­The Road To Reform Section 6

Introduction

On 6 December 2021 the government published its response to the Green Paper on proposed reform to public procurement. A link to the response can be found here.

This is the sixth in a series of articles which the procurement law team at Bevan Brittan LLP are producing on what the proposed reforms will mean for the public sector and suppliers. Each article will give practical commentary on the different themes within the proposed reforms.

Here is a menu of what we will be covering, with links to each Part which will become live once each Part is published:

• Section 1 - An overview
• Section 2 - Principles and objectives, the National Procurement Policy Statement and the PRU
• Section 3 - Single set of Regulations with exemptions, interface with health procurement, light touch regime and concessions
• Section 4 - New procedures, including for urgent procurements, emphasis on pre-market engagement and planning
• Section 5 - Evaluation (MAT not MEAT), links to NPPS and other legislation
• Section 6 - Exclusion: grounds for exclusion, debarment register, past performance and supplier registration system
• Section 7 - Purchasing tools – new DPS+, new rules for open and closed frameworks
• Section 8 - Transparency – notices, debriefing, what has to be published and Open Contracting Data Standard
• Section 9 - Remedies: reforms to Court process, no independent review up front by the authority, disclosure, new test for automatic suspension, no cap on damages, no tribunal and alternative route via PRU
• Section 10 - Contract Management: prompt payment, amendments to contracts after signature

Exclusion: grounds for exclusion, debarment register, past performance and supplier registration system

Summary

The Green Paper set out a wide range of proposals, including that the exclusion grounds are to be reviewed and revisited by the government and new statutory guidance will be issued to assist contracting authorities in applying the revised exclusion grounds. The government response to stakeholder feedback on the Green Paper clarifies these proposals.

Key issues highlighted in the government response are:

• Contracting authorities have highlighted difficulty in applying the current exclusions regime, citing ambiguities around the scope of the existing exclusion grounds, the process required in relation to verifying self-declarations and the aim of self-cleaning provisions. In response the government intends to introduce a new exclusions framework to address some of these concerns.
• Statutory guidance will be published to assist authorities in the application of the exclusion grounds.
• A 5-year time limit will now apply to both mandatory and discretionary exclusion grounds, where previously a three year limit applied to the discretionary exclusion grounds.
• Exclusion grounds will apply whether there has been a conviction or regulatory decision for a similar offence or conduct overseas or where the relevant conduct occurred overseas.
• Exclusion grounds will cover not only the actions of the bidder but also individuals and entities to which the bidder has a close connection.
• Consideration is being given to setting up a debarment register.
• The government will introduce a power to amend the exclusion grounds, with amendments to be made via secondary legislation.

Debarment list

The Government will investigate the feasibility of developing a centrally managed debarment list of suppliers who have relevant convictions to make it easier for contracting authorities to identify organisations to be excluded from public procurement processes.

Contracting authorities will have to exclude suppliers on the list if a mandatory exclusion ground applies, however they can exercise discretion in respect of a discretionary ground. In addition, suppliers not on the list can also be excluded on a case by case basis.

The Procurement Review Unit (to be set up), would hold responsibility for considering debarment issues, including evidence of misconduct and self-cleaning by suppliers and making recommendations to the Minister. The proposal is for a power for a Minister of the Crown to add suppliers to a public debarment list if they are assessed as meeting a ground for exclusion and there is insufficient evidence of self-cleaning.

Interestingly, some categories of authorities, such as central government, will be able to refer suppliers to the Cabinet Office without having excluded the suppliers in question, so that consideration can be given to the suppliers in question being added to the debarment list. For other categories of authorities, suppliers will be considered for debarment when they are excluded by a contracting authority during a procurement.

The advantage of this proposal is that if a debarment list were created, the burden on contracting authorities to independently assess suppliers is decreased, as a centralised debarment list would mean that contracting authorities would be able to quickly check the centralised debarment list when needed, rather than carrying out independent assessments and duplicating the expenditure of public sector time. Consistency of assessment would also be introduced into the process.

From a supplier perspective, suppliers would be able to appeal if they are notified that they are due to be added to the list, and similarly to the current regulatory system, would be able to undertake self-cleaning measures and apply for early removal from the debarment list before the end of the five year period of exclusion if they can demonstrate that they have self-cleaned.

It should be noted that the detailed process is still being considered in respect of how exactly the debarment list would operate.

Past performance

The Green Paper contained an interesting proposal in relation to creating a system where suppliers could be excluded in relation to prior poor performance under a previous public contract, even in cases where termination, damages, or similar sanctions had not been applied. The Government proposed implementing a similar system in the form of a Contract Performance Register that would require contracting authorities to evaluate the contract performance based on set KPIs deemed important by the contracting authority and included in the contract.

However the government response to the consultation acknowledges the concern of respondents that the bar for exclusion may be lowered too far. It instead states that exclusion based on past performance should be reserved for cases in which performance was so poor as to create risks to the delivery of any future public contracts. Failure to meet KPIs or other performance measures will not by itself give rise to grounds for exclusion. Therefore the proposal is to provide for a discretionary exclusion ground where:

• “a previous public contract has been terminated due to breach of contract, damages paid for breach of contract, or a settlement entered into due to poor performance or breach of contract by the supplier; or
• the supplier has failed to remedy poor performance or breach in accordance with contractual measures put in place by a contracting authority.”

While the proposal has been revised, it nonetheless does still significantly expand the scope of the exclusion grounds in relation to poor performance. The government’s intention to create a Contract Performance Register remains and how this register can be usefully used is due to be explored, options mentioned include encouraging contracting authorities to review it to promote discussion regarding contract performance and management and also useful indicators for contracting authorities as to when a contract has previously been terminated for poor performance. This would create a new option where it is possible for contracting authorities to review suppliers’ previous performance.

Supplier registration system

There is also a proposal to put together a single digital platform for supplier registration that means suppliers would input their information only once, referred to as an ‘evidence locker’ and described as similar to the current Standard Selection Questionnaire. The supplier registration system will keep the information submitted, which can include self-declarations in relation to exclusion grounds and confirmation that they meet the conditions for participation, but contracting authorities can request further procurement-specific information.

Conclusion

Suppliers will need to be aware of the possible upcoming introduction of a debarment list, as being included on this list would have a significant impact on an organisation’s business with a predominantly public sector client base. The current proposal is that a supplier could be excluded from public sector contract opportunities for either a set period of time, or until required self-cleaning is carried out. Therefore self-cleaning measures will be key if a situation such as this arises.

From a contracting authority perspective, the introduction of a debarment list will hopefully be a welcome change, as it has the potential to speed up the process of evaluating responses to exclusion grounds and reduces the administrative burden. However, if a supplier is on the debarment list for a mandatory exclusion ground and their self-cleaning has not been accepted as sufficient to remove them from the debarment list, then contracting authorities will have no discretion as to whether or not to remove the supplier.

The Contract Performance Register is another change that, similarly, has the potential to impact suppliers’ businesses, while providing more protection for contracting authorities who otherwise would have no information on a suppliers’ prior poor performance under a public contract.

However the suggested supplier registration system is likely to benefit suppliers, by making it simpler to bid for multiple public procurement processes.

If you would like to discuss this topic in more detail, please contact Catherine Maddox, Associate.