Public Procurement Challenges - Modern Slavery Act 2015 15 March - - PowerPoint PPT Presentation

Public Procurement

The Diverse Law Firm The Diverse Law Firm

15 March 2018

Public Procurement Challenges

• Modern Slavery Act 2015

Public Procurement

The Diverse Law Firm

Introduction

• High volume of procurement challenges in UK
• 11% of cases in Technology & Construction Court in London are

procurement challenges.

• Numerous other procurement challenges which never get to Court
• Size of UK procurement market - £240 billion of £740 billion annual

public spend

• Objectives of webinar
• Public bodies - how to avoid your procurement awards and processes

being challenged

• Bidders – how to identify grounds for challenge
• Both – how to deal with procurement challenges when they arise

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Introduction: Types of Tenders

• Public Contracts Regulations 2015
• Other sectors – Utilities Contracts Regulations 2016, Defence and

Security Public Contracts Regulations 2011

• Concession Contracts Regulations 2016
• Financial thresholds – new since January 2018
• Central government contracts for services and supplies -

£118,133

• Other public bodies contracts for services and supplies - £181,302
• Public works contracts - £4,551,413

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Public Contracts Regulations 2015

• Light touch regime
• Financial threshold: £615,278
• More freedom over process
• Uncertainty over obligation to hold standstill period – Crown

Commercial Guidance recommends running one

• Below threshold contracts
• Less onerous requirements
• Only some parts of Regulations apply
• Value greater than £10,000 (central government) or £25,000

(other public bodies)  advertise on Contracts Finder

• BUT general EU principles apply where there is cross-border interest

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Common Reasons for Procurement Challenge

• When can a procurement decision or process be legally challenged?
• Where a public body has not complied with the required procedure
• Where a public body has exceeded its discretion (manifest error)
• Where a public body has not complied with EU procurement principles
• Where the facts upon which a public body makes a decision are wrong

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Procurement Principles

• Procurement Principles (Regulation 18)
• Non-Discrimination
• Transparency
• Equality
• Proportionality

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Common Reasons for Challenge

• Procedural breaches of the Regulations
• Challenges to tender design
• Challenges to tender evaluation
• Challenges during the performance of the contract

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Procedural Breaches

• Major procedural breaches subject to remedy of

ineffectiveness

• Failure to advertise
• Failure to hold a standstill
• Entering into the contract during the standstill
• Other procedural breaches

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Tender design

• Quality award criteria
• Criteria must be directly related to the subject matter of the

contract and proportionate

• Must ensure possibility of effective competition
• Must include specification to allow bidders to assess how well

they meet the criteria

• Regulation 67

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Challenges to Tender Design

• Practical examples:
• Publishing/typographical errors e.g. mistakes in the number of

marks available

• Confusing/ambiguous language
• Can it be understood by the reasonably diligent person?
• Requirements which cannot be met e.g. products or standards

which no longer exist

• Requirements which favour one bidder over others
• Regulation 42 – detailed rules on technical specifications
• Be wary of suppliers helping with design of the tender - risk of favouring

incumbent/supplier

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Challenges to Tender Design

• Bidders: raise complaints quickly
• Limitation period of 30 days - no option to sit on a challenge and
• nly raise it if you do not win
• Public bodies: Use clarifications
• Correct mistakes to avoid challenge

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Challenges to Evaluation

• The most common type of legal challenge
• Contract Award Letter notifies unsuccessful bidder:
• Their marks and the successful bidder’s marks
• Reasons for decision, including “characteristic and relative advantages of

the successful tender, the score … of the tenderer to be awarded the contract or become party to the framework agreement”

• That a standstill period will now take place (Regulation 86)

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Marking Tender Responses

• The tender documents

Woods Building Services v Milton Keynes County Council (2015)

PART 2 AWARD CRITERIA MARKS 2.1 Provide a method statement (of two A4 pages maximum) setting out your proposals to meet the requirements of the Service 10 2.2 Explain your mobilisation plan and your proposals to ensure that all task orders are completed within the given time scale (maximum one A4 page). 10 2.3 Specify the members of delivery/project team, including their roles and responsibilities (including CVs) (maximum

• ne A4 page)

