Michael Bowsher's Mostly Procurement Bulletin

Some Relevant Texts on External and Internal Agreements affecting UK Procurement Law Reform: For a Talk on 30 May 2022

As many of us have said would happen since well before the Referendum in 2016, the external arrangements of the United Kingdom with the rest of the world heavily constrain any government’s freedom of movement in repealing, amending or even improving procurement law.  The internal arrangements between the UK government and the governments of the constituent nations of the United Kingdom also constrain that freedom of action.  A comprehensive collection of references on this topic would be something worth setting up.   

For the moment, I set out here a very limited selection of comparative references and some quotations intended to illustrate a short talk I am giving on this subject to the Bar European Group in Salzburg on 30 May 2022.   I set them out here as a basis for future discussion and comment. 

References to the Procurement Bill published this week are to the version accessed online at https://bills.parliament.uk/bills/3159 on the day of 1^st Reading, 11 May 2022.  The shorthand “PB” is used.

Other repeated references are to:

Revised Agreement on Government Procurement of the WTO, as amended on 30 March 2012 (“GPA”).  The UK (inevitably) acceded to this upon Brexit. See https://www.wto.org/english/tratop_e/gproc_e/memobs_e.htm

and

https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/963079/PPN-0221-Requirements-for-contracts-covered-by-the-WTO-Government-Procurement-Agreement-and-the-UK-EU-Trade-and-Co-operation-Agreement.pdf

Trade and Cooperation Agreement between the European Union and the European Atomic Energy Community, of the one part, and the United Kingdom of Great Britain and Northern Ireland, of the other part, (“TCA”) at https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=uriserv%3AOJ.L_.2021.149.01.0010.01.ENG&toc=OJ%3AL%3A2021%3A149%3ATOC

UK-Australia FTA (“UKAUS”) published on 15 June 2021, at https://www.gov.uk/government/collections/uk-australia-free-trade-agreement

Corruption and Integrity

United Nations Convention against Corruption, Article 9

“Article 9.         Public procurement and management of public finances

1. Each State Party shall, in accordance with the fundamental principles of its legal system, take the necessary steps to establish appropriate systems of procurement, based on transparency, competition and objective criteria in decision-making, that are effective, inter alia, in preventing corruption. Such systems, which may take into account appropriate threshold values in their application, shall address, inter alia:

• The public distribution of information relating to procurement pro- cedures and contracts, including information on invitations to tender and rel- evant or pertinent information on the award of contracts, allowing potential tenderers sufficient time to prepare and submit their tenders;
• The establishment, in advance, of conditions for participation, including selection and award criteria and tendering rules, and their publication;
• The use of objective and predetermined criteria for public procure- ment decisions, in order to facilitate the subsequent verification of the correct application of the rules or procedures;
• An effective system of domestic review, including an effective system of appeal, to ensure legal recourse and remedies in the event that the rules or procedures established pursuant to this paragraph are not followed;
• Where appropriate, measures to regulate matters regarding personnel responsible for procurement, such as declaration of interest in particular public procurements, screening procedures and training

2. Each State Party shall, in accordance with the fundamental principles of its legal system, take appropriate measures to promote transparency and accountability in the management of public Such measures shall encompass, inter alia:

• Procedures for the adoption of the national budget;
• Timely reporting on revenue and expenditure;
• A system of accounting and auditing standards and related oversight;
• Effective and efficient systems of risk management and internal control; and
• Where appropriate, corrective action in the case of failure to comply with the requirements established in this paragraph.

3. Each State Party shall take such civil and administrative measures as may be necessary, in accordance with the fundamental principles of its domestic law, to preserve the integrity of accounting books, records, financial statements or other documents related to public expenditure and revenue and to prevent the falsification of such documents ”

UKAUS, Article 16.18

“1.           Each Party shall ensure that criminal or administrative measures exist to address corruption, fraud, and other illegal acts in its government procurement.”

