Crown Commercial Service customer updates: September 2018
The latest issue (published 7th September 2018) is available here. This month there is news on:
- Looking for Construction Products and Consumables?
- digitech2018 – secure your space today
- CCS’ digital buying community is live
- Travel webinar – sign up today – Tuesday 18th September 14:30
- Aggregation opportunities – Fleet, Mobile Voice and Data, Fuels
- Technology webinars:
- 20th September 14:30 Network Services
- 26th September 10:30 Tech Services 2
- 27th September 12:00 Technology Products 2
- Professional Services and PMFDTS Webinars
- Utilities and Fuels Webinars
- Upcoming events:
- Digitech18 – the technology & procurement showcase for the public sector
- Utilities & Fuels customer event
- New framework:
- Framework extensions
- Workforce management (RM1072)
Procurement Policy Notes (PPNs)
All Procurement Policy Notes (PPN’s) are published on the CCS website here.
- No PPNs have been published since the last edition
Annual Party Conference Guidance
Cabinet Office has produced guidance for civil servants, including special advisors on the party conferences set to take place over the coming weeks. The guidance includes information for:
- Civil Servants
- Special advisers
- NDPB and ALB board members and staff
Management Consultancy Framework Two (MCF2)
Management Consultancy Framework Two (MCF2) is available for use. It complements the existing Management Consultancy Framework and both replace Consultancy ONE. MCF2 provides additional coverage across 4 lots including 4 top tier consulting firms and greater access to SMEs.
- There are 439 suppliers (275 are SMEs)
- Lot 1 (general business consultancy): 284 suppliers, including 211 SMEs
- Lot 2 (procurement/supply chain/commercial): 92 suppliers, including 52 SMEs
- Lot 3 (complex/transformational): 32 suppliers, including 2 SMEs
- Lot 4 (strategic advice): 21 suppliers, including 10 SMEs
- An interim tool is currently supporting the framework. The final digital solution will be in place by end of 2018
- The framework will have procurement support from the CCS advisory team, including the Commercial Advice Unit led by Chrissie Joseph. The CAU is available to assist on high value engagements and commercial best practice
Law Commission publishes consultation on electronic execution of documents
The Law Commission has launched a consultation on the electronic execution of documents. The provisional conclusion is that an electronic signature is capable in general of meeting a statutory requirement for a signature and that no legislative reform is necessary. The deadline for responses to the consultation is 23rd November 2018.
Views are being sought on whether:
- a group of industry experts should be set up by the government to monitor the use of electronic signatures, with the group advising on potential changes that could help businesses as new technology emerges
- where documents require witnessed signatures, webcams or video links could be used instead of a physical witness for documents
- it is desirable to move away from traditional witnessing in person to
- a signing platform alone where the signatory and witness are logged onto the same programme from different locations; or
- enable a person to ‘acknowledge’ that he or she applied an electronic signature to a witness after the event
- an additional project is needed on if the concept of ‘deeds’ is fit for purpose in the 21st century
The consultation paper consists of a glossary, a list of abbreviations, 9 chapters and 2 appendices (Acknowledgements and Overseas legislative schemes):
- Chapter 1: Introduction
- Chapter 2: Formalities and technology
- Chapter 3: Electronic signatures–the current law
- Chapter 4: Deeds–the current law
- Chapter 5: Comparative research
- Chapter 6: The case for reform, the potential impact of reform and other considerations
- Chapter 7: Provisional proposals–electronic signatures
- Chapter 8: Provisional proposals–electronic execution of deeds
- Chapter 9: Consultation questions
GDPR: New Guidance from ICO
GDPR has been in place for nearly four months. Since then, there has been a 160% increase in the number of reported breaches, with the Information Commissioner’s Office (ICO) talking around 500 calls each week.
The recent breach by British Airways highlights the importance of swift action in the event of a breach. BA disclosed the breach within 72 hours complying with the requirements set out in the GDPR.