10 2.4 Specify the training and competencies of your directly employed staff in relation to the safe removal of Asbestos Containing Materials and reinstatement of non-asbestos products (maximum one A4 page) 10 2.5 How do you propose to ensure the Health and Safety of employees, residents and other stakeholders on site? (maximum one A4 page) 10 3.1 Please provide details of the quality systems you will use to ensure all works are fully compliant with the Specification and are completed in accordance with each Task Order programme. (maximum one A4 page) 10 3.2 Provide a statement of your commitment to develop a good working relationship with the client and other stakeholders

• f the contract. Please describe measures to be taken to maintain this relationship (maximum one A4 page)

10 3.3 Please describe how you would manage the defect correction period. Please describe what procedures you have in place for managing complaints (maximum one A4 page) 10 3.4 Please provide details of your proposed communication procedures in relation to the requirements of the contract (maximum one A4 page) 10

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Challenges to Evaluation

• A marking error of a question where no independent

judgement/assessment required

• Incorrect adding up
• Applying weighting incorrectly
• Awarding bidder more marks than

available for question

• Always grounds for challenge

Section Question Bidder A Bidder B 1.

5 4

2.1

7 6

2.2

7 5

2.3

4 5

2.4

1 2

3.1

2 2

3.2

5 3

3.3

1 6

4.

5 5

Total

37 36

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Challenges to Evaluation

• Awarding marks on basis of incorrect facts
• Mistakenly believing bidder had not supplied a mandatory document
• Misreading or misunderstanding bidder’s response when meaning clear
• Always a ground for challenge

5

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Challenges to Evaluation

• A marking error of a question where independent

judgement/assessment is required by evaluator

• Court’s role is to review, not re-mark, bids
• Public bodies are allowed a “margin of appreciation” in their marking
• You need to prove a “manifest error”

to challenge

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• Marking involved a breach of principle of transparency
• No “margin of appreciation” for evaluator
• Breach of procurement principle always grounds for challenge
• Occurs where evaluator uses an undisclosed marking scheme or

award criteria to mark an answer

• Possible defence if genuine “sub-criteria”

Challenges to Evaluation

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Challenges to Evaluation

• Marking involved a breach of the principle of equality
• An “equal” approach to marking bids must be applied
• Fabricon v Belgium (2005)
• “Comparable situations must not be treated differently”
• “Different situations must not be treated the same unless treatment is
• bjectively justified”
• Breach of equality principle is always grounds for challenge

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Record Keeping / Audit Trail

• Reg 84(8) “Contracting authorities shall ensure they keep sufficient

documentation to justify decisions taken at all stages of the procurement process such as:

(a) communications with economic operators and internal deliberations (b) preparation of the procurement documents (c) dialogue or negotiation if any (d) selection and award of the contract

• Reg 18 Duty of Transparency

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Record Keeping / Audit Trail

• Energysolutions EU Limited v Nuclear Decommissioning Authority (2016)
• NDA’s approach to record keeping:
• Deliberate policy of not creating or keeping records of evaluation.
• Only retained records were those in software evaluation software
• Result:
• Court described records of evaluation as “extraordinarily brief”
• Made defending procurement challenge by NDA much harder.
• NDA’s approach to record keeping held to be “wholly lacking in transparency, in breach of the
• bligation of transparency”
• “…the more comprehensive and robust the record of the … evaluation, the stronger the NDA

would have been in terms of any challenge, assuming the evaluation was done correctly. Thus ironically, in my judgment the NDA’s approach to note-taking ran counter to its objective.

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Record Keeping / Audit Trail

• Correct approach to take?
• Not documenting decisions is not an option.
• Public bodies need to be able to justify their decision – Duty of Transparency
• This covers scoring decisions and any procedurally important decision
• Contemporaneous records should be kept, including proportionate level of detail.
• Just reciting marking scheme may be inadequate. Summary of reasoning required.
• Evaluators assisted by well-designed tender and clear marking scheme
• Evaluators need to be trained on record keeping and aware that their notes could

be reviewed in legal proceedings

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Bringing and defending a procurement challenge

• TCC Guidance Note of Procedures for Public Procurement
• cases. Applies post July 2017
• ”The potential claimant will send a letter before claim to the contracting
• authority. This should identify the procurement process to which the claim

relates; the grounds then known for the claim (both factual and legal); any information sought from the authority; the remedy required, and any request for an extension of the standstill period and/or a request not to enter into the contract for a specific period of time and/or not to do so without a specified period of notice to the potential claimant. The letter should propose an appropriate, short, time limit for a response” (Para 5(1)).

