Procurement in a Nutshell – Procurement Act 2023 – Guidance: Remedies

The referenced guidance can be found here. Please note that Limitation will be discussed in a future Nutshell.

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

Automatic Suspension

Section 101 of the Act states that if a mandatory or voluntary standstill period applies to the award or modification of a contract and during the standstill period (and not simply prior to the contracting authority entering into the contract or modification as is the case under the PCRs) the supplier:

• Has commenced proceedings
• Has notified the contracting authority that it has done so

the contracting authority’s ability to enter into the contract will be automatically (and immediately) suspended.

Please note that the standstill period is eight working days beginning with the day on which the Contract Award Notice is published in respect of the contract.

The guidance stresses that if the claim form is issued and/or notified after the standstill period has ended but before the contract has been entered into, the automatic suspension in Section 101 does not apply and the contracting authority is able to enter into the contract or make the modification.

If a contracting authority has agreed to extend the standstill period, for example to respond to a supplier’s query regarding the procurement, the Contract Award Notice should be amended accordingly and re-published in order to ensure suppliers are aware that they have more time to commence proceedings should they wish to do.

The automatic suspension shall remain in place until:

• The claim is resolved (i.e. settled or determined or discontinued); or
• An order is made by the Court to bring the automatic suspension to an end under Section 102.

When considering whether to make an order under Section 102, the Court must have regard to the public interest in:

• Upholding the principle that public contracts should be awarded, and contracts should be modified, in accordance with the law;
• Avoiding delay in the supply of the goods, services or works provided for in the contract or modification; and
• The interests of suppliers, including whether damages are an adequate remedy for the claimant.

Pre-contractual Remedies

Pre-contractual remedies are only available where the contract in relation to which the breach occurred has not yet been entered into or the modification has not yet been made.

The pre-contractual remedies available to the Court are set out in Section 103(2). These include:

1. An order setting aside the decision or action (for example, setting aside the decision to award the contract);
2. An order requiring the contracting authority to take any action (for example, to re-assess tenders);
3. An order for the award of damages

However, contracting authorities should note that Section 103(2)(d) provides the Court with a wide discretion to make any order, in addition to those set out at Section 103(2)(a-c), that it considers appropriate.

Post-contractual Remedies

Post-contractual remedies are those remedies available to the supplier where the contract in relation to which the breach occurred has already been entered into or the modification has already been made.

In these circumstances, Section 104(2) provides that the Court must set aside the contract if the conditions in Section 105 are met and may, in any case, make an order for the award of damages.

Set aside

Section 104(2)(a) applies when a breach has occurred in the award or modification of a contract but the supplier has been denied the opportunity to seek a pre-contractual remedy (under Section 103) for a reason set out in Section 105(1). Please note that set aside is mandatory in these circumstances, subject to the public interest test at Section 104(3), which will addressed below.

The ‘set aside conditions’ under Section 105 are as follows:

1. The Contract Award Notice was not published
2. The contract was entered into or modified before the end of any applicable standstill period
3. The contract was entered into or modified during a period of automatic suspension under Section 101 or in breach of a court order;
4. In the case of a contract of a kind described in Section 51(3) (exceptions to mandatory standstill), the breach became apparent only on publication of a Contract Award Notice
5. In the case of a modification under Section 74, the breach became apparent only on publication of a Contract Change Notice;
6. The breach became apparent only after the contract was entered into or modified.

Even where a set aside condition is met, the Act allows the Court discretion not to set aside the contract or modification, if it is satisfied that there is an overriding public interest not to do so.

In considering whether there is an overriding public interest the court:

• May have regard to the financial consequences of setting aside the contract or modification only in exceptional circumstances
• Must in any event disregard costs that are directly associated with:

1. 1. 1. The contracting authority having to award another contract or enter into a contract to a different supplier
      2. A delay in the performance of the contract or the contract as modified
      3. Any legal obligations arising from setting aside the contract or modification.

The guidance states that if a Court is satisfied that there is an overriding public interest, it may, instead of setting aside the contract or modification, reduce the duration of the contract or the goods, services or works to be provided.

What does this mean?

The approach to remedies under the Act is broadly similar to that under the current PCRs 2015. However, contracting authorities should make note of the key differences. The post-contractual remedy of ‘set aside’ is akin to a declaration of ineffectiveness under the PCRs, however it is important to note that 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. The automatic suspension also now only applies if proceedings are commenced during the standstill period. The approach taken to limitation under the Act will be explored in a future Nutshell.

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