The ICO is continuing to publish guidance on GDPR. The latest relates to International transfers where data may need to be transferred outside the EEA. With further guidance set to be released as GDPR becomes embedded, you should ensure that you keep an eye on the ICO website.
Social Value Conference 2018
Abnormally low tenders and the
duty to investigate
Provided by Asad Shabir, GLD
This article looks at a recent High Court decision on abnormally low bids. This is a useful case as it provides clear guidance for public bodies on the scope of their duties in the abnormally low bid regime under the Public Contracts Regulations 2015 (PCR 2015). It is also an important decision on limitation in procurement claims.
In SRCL Limited -v- The National Health Service Commissioning Board, NHS England was successful in a procurement challenge by SRCL, a UK-wide clinical waste management company.
The dispute related to a tender process for a clinical waste disposal contract. The result of the process was that the incumbent service provider SRCL was unsuccessful.
NHS England had used e-auctions for the award of such contracts in order to obtain lower prices through more effective competition. The tender process took the form of a “reverse auction” whereby the bidders each reduced their initial bid in turn – with the lowest bid winning both the auction and the contract.
The final bids were as follows:
- Winning bid: £310,000
- Runner-up bid: £313,000
- SRCL’s bid: £479,999
Consequently, the SRCL made a number of challenges to the decision to award the contract to the winning bidder including that the winning bid and the runner-up bid were abnormally low and, as such, that NHS England was under a duty to investigate these.
NHS England rejected the grounds of challenge, arguing that SRCL had issued the proceedings outside the 30-day period imposed by Regulation 92 of the PCR 2015. These regulations implement Directive 2014/24/EU (Directive) on public procurement
NHS England is a
“Contracting Authority” for the purposes of PCR 2015. Therefore, NHSE is obliged to observe the requirements in the PCR 2015 in terms of how it places these contracts for services with different economic operators. This means observing the principles of EU law and holding open competitions before such contracts are entered into.
The relevant legislation Regulation 18 of PCR 2015
18 sets out the principles of procurement. The principles of procurement are that contracting authorities treat economic operators equally and without discrimination and will act in a transparent and proportionate manner. The design of the procurement must not be made with the intention of artificially narrowing competition (by unduly favouring or disadvantaging certain economic operators).
Regulation 69 of PCR 2015
Regulation 69 covers abnormally low tenders and states that:
“Contracting Authorities shall require tenderers to explain the price or costs proposed in the tender where tenders appear to be abnormally low in relation to the works, supplies or services.”
It is interesting to note that the wording under the PCR 2015 differs from their previous 2006 counterpart which stated that:
“If an offer for a public contract is abnormally low, the Contracting Authority may reject that offer, but only if it has requested in writing an explanation of the offer or of those parts which it considers to contribute to the offer being abnormally low.”
As such, a crucial consideration for the Court in arriving at its decision was whether the change in wording between the Public Contracts Regulations 2006 and the PCR 2015 means that a Contracting Authority is now under a duty to investigate tenders that appear abnormally low, or does this only arise (as with the previous Regulations) where the Contracting Authority wishes to reject the tender.
Regulation 92 of PCR 2015
92 deals with the general time limits for starting proceedings. It states that proceedings must be started within 30 days beginning with the date when the economic operator first knew or ought to have known that grounds for starting the proceedings had arisen.
The court may extend the time limit where it considers that there is a good reason for doing so but must not exercise its power to extend the 30-day time limit to permit proceedings to be started more than three months after the date when the economic operator first knew or ought to have known that grounds for starting the proceedings had arisen.
Proceedings are regarded as started when the claim form is issued.
The judgement in this case confirmed that there is a 30 day deadline for issuing procurement challenges and there would have to be some ‘good reason’ before a party is permitted to bring a claim outside of that 30 day period. In this case, it was found that there was no such reason and so the claim failed on limitation grounds as well.
- There must be a good reason for extending time.
