As part of our ongoing series, changing landscape, this insight explores the new approach under the Procurement Act 2023 (the Act) which permits contracting authorities to exclude suppliers from participating in its public procurements. While many of the mandatory and discretionary grounds are consistent, the approach set out below is quite different from the current regime in regulation 57 of the Public Contracts Regulations 2015.
Under the Act, contracting authorities will be required to consider whether suppliers are "excluded suppliers" or "excludable suppliers" (see below) and:
- must disregard tenders from excluded suppliers. A contracting authority may also disregard tenders from excludable suppliers;
- must exclude excluded suppliers from participating in, or progressing as part of, a competitive flexible procedure. A contracting authority may also exclude excludable suppliers;
- must request information regarding suppliers' intentions to
sub-contract any part of a public contract and then determine
whether the intended sub-contractors are on a debarment list.
Contracting Authorities may also request information for the
purpose of determining whether any intended sub-contractor is an
Excluded or excludable supplier.
- If a contracting authority considers a sub-contractor is an excluded supplier it must treat the supplier bidding as an excluded supplier and exclude the supplier from participating in, or progressing as part of, the competitive tendering procedure; and
- If the contracting authority considers a sub-contractor is an excludable supplier it must treat the supplier bidding as an excludable supplier and may exclude the supplier from participating in, or progressing as part of, the competitive tendering procedure.
In each case, before excluding a supplier who is an excluded supplier or excludable supplier as a consequence of its being either a proposed sub-contractor or an 'associated person', a contracting authority must:
- notify the supplier of its intention, and
- provide the supplier with reasonable opportunity to replace the proposed sub-contractor or associated person (as the case may be).
Similar provisions are included in relation to suppliers who turn out to be excluded suppliers or excludable suppliers during the course of a contract: here, a contracting authority must give the supplier a reasonable opportunity to (a) cease sub-contracting to the excluded or excludable supplier, and (b) if necessary, find an alternative supplier to which to sub-contract.
National security
Special provisions will apply where a contracting authority intends to either disregard a tender or exclude a supplier on the basis of a threat to national security. In these circumstances, a contracting authority may not do so unless it has first notified the relevant Minister of its intention and the Minister considers that the supplier or sub-contractor is an excludable supplier, and that the tender should be disregarded, or supplier excluded.
Improper behaviour
The Act also introduces a further circumstance under which a supplier may be treated as an excluded supplier where:
- a supplier has acted improperly in relation to the award of a
public contract by:
- failing to provide information requested by the contracting authority,
- providing information that is incomplete, inaccurate, or misleading,
- accessing confidential information, or
- unduly influencing the contracting authority's decision-making;
- in consequence, the supplier is put at an unfair advantage in relation to the award; and
- the unfair advantage cannot be avoided other than by excluding the supplier.
However, before excluding a supplier, a contracting authority must allow the supplier to make representations and provide relevant evidence.
If having requested information the supplier fails to provide the information requested, or provides information that is incomplete, inaccurate, or misleading, the contracting authority will be obliged to treat the supplier as an excluded supplier for the purpose of assessing tenders, and exclude the supplier from participating in, or progressing as part of, any competitive tendering procedure.
Excluded suppliers
Suppliers will be excluded suppliers if a mandatory exclusion ground applies to (i) the supplier or (ii) an associated person and the circumstances giving rise to the exclusion ground are continuing or likely to occur again or where the supplier or associated person is on the debarment list by virtue of a mandatory exclusion ground.
Schedule 6 of the Act sets out a broad list of mandatory exclusion grounds. In determining whether a mandatory exclusion ground applies, contracting authorities must:
- generally ignore any event that occurred before the five-year period ending with the date on which the determination is made;
- ignore certain events which occur prior to Schedule 6 coming into effect (including corporate manslaughter, homicide, theft, robbery, burglary etc, inchoate offences and corresponding offences outside the United Kingdom, and threats to national security); and
- ignore certain events that occur before the three-year period ending when Schedule 6 comes into effect (including offences relating to tax, fraud, blackmail, labour market offences, modern slavery, cartel offences, and competition law infringements).
Excludable suppliers
Suppliers will be excludable suppliers if a discretionary exclusion ground applies to (i) the supplier or (ii) an associated person and the circumstances giving rise to the exclusion ground are continuing or likely to occur again or where the supplier or an associated person is on the debarment list by virtue of a discretionary exclusion ground.
Schedule 7 of the Act sets out the discretionary exclusion grounds. In determining whether a discretionary exclusion ground applies, contracting authorities must:
- generally ignore any event that the decision maker is aware (or should have been aware) occurred before the five-year period ending with the date on which the determination is made;
- ignore certain events that occurred or the decision-maker was aware of before the three-year period ending with the date on which the determination is made (insolvency, bankruptcy etc, potential competition infringements, professional misconduct, breach of contract, adverse information about supplier published by contracting authority and acting improperly in a procurement); and
- ignore certain events that occurred before the coming into force of Schedule 6 (including labour market misconduct, environmental misconduct, poor performance, adverse information about a supplier published by contracting authority where the information is not published in relation to a breach of contract and national security).
Debarment list
Contracting authorities will be required to notify an appropriate authority within 30 days of the date of a decision to disregard, exclude or replace a supplier. The appropriate authority may investigate and may determine that a supplier's name be added to a debarment list which shall include details relating to the debarment and the date on which the Minister expects the exclusion ground to cease to apply.
Before entering a supplier's name on the debarment list, the Minister must give notice to the supplier setting out the decision to do so, and an explanation of the supplier's rights under the Act. The Minister may not enter a supplier's name on the debarment list before the end of the period of eight working days beginning with the day on which the Minister gives notice to the supplier (the "debarment standstill period").
suppliers notified of their inclusion on the debarment list will need to apply to the court for suspension of a Minister's decision. They may also, at any time, apply to the Minister for removal from the debarment list, or revision of an entry on it.
The debarment list will be published and kept under review. The Minister may remove any entry from the list or revise an entry.
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