2022 Begins – Another procurement law controversy?
There has of course been widespread disquiet with regard to the Government’s processes for allocating contracts for COVID PPE in the early stages of the pandemic. Beneath the general concerns about deals done with those friendly with Government Ministers and a general sense of unfairness has been the impact of public procurement law which, of course, imposes high standards on those letting contracts for the provision of works, goods and services to public sector bodies.
The High Court (Technology and Construction Court) confirmed this position following a challenge brought by the Government’s unfavourite body, The Good Law Project, reported as Good Law Project Limited / Every Doctor v The Secretary of State for Health and Social Care (2022 EWHC 46) (TCC). Within this case (and it is perhaps surprising that these groups were able to bring an action given that they would not generally be regarded as parties suffering direct loss as a result of any failure to follow procurement law) it was alleged that contracts of a total value of over £350m were not awarded in accordance with the requirements of the Public Contracts Regulations 2015 (Regulations).
Of course, a procurement process normally requires the publication of a Notice (previously in the Official Journal of the European Union (OJEU) and now within the UK’s Find a Tender service (FTS) publication) and a process of competitive tender/selection. Crucially, a “Negotiated Procedure Without Publication” is allowed within the Regulations such that buyers can acquire supplies within a short time frame without a Notice being published in cases of extreme urgency. This is what the Government relied upon here.
In addition, the Claimant relied upon such things as Purchasing Policy Note 02/20 which stressed that Government organisations should note that payment in advance of need should not be utilised without Treasury consent, and advice given internally that foreign companies should be checked to ensure they were reputable and assurances provided with regard to the quality and certification standards of suppliers before they were issued with contracts. It would appear that this sort of due diligence was not properly followed in the case of some suppliers concerned, and there was a lack of proper certifications being issued.
Within the 125 page judgment, there is extensive discussion over the quality of evidence provided by the Government and the extent to which information was redacted. What was apparent in the case, however, is that whilst many suppliers (up to 16,000) offered to make supplies to the Government, only certain suppliers were given preferential treatment and progressed through what was called a “high priority lane” or, as it was described internally, a “VIP lane”. In many cases these were in fact suppliers where Ministers were lobbied by, or on behalf of, people who were in touch with them who said that they ought to be given such contracts.
The High Court took the view that even if the usual requirements under public procurement law could be dispensed with within the Regulations, there remain fundamental duties of fairness and a duty to give “clear and sufficient reasons” for awarding contracts. This was a particular concern given that in the case of certain suppliers there was a lack of evidence of financial standing and in one case a supplier had been given a “red” due diligence rating by the Cabinet Office but was still awarded a contract. In the case of another supplier, it provided over 150million face masks that were effectively unusable.
Given all the evidence and based in part on general principles as frequently applied in judicial review that public bodies must behave fairly and reasonably, it was ruled that the Government behaved unlawfully by conferring “preferential treatment” and an “unfair advantage” on two particular firms by placing them on a “high priority lane” and therefore acted unlawfully.
This decision has been somewhat affected by a very recent Court of Appeal Decision on 19th January 2021 following another “Good Law Project” challenge. This was a Judicial Review claim concerning the award of a contract related to focus group services connected with COVID-19 to a firm called “Public First” .The Government won (on points) on the basis that the use of the “urgency” power within regulation 32 of the Regulations can be permitted in circumstances such as this, whilst signalling a very real concern over the potential for bias in a process such as this, and that the government is entitled to exercise a view on who appropriate suppliers might be (even if, as noted in court, those suppliers were named as having close relations with Dominic Cummings and Michael Gove!).
During the period of COVID-19, we have frequently been requested by Public Sector clients to advise on the potential to go through a procurement process without following the sometimes lengthy requirements to publish a Notice and go through a particular procedure. These cases are not an authoritative position that urgency does not mean that expedited procedures can or cannot be used. However, what the judgment does mean is that Authorities have to be sure that they are behaving in a fair, objective and even-handed way in dealing with suppliers and not giving preference because, for example of the connections which some suppliers might have, or the way in which they have lobbied influential individuals.
The content of this page is a summary of the law in force at the date of publication and is not exhaustive, nor does it contain definitive advice. Specialist legal advice should be sought in relation to any queries that may arise.
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