Procurement in a Nutshell – The Procurement Act – The automatic suspension on contract making
22nd March, 2024
Following on from last week's Nutshell on procurement challenges and remedies, in this Nutshell we look at the automatic suspension on contract making, which can be invoked upon a procurement challenge being issued.
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?
Just like with remedies and limitation periods, not much is absolutely novel. However, changes to the existing regime are important to note.
What’s changed?
Invoking the automatic suspension.
The concept of an automatic suspension on contract making in circumstances in which a claim is issued remains (section 101). However, a very important difference exists between the current regime and that under the Act.
Currently, as long as a claim is issued, and the contracting authority is notified of the same, prior to the contracting authority entering into the contract, the automatic suspension will be invoked (thus meaning that the contracting authority is prohibited from concluding the contract with it’s preferred bidder). This is the case even if the standstill period has ended but the authority is yet to have entered into the contract (a common scenario).
Under section 101(1) of the Act, in order for the automatic suspension to be invoked, the claim has to be commenced, and the authority notified of that fact, during the standstill period. Therefore, in circumstances in which a claim is issued after the end of the standstill period, but still prior to the contract being entered into, the claimant will not benefit from the automatic suspension.
This is an important point to note, particularly for suppliers who wish to ensure that the contracting authority is precluded from entering into the contract and the opportunity to obtain one (or more) of the pre-contractual remedies remains available.
Another important relevant change to note is the fact that the length of the mandatory standstill period under the Act will be eight working days, beginning with the day on which a contract award notice is published in respect of the contract, as per section 51(2). This is, of course, different to the situation currently, whereby the standstill period ends at midnight at the end of the 10th day after the date upon which standstill letters are issued (assuming that the letters are issued electronically).
It should also be remembered that under the Act, the standstill period does not begin with the issuing of Assessment Summaries (which are to replace standstill letters). Establishing when the relevant standstill period ends will obviously be important when assessing whether the automatic suspension will still be in play.
Applications to lift the Automatic Suspension
In accordance with section 102(1), a defendant contracting authority can, in the same way as is the case now, issue an application to lift the automatic suspension and the court can make an order that the suspension be lifted. However, the test to be applied by the court is, on its face at least, different the current test.
The current test i.e. is there a serous issue to be tried?; are damages an adequate remedy?; where does the balance of convenience lie? (known as the American Cyanamid test) is to be replaced. In considering whether to make such an order, the court, under section 102(2), must now have regard to:
(a) the public interest in, among other things—
(i) upholding the principle that public contracts should be awarded, and contracts should be modified, in accordance with the law;
(ii) avoiding delay in the supply of the goods, services or works provided for in the contract or modification (for example, in respect of defence or security interests or the continuing provision of public services);
(b) the interests of suppliers, including whether damages are an adequate remedy for the claimant;
(c) any other matters that the court considers appropriate.
What does this mean?
It would be easy to think that it is a case of “as you were” in respect of automatic suspensions. However, suppliers in particular will need to be alive to the new requirement to issue the claim within the standstill period in order to invoke the suspension.
Although the new test to be applied by the court when considering whether to lift the automatic suspension has changed, the new test is plainly very similar to the American Cyanamid test. It will have to be seen how it is applied by the court. How existing case law is to be followed (which has been established with the existing test being applied) will also be significant.
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.
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