PB, clause 11 (1)

“(1)          In carrying out a procurement, a contracting authority must have regard to the importance of –

…

                (d) acting, and being seen to act, with integrity.”

Non-Discrimination

PB, Clause 82 (and 83) introduces a non-discrimination obligation in respect of treaty state suppliers.

Clause 81 defines a treaty state supplier is defined as one that is entitled to the benefits of one of the international agreements specified in Schedule 9.  The list there includes 24 Agreements, including a number of the agreements rolling existing EU arrangements forward, but including also GPA, TCA and UKAUS.

Clause 81(2) provides that a supplier is a treaty state supplier only to the extent that it is entitled to the benefits of the agreement etc. in relation to the relevant procurement being carried out or challenged.

PB, clause 18 (3)(b) provides that a contracting authority may disregard any tender from a supplier that is not a UK supplier or treaty state supplier, or intends to sub-contract the performance of all or part of the contract to a supplier that is not a UK or treaty state supplier.

This appears to be rather broad and unconstrained basis for retaliation in comparison with the EU’s rather specific and rule based draft of a measure in this field.  See https://ec.europa.eu/commission/presscorner/detail/en/ip_22_1728

And further on Remedies

See PB, clause 89(2)(b) and (3).  Oddly, the obligation not to discriminate against treaty state suppliers in below-threshold procurements is not enforceable under the PB – see PB, clause 89(5) 

Specific Additional Provision in UKAUS on Late Bids

It is a slow process digging out the odd differences between these various texts.  Will any of them make a substantive difference?

For instance, in UKAUS, Article 16.14 para 2 it is provided that:

”A procuring entity shall not penalise any supplier whose tender is received after the time specified for receiving tenders if the delay is due solely to mishandling on the part of the procuring entity.”  

In a late bid case that would be a useful text to rely upon if acting for a bidder.  Can only Australians benefit from it, or does equal treatment mean that if any Australian is involved in a bid there is another factor that a Court might take it into account?  Or is it to be ignored?

Abnormally Low Tenders

PB now contains no provision; but it remains in GPA (Article XV, paragraph 6) and TCA (paragraph 284).

The Award Decision

GPA Art. XV 5

“Unless a procuring entity determines that it is not in the public interest to award a contract, the entity shall award the contract to the supplier that the entity has determined to be capable of fulfilling the terms of the contract and that, based solely on the evaluation criteria specified in the notices and the tender documentation, has submitted:

1. The most advantageous tender; or
2. Where price is the sole criterion, the lowest price.”

PB cl. 18(1)

“A contracting authority may award a public contract to the supplier that submits the most advantageous tender in a competitive tendering procedure.” 

So what stops one contracting with anyone else….clause 10(1), “A contracting authority may not carry out a procurement except in accordance with this Act.”

And Remedies Again

GPA Art. XVIII – Domestic Review Procedures

“7. Each Party shall adopt or maintain procedures that provide for:

1. Rapid interim measures to preserve the supplier’s opportunity to participate in the procurement. Such interim measures may result in suspension of the procurement process.  The procedures may provide that overriding adverse consequences for the interests concerned, including the public interest, may be taken into account when deciding whether such measures should be applied.  Just cause for not acting shall be provided in writing; and
2. Where a review body has determined that there has been a breach or a failure […], corrective action or compensation for the loss or damages suffered, which may be limited to either the costs for the preparation of the tender or the costs relating to the challenge, or both.”

PB cl.92, Pre-Contractual Remedies

“(1)      …[I]f the court is satisfied that a decision made, or action taken, by a contracting authority breached the duty…etc.

(2)        The court may make one or more of the following orders

            …

            (c)        an order for the award of damages;

            …”

And cl. 93 on Post-Contractual Remedies establishes the same condition, breach of the duty and in that condition

“(2)      The court –

            (a) must, if a set aside condition in section 94 is met, make an order setting aside the contract or modification, and

            (b) may, in any case, make an order for the award of damages.”

