with his thoughts in the dank cellar below the House of Lords, Guy Fawkes imagined the display of pageantry that would occur above him when King James I arrived later that day for the State Opening of Parliament. This war veteran from Yorkshire, however, had a very different spectacle in mind: the detonation of 36 barrels of gunpowder directly beneath the King’s feet. With James dead, Fawkes and his fellow conspirators hoped to instigate a popular uprising and restore a Catholic monarch to the throne. He just had to remain undiscovered for a few more hours…

A noise… his heart skipped a beat. Footsteps!

It’s fascinating to think that the actions of a few individuals in the distant past can continue to influence our lives centuries later. In his moments of introspection in the cellar, Guy Fawkes probably didn’t imagine that his effigy would be burned as part of a widely recognised annual cultural event over four hundred years after his death; he surely wouldn’t have had the remotest idea that an extensive publicly funded supply chain would be required to make it happen!

Continue reading “Remember Remember Your Tenders in November!”

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