The Covid-19 pandemic has seen an increased reliance by contracting authorities upon regulation 32 of the Public Contract Regulations 2015 (PCR) to make direct awards of contracts without the usual competitive procurement process.
Government contracting has always been subject to scrutiny, but arguably never more so than now with an increased focus on how during the pandemic the UK government selected contractors to be directly awarded contracts. A recently ruling highlights why contracting authorities must act fairly.
On 8 June 2021, Justice O’Farrell held that the government had acted unlawfully when it made a direct award of a contract worth approximately £560,000 to Public First, a business with which Michael Gove had “personal connections”. The court heard that one of Public First’s directors, Rachel Wolf, used to be an adviser to Gove and another, James Frayne, used to work alongside the now-infamous Dominic Cummings.
The government attempted to argue that this was “not the normal world”, and the special circumstances surrounding the COVID-19 pandemic meant the direct award of a contract for these services was appropriate. Furthermore, the government contended that Public First was the only provider that could have carried out the contract.
While the court accepted that in the circumstances, reliance upon regulation 32 to make a direct award of the contract was appropriate, it concluded that there was an appearance of bias in the selection of Public First as the recipient of that directly awarded contract.
The court held that the government’s failure to consider any other provider would lead a fair-minded and informed observer to conclude that there was a real possibility – or a real danger – that the decision-maker was biased.
However, the court did acknowledge the urgent need for the services and rejected the claim that the six-month contract awarded to Public First was disproportionate given the government’s immediate needs. This reaffirms the position that when relying upon the extreme urgency ground in regulation 32 there is a balancing exercise to be struck between the immediate need for services and the requirement that the procurement process should promote free and open competition and value for money.
This ruling should serve as a warning to all contracting authorities, that when making a direct award of a contract in reliance upon regulation 32 PCR it must act fairly and be seen to act fairly in the selection of the contractor.
Where there is a risk of bias – or perceived bias – in the award of a contract to a particular entity, this may result in a successful challenge to an otherwise lawful use of regulation 32 PCR (which was the case here).
In addition to a declaration of ineffectiveness, failures in the procurement process may result in contracting authorities being exposed to significant financial consequences.
It has been reported that the government spent approximately £600,000 on their failed legal defence, which exceeded the original value of the contract awarded.