See Energy SolutionsEU Ltd v NDA [2017] UKSC 34

“15.     ATK also submits that the Court of Appeal’s approach is inconsistent with the EU’s international obligations under the Government Procurement Agreement ….. ATK submits that … damages must always be recoverable for a breach (and cannot be restricted to cases of serious breach), even if they may be limited to costs for tender preparation or protest….

 

…

25. ….Nor is ATK’s argument by reference to the EU’s international obligations under the GPA 1994 capable of leading to a contrary decision on any points. Any impetus which .[the GPA]..can give to ATK’s argument is very weak at best.  That article requires no more than either correction of the breach or compensation, and the compensation required may fall far short of covering the actual loss or damage suffered…”

As to justiciability and impact of the GPA in domestic law see the lengthy discussion in Heathrow Airport Ltd v HMT [2021] EWCA Civ 783 from para 135.  On justiciability see “grounding” and “intrinsic non-justiciabilithy”; on impact see from para 178.  Is cl. 93 a “tenable” application of the GPA provision?  Other standards of review?

Is it relevant that in UKAUS at Article 16.19, para. 7 it is provided that

    ”The procedures may provide that overriding adverse consequences for the interests concerned, including the public interest, may be taken into account when deciding whether those measures should be applied.  Just cause for not acting shall be provided in writing.”

This seems to grant the court a discretion to withhold relief, including damages.  This seems broader than was understood to be the position on GPA, but does it introduce a new test (perhaps the “sufficiently serious breach” test?) only for procurements covered by UKAUS.

Interplay of Agreements

Prof Sanchez-Graells has already written on this at https://www.howtocrackanut.com/blog/growing-thicket-of-multi-layered-procurement-liberalisation and in the paper linked to that blogpost.  He gives specific examples of where the EU’s arrangements with Singapore and Canada (which have been rolled over by the UK and are in Schedule 9 in that form) create at least a potential problem. 

In the UK context there do seem to be odd wrinkles in which a treaty state supplier from one state benefitting from one FTA might enjoy a better position than that from another.  And at least as regards Singapore that might include a tension between the Singapore FTA and the Bill on the position of non-GPA suppliers or sub-contractors.  The terms by which the EU-Singapore agreement was rolled into a UK-Singapore agreement seems to do nothing to address the problem addressed by Prof. Sanchez Graells.

In the underlying paper Prof. Sanchez Graells explores how different agreements such as UKAUS and CPTTP might reach different outcomes on the assessment of different sub-contractor components of a bid.  There may well be some technical problems ahead, but on the whole this seems likely to be a problem only in very specific cases.

Prof. Sanchez Graells seems to conclude that at least on the basis of the particular provision he uses for his thought experiment, the process of adopting better terms on procurement to one party might be ineffective, and at the very least the uncertainty is undesirable.

Different Scope Provisions for TCA and UKAUS

Both the TCA and UKAUS include some supplemental provisions on scope.  These may be the most relevant differences between regimes.

TCA includes a range of procurements covered by “Section B of Annex 25”.  This brings into scope of TCA and therefore the “treaty” for the purposes of PB the procurement of those public and private entities covered by the current Utilities procurement legislation, as well as a range of services not covered by the GPA.

UKAUS brings concession agreements within scope.  Perhaps this does not raise the complexity of the issues raised about inconsistencies in the substantive content of obligations, but it does mean that TCA or Australian entities gain rights in respect of some procurements while those from other GPA states are left without any rights.  Presumably this was the intention, but it may be odd, particularly if everyone starts incorporating in Australia to bid for UK concessions.

Some Future Directions

The government’s ambition to be seen to be signing up agreements is well-known even if the economic effects are limited.  The United Kingdom has applied to accede to the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (“CPTPP”).  That has a procurement chapter discussed at

https://www.dfat.gov.au/sites/default/files/cptpp-government-procurement-2020.pdf and https://www.international.gc.ca/trade-commerce/trade-agreements-accords-commerciaux/agr-acc/cptpp-ptpgp/chapter_summaries-sommaires_chapitres.aspx?lang=eng#15

Presumably each new agreement leads to a gradual ratcheting up of the content open trade in procurement and availability of rights to bidders from outside the UK. 

