Excluding bidders: The Procurement Act 2023

The Procurement Act 2023 (the Act) has extended the grounds for contracting authorities (CAs) to exclude suppliers from the tendering process in an effort to improve the standard of suppliers, and to make it easier to reject suppliers for previous poor performance.

The Act defines an excluded supplier as one where a CA determines that a mandatory exclusion ground applies. Additionally, the exclusion must be based on circumstances that are ongoing or likely to occur again. An excludable supplier is subject to discretionary exclusion grounds. If these apply to the supplier or an associated person, and the issue is ongoing or likely to recur, the supplier may be excluded.

When determining whether exclusion grounds still apply or are likely to resurface, CAs can consider actions taken by the supplier or their associates to address the issue and prevent future occurrences. This forms part of the “self-cleaning” process, where suppliers are given the opportunity to make representations and provide evidence that exclusion grounds no longer apply.

Mandatory exclusion grounds are listed in Schedule 6 of the Act and closely resemble the existing regime, with some additional offenses. Discretionary grounds, outlined in Schedule 7, include new provisions such as exclusion for poor performance. This applies where a supplier has breached a contract, and the breach was sufficient serious; where a court has ruled a supplier has breached a contract, and the breach was sufficiently serious; or where a supplier has not performed a contract to the CA’s satisfaction, and following an opportunity to improve performance, the supplier has failed to do so. CAs must also be mindful of the relevant look-back periods when considering these grounds.

Suppliers can be excluded based on the status of their associated persons or subcontractors. CAs are required to request details of subcontractors and verify whether any are on the debarment list. Before rejecting a tender, the CA must allow the supplier to replace the associated person with a suitable alternative. This applies to any entity the supplier relies on to meet participation requirements, except guarantors.

CAs must assess whether a supplier qualifies as an excluded or excludable supplier by reviewing mandatory or discretionary grounds, the likelihood of recurrence, whether the supplier is listed on the debarment list, or for other reasons. If a supplier is classified as an excluded supplier, their tender must be disregarded. For excludable suppliers, the CA has the discretion to reject their tender. In competitive flexible procedures, these determinations must be made before allowing a supplier to participate.

In an effort to level the playing field, a supplier must be treated as excluded if they have an unfair advantage in the procurement and that advantage cannot be avoided; if they have acted improperly in the procurement and the improper behaviour resulted in the supplier having an unfair advantage; and if a conflict of interests puts a supplier at an advantage in respect of a procurement that cannot be avoided, or the supplier will not take necessary steps to ensure that it is not afforded an unfair advantage. However, this does not mean the supplier is an excluded supplier for all procurements.

Notification of exclusion

Where a supplier is excluded, the CA must notify the appropriate authority within 30 days of the relevant event occurring. If the supplier has challenged an exclusion decision in civil proceedings, the CA must also notify this and provide the outcome within 30 days of commencement or determination of proceedings.

Investigations of a supplier

The appropriate authorities (a Minister of the Crown or Welsh Ministers) have powers to investigate whether an exclusion ground applies to a supplier and whether the circumstances giving rise to the ground are likely to reoccur. The supplier must be told of any relevant exclusion grounds for which they are under investigation and how and when they can respond. Where Welsh Ministers have conducted an investigation, they may refer a case to a Minister of the Crown for consideration. The Minister must prepare a report on any investigation considered, provide a copy of the report to the supplier, and publish the report (subject to certain exceptions).

Summary

The Act aims to strengthen fairness and accountability when excluding bidders in public procurement all whilst delivering on the objectives of the Act. This is achieved by improving the standard of suppliers through broadening the grounds of exclusion and streamlines the rejection process for poor performance. The Act includes a “self-cleaning” process allowing suppliers to prove that exclusion grounds no longer apply. Where a CA excludes a bid, or there is a challenge to an exclusion, they must notify this to the relevant authority within 30 days.