Debarment: Changes for contracting authorities under the Procurement Act 2023
The main operative provisions of the Procurement Act 2023 (Act) are set to come into force in October 2024. Contracting authorities need to ensure that they are familiar with the new regime and that the relevant people within their organisation have a good understanding of some of the key changes that the Act will bring.
Two areas that will be subject to change, as a result of the Act, are exclusion and debarment. The powers and duties of authorities to exclude suppliers from procurement procedures will have greater significance due to the introduction of the centralised debarment list. Under the Act, authorities will be under a duty to report any issues that have resulted in a supplier being excluded from a procurement procedure. This may result in the supplier being placed on the debarment list, either as an excluded, or an excludable supplier. All contracting authorities will have access to the list, potentially damaging the supplier’s chances of winning public contracts in the future. It will also have an impact on contracting authorities, as they will not be able to award contracts to excluded suppliers, and they will have to record any decision to award a contract to an excludable supplier.
Exclusion grounds
As with the Public Contracts Regulations 2015 (PCR 2015), which currently regulate public procurement, there are mandatory and discretionary exclusion grounds. These grounds are outlined in schedules 6 and 7 of the Act. If a bidder or a supplier is found to have done something which constitutes a mandatory exclusion ground, the contracting authority must exclude the bidder from the procurement procedure, or in the case of a supplier, the contract must be terminated. The authority must then report the incident to the Secretary of State, who may decide to place the supplier on the centralised debarment list as an excluded supplier. Where a discretionary exclusion ground has arisen, the contracting authority may exclude the bidder or terminate an agreement with a supplier, which may result in that bidder/supplier being placed on the debarment list as an excludable supplier.
Whilst the PCR 2015 had similar grounds to those contained within the Act, the 2023 Act does introduce some new grounds, which include acting improperly in any procurement process and prior poor performance of public contracts. For example, the prior poor performance ground that previously only applied to breach of contract and resulted in serious repercussions, such as termination or damages, has been extended. Under the Procurement Act 2023, this ground will now also include situations where a contracting authority is not satisfied with a supplier’s performance and, despite being given a chance to improve such performance, the supplier has failed to do so. Section 75 of the Act introduces additional transparency obligations, which link with this new point, as information about contract performance issues will now need to be published by contracting authorities.
Contracting authorities should be aware of the timescales, within which mandatory and discretionary exclusion grounds will apply. For a comprehensive understanding of the timescales, contracting authorities should familiarise themselves with Schedules 6 and 7 of the Act, and in particular, section 44 of Schedule 6 and section 15 of Schedule 7. These sections deal specifically with excluded matters. In summary, some exclusion grounds will apply as far back as 5 years prior to the schedules coming into force, others will go back 3 years, whilst some will apply only from the date which the schedules come into force.
Likelihood of reoccurrence
In addition to considering whether or not an exclusion ground has occurred, contracting authorities must now, as part of their decision-making process, consider and come to a conclusion on the evidence as to the likelihood of an exclusion ground reoccurring in the future if a bidder or supplier is not excluded. Such evidence includes, but is not limited to:
- evidence that the conduct has been taken seriously,
- steps that have been taken to prevent such grounds from reoccurring, and
- the timeframe since the initial occurrence.
Contracting authorities should therefore document any evidence that has been used in consideration of whether or not to exclude a supplier.
Debarment
The Procurement Act 2023 will introduce a centralised debarment list which will be maintained by the government. The list will be accessible to all contracting authorities and will contain information about excluded and excludable suppliers for a specified period. Contracting authorities will report any exclusion grounds to the relevant Minister, which will in turn trigger the procedure for an investigation into the occurrence of an exclusion ground. If the relevant Minister is satisfied that an exclusion ground does apply, then that supplier will be added to the centralised debarment list. Contracting authorities will need to give notice to suppliers if an investigation is taking place. The supplier will then have an opportunity to make representations, which will aid the investigation. Once a decision has been made, the relevant Minister must notify the supplier if a decision has been made to add the supplier to the debarment list. This will trigger an 8-day standstill period, whereby the supplier will have an opportunity to challenge the decision. Furthermore, where there has been a material change in circumstances since the decision was made, a supplier can apply for removal from the list.
If you have any questions regarding procurement, please contact the Geldards Public Sector Team