In lieu of the holy grail of a US agreement, arrangements are now to be sought at sub-central level.  On Friday the UK entered into the Memorandum of Understanding on economic cooperation and trade relations between Indiana and the United Kingdom.  That includes this provision.

“SECTION 4: GOVERNMENT PROCUREMENT

1. The United Kingdom reaffirms its existing obligations under the World Trade Organisation Revised Agreement on Government Procurement (WTO GPA).
2. Indiana will actively work towards offering the United Kingdom’s suppliers treatment no less favourable than that afforded to suppliers from a state not bordering Indiana, including state level preferences.
3. Indiana and the United Kingdom decide to maintain an open dialogue regarding current and future trade related initiatives and developments.
4. The Participants will prioritise and advance opportunities in their government procurement processes within the Working Group framework (outlined below in Section 6).”

So UK suppliers are now up there with everyone except suppliers from Illinois, Kentucky, Ohio, Michigan.  This wonderfully retro.  The United Kingdom has not entered into agreements about the control of trade across the Ohio River since the 18^th century and nothing bad ever happened with them!  And my students are often made to watch the procurement law episodes of “The Good Wife”.  That teaches us about the practicalities of acquiring status as an Illinois or Chicago-based supplier from dodgy actors.

Given that both the UK and US are both Parties to the GPA the significance of this presumably concerns sub-central procurement.  How will this play out with other states, or in Canada where the provinces are much more involved in setting the terms of any national procurement law offering to other countries?

 

Internal Arrangements

Large parts of the PB deal with relations amongst the nations of the UK.  A few preliminary pointers.

Scotland

Bill applies to Scotland but devolved Scottish authorities are excluded.

Northern Ireland

The Bill applies, but is there any reference to the Protocol?  What of cross-border procurements involving goods.  Characterisation of Works Contracts?

Wales

There is much more detail here in that provision is made for a Welsh procurement policy statement.  The divergence between that and the National procurement policy statement will be interesting.  As to that see https://www.gov.uk/government/publications/procurement-policy-note-0521-national-procurement-policy-statement

Some Recent References to Rowing and Public Policy; and two Follow-Up Points from our King's/George Washington Conference this Week

This blog was always supposed to be a mix of procurement and water-related matters.  The picture of “Local Government” on Vauxhall Bridge was always intended to be a reminder from my river-borne commute of the importance of integrity in the public sector.   So I commend this blogpost from today which manages to discuss rowing and integrity, and a few other things.....

https://heartheboatsing.com/2022/05/28/an-unholy-amalgam-of-disparate-prints/

I should also note a few things that arise out of our King’s/George Washington seminar on Anti-Corruption and the Procurement Bill this week (see https://publicprocurementinternational.com/2022/02/01/kcl-gw-symposium-anti-corruption/ )  One of the points we discussed was the importance of the standards to which  ministers, civil servants and the like were held to.  The news that the UK ministerial code is to be amended to modify references to integrity and like is therefore a matter of concern and something I plan to come back to.

(https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/1079310/Ministerial_Code.pdf) 

Second, I made an observation at the conference about the the importance of bringing the sorts of agreements that have been covered by the line of case law since La Scala within the Procurement Bill.  It has been pointed out to me that I did not adequately take account of the fuller definition of “works contract” to be found in Schedule 1, paragraph 4 which does seem to be intended to do just that.  I fear I am going to have to re-read this bill many more times before I have got to grips with it all.  The key language on any given point is often to be found in widely distributed parts of the Bill.  And we have not had all the Regulations yet.  Will the Single Rule Book be that much less complex than the old system?

Does the UK Procurement Bill provide a clear route to addressing Corruption Challenges?

I am looking forward to seeing many online, and some in person at our King's/George Washington event on Anti-Corruption and the New UK Procurement Rules.  The title and date were set many many months ago when we had no idea where the UK process would have reached.  But here we are!  

