Procurement in a Nutshell – Taking past performance into account

In December 2021 the Government published its response to the consultation and the comments raised by over 600 organisations and individuals. As a result we now have a clearer indication of the reforms that the Government intends to introduce.

The Government plans to produce a draft Bill at some point in 2022. Further to the new legislation the Government will also introduce new secondary legislation or regulations to implement the new regime and produce  “a detailed and comprehensive package of published resources (statutory and non-statutory guidance on the key elements of the regulatory framework, templates, model procedures and case studies)” to help contracting authorities and suppliers understand how the new regime will work.

Due to significant changes and the amount of work required to bring this all into effect it is unlikely that the new regime will be implemented until 2023 at the earliest. We can expect a draft Bill this year and the Government has said that it intends to give at least 6 months’ notice of “go-live”.

What this Nutshell covers

This Nutshell looks at the proposals for taking past performance into account in the evaluation of tenders.

What the Green Paper said

In the Green Paper the government outlined concerns that the current regulations do not allow contracting authorities to properly consider past performance as an assessment criteria. Current provisions are very narrow in that they only allow a contracting authority to exclude a supplier on the basis of poor past performance if the poor performance had led to an early termination, the award of damages or a similar significant sanction. In addition, it is difficult for contracting authorities to gather information on past performance as they are often limited to information which the supplier themselves is providing.

The government proposes to broaden the criteria which a contracting authority is required to consider in terms of past performance. Under the new rules, suppliers could be excluded for a range of instances of poor performance. The revised standards would be objective and transparent but not prescriptive, as it is recognised that some flexibility is required. Examples given were poor performance notices, or consistent failure to meet KPIs. The government will also collect performance data, and would build a database of past performance which could be considered in assessing bids.

Results of the Consultation

This proposal was well received, with a clear majority of respondents being supportive of an increased ability to judge a supplier’s past performance. Some of the support was qualified by concerns that there would be a need for guidance on how to assess past performance, and a clear framework to ensure past performance was measured appropriately and fairly.

In response, the government clarified some of its provisions for wider criteria for past poor performance to be considered, such as a breach notice, the imposition of performance improvement plans or a financial settlement. It confirmed the intention to collect performance data to be held in a Contract Performance Register. The government anticipates that this database will be used by contracting authorities throughout the life of each procurement so that the performance of suppliers more widely can be kept under review.

Recognising concerns that poor performance is not always the fault of the suppliers, the government intends that, notwithstanding the widening of the criteria, exclusion based on past poor performance should be limited to the most extreme cases.

What this means

The government appears confident that the widening of the criteria will make it considerably easier for contracting authorities to take a supplier’s past performance into account when evaluating a tender. This is welcomed as an improvement. However, the government, supported by some contracting authorities and inevitably some suppliers, recognise that allowing too much weight to be put on this might be difficult to manage and result in confusion and unfairness. Further guidance will be issued to clarify the grounds, but the grounds for actual exclusion are likely to remain quite limited.

If you have any queries on the issues raised or on any aspect of procurement, please contact one of our procurement specialists via our procurement hotline on 0330 137 3451