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Bringing and defending a procurement challenge

• “The authority should promptly acknowledge receipt of the letter

before claim, notify its solicitors’ details and (if requested) indicate whether the standstill period will be extended and if so, by how long. The authority should then provide any information to which the claimant may be entitled as soon as possible, and send a substantive response within the timescale proposed by the claimant, or as soon as practical thereafter” (Para 5(2)).

• “Having exchanged correspondence and information, the parties

should continue to make appropriate and proportionate efforts to resolve the dispute without the need to commence proceedings” (Para 5(3)).

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Timescales & procedures

• Standstill period – 10 days
• Automatic suspension of contract award if proceedings

are issued within the standstill period

• Automatic suspension very often lifted on application by the

public body

• Bidders still entitled to damages if suspension lifted
• Absolute deadline: 30 days from the date of knowledge
• The date the bidder “Knew or ought to have known”
• Extensions of time – up to 3 months but very rarely available

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Practical Tips for Procurement Challenges

• Bidders:
• Be aware of dates and deadlines and react quickly.
• Make notes and keep records of discussions
• Ask for an extension of the standstill period
• Press for early disclosure of key documents
• Think about your remedy – would you be content with

damages?

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Practical Tips for Procurement Challenges

• Public bodies:
• Know the Regulations – arrange regular training for staff
• Use clarifications wisely, correct mistakes if you can
• Keep good notes
• React quickly to challenges
• Consider extending the standstill period
• Provide reasonable information and assistance
• Consider all options, including abandoning the tender and

starting again

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MODERN SLAVERY ACT 2015

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Modern Slavery Act 2015

• “The Modern Slavery Act 2015 is the first of its kind in Europe, and one of the

first in the world, to specifically address slavery and trafficking in the 21st century”.

• “The new legislation significantly enhances support and protection for victims,

gives law enforcement the tools they need to target today’s slave drivers, ensures perpetrators can be severely punished, and includes a world leading provision to encourage business to take action to ensure their end-to-end supply chains are slavery free”. Home Office Press Release March 2015

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Modern Slavery Act 2015

• California Transparency in Supply Chains Act
• UK legislation
• Consolidates and enhances existing criminal offences of slavery,

servitude, forced labour and trafficking

• Introduces new supply chain transparency requirements (s54)
• Success of criminal legislation
• National performance
• Local prosecutions

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Modern Slavery Act 2015

• Part 1 – offences
• Slavery, servitude, forced or compulsory labour
• Human trafficking
• Section 54 – MSA statement
• Commercial organisation
• Turnover exceeds £36m
• Annual obligation
• Publish as soon as possible, latest within 6 months of end of year

end

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Modern Slavery Act 2015

• Contractual provisions
• Basic - requirement that suppliers must comply with MSA
• Anti-Slavery policies?
• Additional layers of protection
• Warranties from suppliers
• Indemnity from suppliers
• Liability for subcontractors

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Modern Slavery Act 2015

• Enforcement
• Ability to terminate contract
• Supplier due diligence
• Public bodies:
• Mandatory MSA compliance questions
• Make sure you actually check!
• Risky industries/locations: MSA award criteria?

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Modern Slavery Act 2015

• The future of Modern Slavery legislation
• France – Law no 2017-399 “Duty of Care of Parent Companies

and Ordering Companies”

• Holland – “Child Labour Due Diligence Law”
• Australia – Consulting on Modern Slavery Act equivalent
• Rest of the World

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Modern Slavery Act 2015

• International solution to a global problem
• UK approach “Race to the Top”
• UK Public Sector Organisations raising standards
• Department for International Development
• Supply Chain Code of Conduct

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Round Up

• If you have any questions, feel free to email:

Chris Tayton: ctayton@clarkslegal.com Emma Butcher: ebutcher@clarkslegal.com

• Visit public procurement page on website for procurement

updates and news

www.clarkslegal.com/OurWork/Public_Procurement

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contact@clarkslegal.com www.clarkslegal.com