Credit Management April 2024 issue

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LEGISLATION The Act also includes new offences to be applied under the mandatory and discretionary grounds of exclusion. These include theft, corporate manslaughter, competition law infringement, and failure to co-operate with debarment investigations. The new offences for the discretionary ground include acting improperly during any procurement process and prior poor performance of public contracts. Further, the Act also requires contracting authorities to consider whether “the circumstances giving rise to the application of the exclusion ground are likely to occur again”. If a contracting authority seeks to rely on this provision, they may consider matters such as evidence that the supplier has taken the conduct or offence seriously; any measures the supplier has taken to prevent any further occurrences; and the time that has passed from the initial circumstances occurring. Debarment List The Act introduces a central ‘debarment’ register which includes a list of suppliers debarred from engaging in the procurement process for a certain period. Suppliers will be added to the debarment list where a relevant minister having investigated a supplier determines that the exclusion grounds apply and determines that the supplier should be added to the list. Suppliers will be notified of any such investigations and also any debarment decisions that are made by ministers. Where notice of a debarment decision is taken, the supplier is granted an eight-day standstill period during which they can initiate court proceedings to suspend their name from being added to the debarment list. A standstill is the period in which a contract award process is suspended and therefore the contract must not be entered into. The mandatory exclusion ground can be applied where a supplier fails to meet such a request, provided that a minister deems the failure to be ‘sufficiently serious’ (Schedule 6, paragraph 42). It is unclear exactly what ‘sufficiently serious’ means, and no doubt this will need to be tested by the courts. Key performance indicators (KPIs) Where any contract value exceeds £2m, contracting authorities must set and publish a minimum of three KPIs before entering into such a contract. This obligation will not apply under the framework contracts; utilities contracts awarded by private utilities, concession contracts, light touch contracts, and where the contracting authority considers that the supplier’s performance could not be appropriately assessed by KPIs. Where KPIs are set by a contracting authority, the authority must review the supplier’s performance annually against such KPIs during the contract lifetime and publish specific data regarding the supplier’s performance. Such data is likely to be published on the central digital platform, but this is yet to be confirmed by the Government. “Protect our sensitive sectors from companies which could threaten national security and are a firm deterrence to hostile actors who wish to do Britain harm.” Brave | Curious | Resilient / www.cicm.com / April 2024 / PAGE 22
CREDIT MANAGEMENT Publishing contract performance information Further, the Act requires contracting authorities to publish information regarding contract performance if certain circumstances – including a supplier’s breach of a public contract which results in termination of the contract, damages being awarded, or a settlement agreement between the parties – arise. This also applies if a contracting authority considers that a supplier’s performance of the contract is not being carried out to the authority’s satisfaction and the supplier has failed to remedy a breach or rectify performance after having the opportunity to do so. This clearly has implications for confidentiality, particularly as to settlement agreements, and careful drafting will therefore be needed if these issues require addressing. Remedies under the Act Many of the existing remedy provisions are retained under the Act with the addition of some key changes including the reduction of the standstill period, changes to automatic suspension. Reduction of the standstill period Under the Act, a minor change has been made to the ‘standstill period’. This period will change from ten calendar days to eight working days. Automatic suspension The Act has made various changes to the application of an automatic suspension. This is where a contracting authority is notified of a claim prior to entering into a contract which consequently prevents the contracting authority from entering into the contract. Changes under the Act note that the automatic suspension will not apply where a contracting authority is notified of a claim after the expiry of an applicable standstill period. Also, there is a new test for the court to determine whether an automatic suspension should be lifted. When deciding whether to lift the suspension in the public interest, the contracting authority will need to ensure that the contract is awarded in accordance with the law; avoid any delay in the supply of the goods, services or works provided for in the contract; and consider the interests of suppliers, including whether damages are an adequate remedy for a claimant (a challenging bidder); and any other matters the court considers appropriate. New set aside remedy A contract will be set aside if the court is satisfied that the claimant (an unsuccessful supplier bidding for the contract in question) was denied a proper opportunity to seek pre-contractual remedies for any one of a number of reasons. The impact of the Act on SMEs The Act includes various provisions intended to help remove the barriers faced by SMEs. Pipeline works: There will be a requirement for contracting authorities to publish a pipeline notice for planned works over an 18-month period for opportunities over £2m. This will allow SMEs to review pipeline works on the central register and allow them to filter the pipeline works, for example, by region. As such, SMEs can make strategic decisions on the incoming opportunities they could bid for when reviewing such data. Centralised system: Under the current regime SMEs face the challenge of registering with multiple platforms which can often take time and resources. The new registration platform will allow suppliers to ‘tell us once’ which will streamline the registration process for SMEs. Contract bidding: This is a provision that prohibits contracting authorities from requiring audited accounts when considering the financial wealth of bidders unless they are required to do so under the Companies Act 2006. This prohibition will help those SMEs who are not legally required to file audited accounts to have access to the public procurement market and to show their financial capability through other means. Reducing costs: Suppliers will no longer be required to have insurance in place prior to a contract being awarded. This means that prospective suppliers will save on unnecessary insurance costs as insurance cover will not be needed where there is no guarantee of achieving a contract. What next? The Government announced that six months’ notice will be given before the Act takes effect which is anticipated to be October 2024. This should give procurement teams time to get up to speed with the changes, especially as further guidance has recently been issued on GOV.UK under Procurement Act 2023: short guides. Although consolidating the various regulations relating to procurement and adopting a specifically UK rather than EU tone signals a clear break from the ‘old’ regime, this is essentially a rewrite of the legislation. It may take time for contracting authorities to get used to the new regime having spent years honing their approach to the old processes. Masuma Ahmed and Pete Maguire Masuma Ahmed is a trainee solicitor, and Pete Maguire, partner and head of Outsourcing, Technology and Commercial at Wright Hassall. Brave | Curious | | | Resilient / www.cicm.com / April / April 2024 2024 / PAGE / PAGE 23 23
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