There is alot of excellent material already up on Chris Yukins' blog at https://publicprocurementinternational.com/2022/02/01/kcl-gw-symposium-anti-corruption/  for those who can't make the event, or would like to come prepared to pose the killer questions.

see you then!

 

 

 

 

 

Rule of Law in the Four Jurisdictions around the Archipelago - A weekend at Middle Temple - and a consequential thought, and a question regarding Procurement Law reform

It has been a privilege to enjoy our first 4 Jurisdictions Conference since 2019.  It was Middle Temple's turn to host in London in 2020, but things happened and if any conference demands in person attendance, this is it.  As always a enjoyable and stimulating occasion to share thoughts about challenges for the law and the profession in Ireland, Northern Ireland, Scotland as well as England & Wales.  One of the things I have really missed in the last couple of years as chair of the Inn's International Sub-Committee is the warmth and support of our friends in our close neighbouring jurisdictions.  Thanks to all the speakers for all their contributions, but given the liveliness of the discussion (and the application of the Chatham House Rule) I won't pick out anyone in particular.  Perhaps we are always facing challenges in maintaining the rule of law, ensuring the system is adequately resourced and ensuring there are opportunities are available for all, but many these challenges do seem more acute than ever.  The video of Mattins in the Temple Church for the Conference at https://youtube.com/watch?v=pUh4fh1kMaw&feature=share is a recording of a wonderful service - thanks to Robin Griffiths-Jones, Mark Hatcher and Roger Sayer and everyone at the Church.  But Mark's sermon is particularly worth watching for (at about 59:00) for a powerful summary of the importance of these issues for the life of our countries - both material and spiritual.

Which leads me to a wider observation I will come back to when discussing the Procurement Bill.  It does seem to me that there is a risk that some of the discussion about the remedies provisions of the Procurement Bill risks being rather blinkered.  Given the need for better resources and rejuvenation in our broader legal system and the awful consequences that our failures have for the daily lives of so many, it is a problem if we simply talk in terms of assumptions that resources could, should and will be made available to meet the needs of a reformed Procurement Law.  Even if those resources are made available, there are strong arguments that other parts of the system need more resources first.

And two of many things I don't understand following on from the Procurement Bill.   (and I tweaked this overnight 15/16 May because the first attempt at this was far from clear)

Scotland - what is planned?  The Act is stated to apply to Scotland, but all devolved Scottish authorities are excluded from the Bill save, apparently for those involved wholly in reserved matters under the devolution legislation.  However, that could leave alot of procurement in Scotland covered by the UK legislation and I am not aware of any engagement on these issues by the Scottish Ministers.  Scotland has developed its own distinct regime (and policy) over many years and I am not clear how that is all to be reintegrated and how two parallel regimes is to work.  (Of course the Welsh government has also been developing in its own direction, but that has always been in the context of a legal regime covering both England and Wales.

Northern Ireland.  How will any eventual Act apply to both England & Wales and Northern Ireland given the effect of the NI Protocol on cross-border trade. 

I will return to this, but anyone who actually knows what is planned, do please tell me!

 

UK Procurement Bill Published - A New Dawn?

Well maybe not a new dawn for procurement law, but a new dawn for this blog.  Close followers of procurement law matters will know that I've been tied up in cases which were a matter of quite alot of public comment and it seemed better not to blog too much.  Some of those cases have ended, some are paused for a moment.

And there is so much more to talk about about procurement law more broadly, so the publication yesterday of the new UK Procurement Bill ought to be get me started again.  See here for the page where the Bill and the consultation materials are to be found.

I plan to start blogging when I have something worth saying, and I'll probably start with the interface with corruption issues as we have our King's College London/George Washington event coming up on 25 May.  There is still space to join remotely and a few in person places will open up near the time, so please register here.

And I haven't forgotten EU law, not least because it will still be very much the basis of UK law for some time to come.