Amendments to the Public Contracts Regulations 2006

This article considers the new Public Procurement (Miscellaneous Amendments) Regulations 2011 (“the 2011 Regulations”) which will come into force on 1 October 2011. These Regulations will amend the Public Contracts Regulations 2006 (“PCR”), the Utilities Contracts Regulations 2006 and other related legislation.  This article focuses on the amendments to the PCR made by the 2011 Regulations.

The 2011 Regulations make some key changes to the time limits for bidders to issue legal proceedings including a new limitation period for bringing proceedings of just 30 days.  There are also some changes to the automatic suspension regime and the mandatory reasons for rejecting a participant.

The main changes are:

• The time limit for bringing legal proceedings is reduced from three months to 30 days from the date of knowledge of the alleged breach.  From 1 October, bidders will have to challenge within a 30 day period or risk being out of time.  The 30 day period will start from when the challenger first knew or ought to have known that there were grounds for bringing a challenge (“the date of knowledge”).  The Court will still have a discretion to extend time where there is good reason for doing so, up to a maximum of three months from the date of knowledge.  The new time limit will apply to all claims (other than those claiming the ineffectiveness remedy) where the date of knowledge is on or after 1 October 2011.
• There is no longer an additional requirement to bring proceedings promptly. The PCR currently state that the time limit for bringing a procurement challenge is “promptly and in any event within 3 months”.  The need to act promptly has been problematic since the January 2010 judgment of the European Court of Justice in Uniplex (UK) Ltd v NHS Business Services Authority which confirmed that UK requirements for a challenge to be brought promptly were contrary to EU law because they prevented claimants from knowing the exact time limit that would apply.  The legislation has now caught up and the requirement to act promptly has been removed. 
• Proceedings are to be regarded as started when the claim form is issued at Court, rather than when it is served on the Defendant.  This amendment closes a technical loophole in the PCR concerning the start of the ‘automatic suspension’.  If a claimant starts court proceedings under the PCR, as long as those proceedings are started before the contract has been awarded, an automatic suspension is imposed on the procurement so that the contracting authority is prevented from entering into the contract.  From 1 October 2011, proceedings are deemed to have “started” on the date that proceedings are issued at Court (rather than when they are served, as was the case previously).  The onus is on the challenging bidder to tell the contracting authority that the claim has been issued.  Only then will the automatic suspension take effect.  The claim form must be formally served on the contracting authority within seven days of the claim being issued.
• The award decision notice only has to be sent to tenderers who have not been definitely excluded from the competition.  The current requirement is for all candidates and tenderers to be told about the start of the standstill period and be given the relevant debriefing information.  The 2011 Regulations relax this requirement where it is clear that a tenderer has already been excluded, has been notified of this and where it is too late for them to bring a challenge in respect of their exclusion.  This amendment should be treated with caution as it will apply to relatively few scenarios.  In the vast majority of cases tenderers will still need to be given the full debriefing information under Regulation 32 of the PCR. 
• Some additional mandatory exclusions have been introduced.   The grounds on which a participant must be rejected under Regulation 23 of the PCR have been updated to reflect changes in legislation and to reflect the criminal offences in the Bribery Act 2010 and the Fraud Act 2006.

Implications for bidders and contracting authorities

The amendments to the PCR clearly place a more onerous requirement on bidders who consider that the PCR may have been breached to quickly gather information, seek legal advice, and, if appropriate, ensure that legal proceedings are brought before the expiry of the 30 day deadline.  Whilst the pressure will be on bidders to decide whether to issue proceedings in a short space of time, the result should be more certainty for contracting authorities and a quicker resolution of any disputes.

When the amendments come into force on 1 October 2011, it will remain to be seen whether some claimants will feel forced into issuing proceedings within 30 days to protect their position while more information is gathered about what went wrong (if anything) with the procurement process.  Contracting authorities and claimants will need to move quickly and cooperate during the standstill period to ensure that proceedings are not issued unnecessarily.  This will be a challenge for both bidders and contracting authorities alike.

As recent court cases have shown, this is also further warning that bidders should act quickly when they spot a potential breach or lack of clarity in the procurement documents as the time limit for bringing a claim can start to run even before the award decision is made.  Further, the clock can start ticking when bidders have a clear indication that there has been a breach even if they do not know all of the facts which would prove the breach.  The message is that bidders who ‘wait and see’ may be out of time. 

To date, the Courts have been reluctant to exercise their discretion to extend time.  Given that the time limit has now been reduced to 30 days, it will be interesting to see how generous the Courts are prepared to be in extending time up to the new maximum of three months and whether they will be sympathetic to bidders who have not been able to start proceedings within 30 days.  Bidders should certainly not rely on this being the case.