Guide to procurement disputes

The procurement process is intended to make sure that goods, works or services are provided to customers at the best possible price. Public bodies and organisations design procurement processes with the intention of promoting equitable and open competition, and include factors such as handling, delivery, and fluctuations in the prices of goods and services.

Challenging a procurement contract award is governed by extremely tight timescales, so when a challenge become apparent, acting swiftly is vital. There is a strict 30-day time limit within which a complaint must be filed with the court.

What to do if you have concerns about a procurement contract award

If you or your company made a procurement contract bid, then you have the standing to challenge the results if they are not favourable. The procurement rules and relevant case law should be considered before you decide to challenge the award.

In most cases, the first time you are alerted to an issue is following receipt of the contract award notice informing you that your bid was unsuccessful. Time limits allowing you to challenge the decision start running from the point at which you first noticed the issue.

The award notice will set out:

• The details of the winning bidder
• The winning bidder’s score and details of your bid
• The winning aspects and components of their bid compared to yours

From this information, you should be able to determine whether to launch a challenge. If you decide to begin litigation, then this must be commenced within 30 days from when you knew, or should have known, that grounds for a challenge had arisen.

Because of the extremely tight timescales, it may be sensible to resolve the situation via correspondence, although it is acknowledged negotiation would likely be limited in these circumstances.

On what grounds can a contract award be challenged?

There are many reasons that a contract award may be challenged and can include:

• biased marking by the procurement body,
• inaccurate scoring,
• unlawful influence or interference with the procurement body,
• lack of transparency,
• the contract was awarded to the candidate who offered additional services over and above tender requirements,
• the contract was awarded without going out to tender - ‘ineffectiveness’, under the Public Contracts Regulations 2015.

Procurement and direct awards

There may be times when a procurement contract was not advertised and a direct award made to an organisation. In these circumstances, you may be able to apply to the court for a declaration that the contract is ’ineffective’. Grounds for bringing such a case are complex, but if you think you have been affected by such a decision, then you should think about getting legal advice to discuss your options.

If the court finds in your favour, the contract would cease to be effective and discharged. The court may also make orders for compensation, or impose a fine or other financial penalty on the offending body. It is important to note that although this remedy has been available for seven years; it has rarely been used.

Technology and Construction Court (TCC)

If there has been a breach of the Public Contract Regulations, cases are heard by the Technology and Construction Court (TCC). To improve the efficiency of claims, the TCC has produced a helpful guide which lays down the conduct it expects from parties, including how they should act before issuing the claim. The Guide does not have to be followed, but not doing so may lead to the imposition of costs penalties if it is found litigation might have been avoided. 

If proceedings are issued, it stops the procurement body from proceeding with the contract because it is automatically suspended. This can only be lifted, and the contract subsequently awarded, if the claim is settled or a hearing has taken place where the court has made an order. 

The claim may still continue for damages in cases where the suspension has been lifted by the court. But if this doesn’t happen, then the court can accelerate a trial, usually within 6 months.

Reform

Predominately because the UK left the EU, procurement law is set for far-reaching reform, with the Procurement Bill currently making its way through Parliament. Procuring bodies will be subject to wider transparency requirements, which means it should be easier to obtain information about planned procurements. In addition, procuring bodies will also have enhanced power to exclude certain suppliers from procurements including the introduction of a central list of barred suppliers. It will also include greater rights to exclude suppliers for performing poorly, including failure to meet KPIs.