Procurement in a Nutshell – Procurement Act 2023 Guidance: Debarment

Introduction

The Procurement Act 2023 is expected to come into force on 24^th February 2025.

The Act will, in particular, revoke the following:

• Public Contracts Regulations 2015 (PCR)
• Concession Contracts Regulations 2016
• Utilities Contracts Regulations 2016

You can find a copy of the guidance here.

Key Terminology

The debarment regime enables Ministers of the Crown to place suppliers on a centrally published debarment list.

A supplier can only be considered for debarment if any of the mandatory or discretionary exclusion grounds, outlined in Schedule 6 and 7, apply and the circumstances giving rise to the relevant exclusion ground are continuing or are likely to occur again.

It is the responsibility of the contracting authorities to review the debarment list in each procurement and must exclude (or have a discretion to exclude) suppliers, if they are on the debarment list. As such, inclusion on the list means the supplier is not, or may not be, allowed to participate in covered procurements or be awarded public contracts.

Obligations on contracting authorities

As mentioned above, contracting authorities must review the debarment list when conducting a procurement and must exclude (or have a discretion to exclude) suppliers who appear on such list.

Where a supplier is on the debarment list as a result of a discretionary ground, and the contracting authority decides not to exclude the supplier, the guidance stresses that the contracting authority should ensure they have considered any relevant investigation report relating to the debarment list entry, and undertaken appropriate due diligence. As with all exclusion decisions, contracting authorities should keep an audit trail of the decision and the reasons for it.

If a contracting authority does exclude a supplier, they must notify the Procurement Review Unit (PRU) within 30 days (Section 59). Any cases relating to national security will be forwarded to the National Security Unit for Procurement (NSUP). Please note that we will explore the role of the PRU in a future Nutshell.

Debarment Investigations

Suppliers may be brought to the attention of a Minister of the Crown for potential debarment through any means, including notification of the exclusion of a supplier by a contracting authority, or via their own investigation (led by either the PRU or NSUP).

Once the decision to investigate has been made, investigating authorities are under a duty to do the following:

• inform a supplier that they are to be investigated;
• Confirm which exclusion ground(s) is the subject of the investigation; and
• Provide information about how a supplier can make representations.

Although suppliers do not have a legal duty to comply with requests for information or other assistance, failure to do so could result in debarment by virtue of the mandatory exclusion ground for failure to cooperate with an investigation.

Contracting authorities may also be asked to supply relevant information and, unlike suppliers, they are under a legal duty to comply with such requests.

Once an investigation has concluded, the supplier will be provided with a copy of the investigation report, which should occur prior to its publication. A Minister of the Crown is under a duty to notify a supplier before entering its name on the debarment list (Section 60(5)).

The Minister is under an obligation to keep the debarment list under review and must remove a supplier’s name from the list if they are satisfied that there are no longer an excluded or excludable supplier (Section 60(8)).

Appeals

At any time, a supplier can apply to a Minister of the Crown for removal or revision of their entry on the debarment list. Such an application need only be considered where there has been a material change of circumstances or significant new information.

Suppliers will have eight working days (‘the debarment standstill period’ under Section 60(6)) after notification of the decision to place them on the debarment list, to apply to the court for a temporary suspension of the decision (Section 63). If the application is successful, the supplier’s name cannot be added to the list until either:

• 30 days have passed since the supplier knew (or should have known) of the Minister’s decision and the supplier has not commenced appeal proceedings; or
• Any appeal that has commenced has been resolved or withdrawn.

Suppliers can only appeal a debarment decision to the courts on the grounds that, in making the decision, the Minister made a material mistake of law (Section 65).

If the Court is satisfied that the Minister made a material mistake of law, it can set aside the decision. If, as a result of that erroneous decision, the supplier was excluded from a procurement, the court may award compensation to the supplier.

What does this mean?

The debarment list is an entirely new consideration with regards to exclusions during a procurement process. By affording a Minister the ability to debar suppliers, the supplier exclusions regime has been significantly broadened.

This increases obligations on contracting authorities when conducting a procurement, particularly in relation to due diligence. As such, it is advised that prior to February 2025, contracting authorities thoroughly assess their internal supplier assessment procedures so that they can effectively adapt and comply with the new regime.

For further information please contact Melanie Pears or Tim Care in our Public Sector Team