- One of the matters that the court will consider is whether there was a good reason for the claimant not issuing within the time required, such as an illness or something out of the claimant’s control which prevented the claimant from doing so.
- It would be unwise to list or seek to limit in advance what factors should be considered to have relative weight to one another in that exercise.
- The court will take a broad approach in all the circumstances of the particular case.
- The categories are not closed or exhaustively listed in the cases. Lack of prejudice to the defendant is not a determinative factor.
With SRCL, it had known on the day of the auction that NHS England had accepted bids from other service providers. Given the 30-day time limit started running from then, the Court considered it would have been entirely reasonable, sensible and prudent for SRCL to have issued a claim form within that period to stop time running. Justice Fraser’s analysis was there was nothing in the inter-solicitor correspondence in the period from the date of the auction to the issue of proceedings on 30 June 2017, over two months later, that constituted a good reason for, or justified, SRCL deciding not to issue a claim form.
SRCL’s failure to issue proceedings within the required time meant the Court finding that NHS England succeeded on this ground.
Justice Fraser also went on to consider the merits of SRCL’s challenge.
With regard to the allegation that it had acted in contravention of PCR 2015 by awarding the contract to the ‘apparent’ abnormally low tender, without having first investigated the nature of the bid itself, NHS England submitted that the duty to investigate under Regulation 69 arises only where two conditions are fulfilled:
- When it appears to the Contracting Authority that a tender is abnormally low; and
- When it is considering rejecting the tender for that reason.
Despite agreeing that the winning bid and the runner-up bid did not appear to be abnormally low, the court investigated whether there was an obligation on Contracting Authorities to investigate all apparent abnormally low bids.
The duty to investigate
In arriving at its conclusion, the Court recognised the view of the noted academic Professor Arrowsmith who had previously stated:
“Although the language of the duty to investigate is no longer expressly limited to the case in which the authority wishes to reject a tender, such a limit is to be implied in light of the purpose for which the provision was originally introduced.”
Additionally, and affirming Professor Arrowsmith’s view, Justice Fraser went on to hold:
“there is no basis for imposing a general duty to investigate such tenders in all cases. If, in any particular competition, the Contracting Authority considers that a particular tender has the appearance of being abnormally low, and the Contracting Authority considers that the tender should be rejected for that reason, there is a duty upon the Contracting Authority to require the tenderer to explain its prices.”
On this basis, the Court found in favour of the Contracting Authority holding that it was not under a general duty to investigate the winning and runner-up bids purely because they may have appeared abnormally low.
Criticism of the Claimant
The legal process saw SRCL forced to disclose a PowerPoint presentation given at a directors meeting in 2017 which said SRCL “need[ed] to create a compelling event” in order to persuade NHS England not to continue its auction policy, which was successfully lowering prices.
It is important to note that the Court directed specific criticism at SRCL for its actions in bringing the claim. In particular, it stated:
“…the whole attack by SRCL…and the complaints that the winning bid [and the runner-up bid] were abnormally low, have been contrived by SRCL. SRCL took a conscious decision not to bid on a commercial basis, but fix its margins at an artificially high figure of 25%, and try to engineer a situation where the other bids were far lower than its own, in order to justify an attack on the auction using the ‘abnormally low tender’ approach.”
Why is this important?
This case is a useful reminder that as well as the wording in the PCR 2015 the court will also look at the original purpose of PCR 2015 being introduced to help decide on their application.
In particular the judgment in this case has shed light on the new requirements and provides clear guidance for Contracting Authorities on the scope of their duties in relation to abnormally low bids under PCR 2015.
Furthermore, in criticising the SRCL’s apparent efforts to “try to engineer a situation where the other bids were far lower than its own” in order to support its abnormally low tender argument the court has reminded other tenderers that such behaviour is ill-advised and will be criticised by the court.
It is also an important decision on limitation in procurement claims.
Click here for the full judgment.