As part of an ongoing series of blogs on the Procurement Act 2023, we look at the introduction of a new debarment list and what it will mean for bidders.
One of the most significant changes introduced to public sector bids and tenders as a result of The Procurement Act 2023 is stronger measures for excluding underperforming suppliers or providers. The purpose of the new public debarment list is to ensure contracts are not awarded to unsuitable suppliers, while also reducing the administrative burden on contracting authorities regarding due diligence. The central government anticipates this will have a positive impact on performance across all contracts that are procured through a formal tender exercise.
In November last year, we published an initial analysis providing an overview of the Procurement Act 2023. Although the Act is not due to come into force until October this year, we look at what the supplier debarment list will comprise and how this may affect organisations wishing to tender for contracts.
The new public sector supplier debarment list
Section 62 of The Procurement Act sets out where and how the debarment list will apply, following strict legal processes. A formal investigation must be conducted by the relevant authority to confirm the supplier meets the criteria for exclusion. The relevant supplier must be given notice at the start of the investigation, and the opportunity to state their case through representation.
Following the investigation and confirmation of an infraction of public procurement processes, the excluded supplier will be entered onto the debarment list, alongside the following information:
- Which exclusion grounds are applicable for instance, a breach in environmental obligations or providing misleading/inaccurate information
- Whether the exclusion is discretionary or mandatory for other government authorities to reference
- A description of which contracts the supplier will be excluded from tendering, ensuring full transparency for bidders and buyers alike
- The date on which the exclusion grounds will terminate, either for a fixed period of time or indefinite suspension, depending on the severity of the infraction.
Suppliers have the right to appeal the decision for up to 30 days. However, this is limited to an appeal related to ‘material mistake of law’ – in other words, that the law has been unfairly applied, not a dispute over the facts of the case or infringement.
Discretionary grounds for tendering exclusion
Furthermore, changes and alterations have been made for what constitutes ‘discretionary grounds for exclusion’ within tendering. Currently, this may include self-certification questions around environmental, social and employment law, any bankruptcy or insolvency proceedings, and any previous infringements around conflicts of interest in the tender process. If any of these are applicable, the bidder organisation must demonstrate measures they have taken for ‘self-cleaning’, which is an opportunity to state reasons why this is no longer a concern and their tender should still be considered. However, infringements could result in being placed on the debarment list under the new legislation.
The three principal new changes introduced to discretionary grounds under The Procurement Act 2023 comprise:
- Contractual performance relating to contracts where the bidder has underperformed against KPIs and failed to rectify performance following an opportunity to do so
- Serious breaches of contract, for instance, a court judgement issued against the bidder or termination, damages or settlement from the breach in agreement
- Improper behaviour during the tender process, such as providing incomplete, inaccurate or misleading information, breaching confidential information or exercising undue influence on the authority’s decision-making.
The first of these grounds appears to be the largest and most significant change, as no breach of contract is required for suppliers to technically qualify. This new ‘contractual performance’ clause will go hand in hand with a new requirement for authorities to publish KPI performance on contracts for those qualifying for the threshold. It will therefore be incumbent on authorities to ensure frequent, robust correspondence on poor performance, with an audit trail ensuring transparency and fairness.
Preparing for October 2024
Both contracting authorities and bidder organisations will need to ensure adequate preparation for the changes and fully understand the consequences of the debarment list.
For buyers, the debarment list may seem like a ‘win-win’ proposition, as information on excludable suppliers will be easily accessible for all bid and tender exercises. However, they are likely to incur new responsibilities in tracking performance of suppliers for relevant contracts, which may be time consuming. The new contractual performance element could potentially contribute to a ‘chilling effect’, making bidders more selective in their ‘bid/no-bid’ decision when choosing to tender.
For obvious reasons, suppliers should be mindful of the new debarment list and financial/reputational implications from its introduction. We strongly advise conducting a risk management exercise on existing and upcoming contracts to determine if they are susceptible to exclusion – particularly any performance issues which can be resolved. It is also advisable to introduce increased checks on subcontractors within your supply chain. Per Section 28 of the Act, suppliers can be excluded via proxy if they employ any excludable subcontracting partners. If you do not already do so, consider introducing a selection questionnaire procedure for subcontractors to minimise risk for future tenders.
Helping you navigate the tender process
As part of our bid and tender services, we offer wider bid management support and consultancy regarding your eligibility for tender opportunities. This could include conducting a brief review of the documents and any concerns you have, supporting an informed ‘bid/no-bid’ decision from proven experts. We have experience supporting over 7,000 PQQ, SQ and ITT submissions across all sectors and industries, ensuring we are ideally positioned to provide support on any questions or queries.
If you would like to find out more about this or any other services we provide, contact our sales and marketing team today at 0800 612 5563 or firstname.lastname@example.org to receive a free, no-obligation quotation.
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Posted on 09-02-2024