Procurement in a Nutshell – The Procurement Act – Limitation Periods and Remedies
14th March, 2024
In this Nutshell we look at some of the important points to note for both contracting authorities and suppliers, when it comes to challenges.
Throughout previous Nutshells, we have highlighted a number of the significant changes to the public procurement regime which will result when the Procurement Act 2023 comes into force.
Introduction
The Procurement Act 2023 (the Act) is expected to come into force in October 2024.
The Procurement Act 2023 establishes a new public procurement regime following Brexit, and aims to deliver the Government’s promise to grow the economy by creating a simpler and more transparent system.
The Act will, in particular, revoke the following:
- Public Contracts Regulations 2015 (PCR)
- Concession Contracts Regulations 2016
- Utilities Contracts Regulations 2016
What’s new?
In short, nothing is “new”. However, time should be taken by both contracting authorities and suppliers to understand the changes to the existing regime.
What’s changed?
Remedies
The remedies available to bidders remain broadly the same as under the current regime.
Under section 103(2) of the Act, if the court is satisfied that there has been a breach of an enforceable duty by the contracting authority, the pre-contractual remedies are:
- (a) An order setting aside the decision or action
- (b) An order requiring the contracting authority to take any action
- (c) An order for the award of damages; and
- (d) Any other order that the court considers appropriate
Post contractual remedies are also, in essence, the same as under the current legal framework. Damages can be awarded to the supplier and the remedy of ineffectiveness remains (however, this remedy is now to be known as “set aside” (section 104)).
The court must, if a set aside condition is met (see further below), make an order setting aside the contract (or the modification to a contract) (section 104(2)(a)). In such circumstances, the court may make an order for the award of damages (section 104(2)(b)). Section 104(3), however, makes it clear that an order of set aside does not have to be made where the court is satisfied that there is an overriding public interest in not making such an order. If this is the case, the court may make an order reducing the term or scope of the contract (section 104(4)). This all effectively means that no real changes have been made in this area.
There is no need for the court to impose a civil financial penalty on the contracting authority where an order of set aside is made. Under the current regime, such a penalty must be ordered where a declaration of ineffectiveness is made (although the level of the few penalties which have been imposed have been low).
Section 105 states that a set aside condition is met if the court is satisfied that the claimant was denied a proper opportunity to seek a pre-contractual remedy (which is usually of more appeal to an aggrieved supplier) because:
- (a) A required contract award notice was not published
- (b) The contract was entered into or modified before the end of any applicable standstill period
- (c) The contract was entered into or modified during a period of automatic suspension or in breach of a court order
- (d) In the case of a contract, the award of which does not require a mandatory period to be observed, the breach became apparent only on publication of a contract award notice
- (e) In the case of a contract modification, the breach became apparent only on publication of a contract change notice
- (f) The breach became apparent only after the contract was entered into or modified.
These conditions are similar to the existing grounds for ineffectiveness. However, as stated above, the emphasis is now explicitly upon ensuring that a claimant has a remedy in circumstances in which it was denied a proper opportunity to seek a pre-contractual remedy, which may be why there is reference in conditions (d), (e) and (f) to the breach only becoming apparent after the contract was awarded, modified or entered into. These conditions are new and are likely to be the subject of satellite litigation (for instance, there may well be arguments about when, exactly, the breach became apparent to the claimant supplier).
Finally, in accordance with section 104(8), the court can still make provision for consequential and supplementary matters where an order is made for set aside or the reduction in term and/or scope of the contract awarded.
Time limits
The 30 day limitation period, which applies to proceedings other than those seeking set aside, remains. The 30 day period begins with the day on which the supplier first knew, or ought to have known, about the circumstances giving rise to the claim (sec 106(2)). Although the wording is slightly different (a difference which could perhaps be the subject of argument/judicial consideration), this is the same period as under the existing regime.
Also the same is the fact that the Court can extend the 30 day period if it considers there to be good reason for doing so (section 106(3)). This can still only be up to 3 months beginning with the day upon which the supplier first knew, or ought to have known, about the circumstances giving rise to the claim (section 106(4)(b)). It is assumed that the Court will continue to adopt the approach of only extending the 30 day period in exceptional circumstances.
In accordance with section 106(1), any specified set-aside proceedings must be commenced before the earlier of (a) the end of the 30 day period beginning with the day on which the supplier first knew, or ought to have known, about the circumstances giving rise to the claim and (b) the end of the period six months beginning with the day the contract was entered into or modified. If the earlier of the two dates is (a), the court may extend the period but only to the period referred to in (b) (sec 106(4)(a)) (although section 106(4)(b) does impose a longstop on the limitation period to 3 months beginning with the day upon which the supplier first knew, or ought to have known, about the circumstances giving rise to the claim “in any case”)
This is different to the position under the existing regime, whereby other than in certain specific circumstances (i.e. where (a) the relevant contract award notice is published or (b) the contracting authority has informed the bidder of the conclusion of the contract and the relevant reasons, in which case the limitation period is 30 days beginning with the day after the notice being published or the bidder being informed), the period for starting proceedings seeking ineffectiveness is within six months beginning with the day after the date on which the contract was entered into. There is no provision in the existing regulations addressing any extensions of time for claims seeking ineffectiveness. It will be of interest to see the court’s approach to applications to extend time beyond 30 days and whether the same, strict, approach will be adopted as the one followed where extensions of time to bring claims for other remedies are sought.
What does this mean?
In reality, the changes in this area are unlikely to have an impact in most cases. However, there are some changes which may well result in satellite litigation (particularly in the period shortly after the Act comes into force). For most it will be business as usual. That, however, is likely to mean a continued trend of more procurement litigation across all sectors.
Our next Nutshell will focus upon automatic suspensions. For further information on anything mentioned above, or on anything else on the subject of procurement disputes, please contact Tim Dennis. For more general procurement enquires please get in touch with Tim Care or Melanie Pears in our Public Sector Team.
Please note that this briefing is designed to be informative, not advisory and represents our understanding of English law and practice as at the date indicated. We would always recommend that you should seek specific guidance on any particular legal issue.
This page may contain links that direct you to third party websites. We have no control over and are not responsible for the content, use by you or availability of those third party websites, for any products or services you buy through those sites or for the treatment of any personal information you provide to the third party.
