The Public Procurement Act 2023 in construction: practical tips and minimising disputes

The Public Procurement Act 2023 (PA 2023) is due to come into force on 24 February 2025. This long-awaited legislation intends to reform the public procurement framework, currently governed by the Public Contracts Regulations 2015 (PCR 2015).  Public authorities, contractors and consultants alike will therefore need to understand how the changes introduced by the PA 2023 will affect the process of tendering and bidding for publicly procured construction work.

We have already written at length on the transitional arrangements which will apply once the PA 2023 comes into force. Please see our previous articles (see related Legal Updates on the right-hand column)  for further information on those arrangements. However, the aim of this article is to first explain the changes introduced by the PA 2023 relating to the standstill process and suspension, and to highlight some of the remedies which may be available to tenderers. Second, we provide some practical tips for contractors, consultants, and authorities to help strengthen their respective positions.

Public Procurement Act 2023 Reforms

Standstill and Automatic Suspension

‘Standstill’, or the ‘standstill period’ is the concept whereby public authorities are precluded from entering into the relevant contract for several days after having published the contract award notice stating their intention to do so.  This period allows other interested suppliers to raise concerns about, or to formally challenge, the contracting authority’s decision before the contract is formally entered into.

Automatic suspension prevents the contracting authority (by way of an injunction) from entering into a contract which has been formally challenged.  

The PA 2023 introduces some key changes relating to standstill and automatic suspension:

• Standstill trigger: Publishing a ‘Contract Award Notice’ (CAN) will trigger standstill which makes the award public and open to challenge at an earlier stage. In contrast, the PCR 2015 allows a public authority to trigger standstill by notifying unsuccessful bidders before publishing a CAN.
• Duration: Standstill will now be a period of 8 working daysinstead of a minimum of 10 calendar days.
• Automatic Suspension: consultants and contractors must make a claim during standstill to benefit from automatic suspension.

If an unsuccessful bidder’s claim falls outside of the standstill period, the PA 2023 nevertheless allows that party to make an interim application for suspension. They should do so as soon as possible.

It is also worth noting that, in addition to their rights regarding suspension,  an unsuccessful party can make an interim application to prevent an amendment to an existing contract, or for the contract to be performed without such amendment. This is designed to prevent the contracting authority and/ or successful bidder from unfairly amending the contract terms post-tender.  It will therefore be more important than ever that:

• Tenderers ensure that they submit a fully compliant tender, highlighting any requested amendments to contract terms as part of their tender submission; and
• Public authorities respond to tender queries in a fully open and transparent manner and provide robust responses where successful bidders seek to unilaterally amend contract terms post-tender.

The test for lifting the automatic suspension

It has generally been the case that contracting authorities have been successful with their applications to lift any automatic suspension, on the basis that damages have typically been seen to be an adequate remedy. However, under the PA 2023, whilst consideration of whether damages as an adequate remedy remains a factor; it is no longer the ‘gateway test’ in determining such applications.  In consequence it may become more difficult for public authorities to have automatic suspensions lifted. However, it remains to be seen what difference the new test will have on the Court’s approach.

Remedies

Pre-Contractual remedies

These remedies are available to a claimant who makes a claim before the successful bidder and public authority enter into the contract. Section 103 of the PA 2023 gives the courts power to order the public authority to take any action they see fit and/or make any other order that the court decides is appropriate. How they exercise this discretion remains to be seen.

Post-contractual remedies

Once the contract between the successful bidder and public authority has been entered into, a claimant has limited remedies. The PA 2023 renames the “ineffectiveness” remedy to “setting aside”.The substance of the remedy is largely the same, albeit the PA 2023 has introduced some notable changes.

• Overriding Public Interest: this provides an exception to “setting aside”, but it remains to be seen how the courts will interpret this concept.  
• Additional grounds: S105 introduces further nuanced grounds for setting aside a contract.
• Light touch regimes: “Setting aside” now applies to light-touch regimes.
• Financial penalty for “setting aside”: It is no longer mandatory to impose a penalty on public authorities. They are therefore likely to become discretionary.

Damages

For a claimant to be awarded damages under current caselaw, the breach of the public procurement rules must have been “sufficiently serious”.  The effect has been that, in some cases, even successful claimants have been left without a remedy.

The PA 2023 does not directly impose this test, and it remains to be seen whether it will be retained under the PA 2023. However, early indications from High Court judges suggest that it likely will. It will therefore remain crucial that claimants first consider whether any purported breach of the procurement rules has been sufficiently serious before taking action.

Contract Management Duties

The PA 2023 imposes new duties on public authorities relating to the management of contracts. For example, it will now be mandatory on contracts relating to projects worth over £5million for a public authority to publish at least three KPIs and assess them every 12 months . Separate to KPIs, there are also further duties relating to transparency.

Public authorities will therefore need to consider KPIs on a project by project basis.  In addition, we recommend that public authorities update their precedent contracts to include specific obligations regarding compliance with KPIs and provision of information relating to those KPIs to make sure these obligations are express terms of their contracts.  Not only will this ensure that the public authority is complying with its obligations regarding including KPIs, but it should also help avoid disputes by setting clear expectations within the contract from the outset.

For projects using the NEC suite, we recommend considering incorporating Option X20, and amending it to reflect the project needs and new duties.

Debarment List

The PA 2023 introduces the “debarment list”.  This  allows public authorities to bar contractors/ consultants from bidding for publicly procured work.  Whilst this will help public authorities to identify any so-called ‘rogue’ bidders, it nevertheless encourages consultants and contractors to collaborate with public authorities to avoid this punishment in the first place. 

The Birketts’ View

Adhering to standstill is an easy way for public authorities to minimise the risk of a dispute. In consequence, we recommend observing standstill even when it is not mandatory (e.g. for call-off contracts), although please note that any voluntary standstill that a public authority publishes becomes mandatory. Public authorities should also have good record-keeping practices and audit trails in the event of dispute.

Consultants and contractors should be vigilant to standstill deadlines and act promptly where possible. Unsuccessful contractors and consultants should act quickly to take advantage of pre-contractual remedies which are notably wider than any remedies which will apply once the contract has been entered into. For this reason, they should also make use of any automatic suspension; or their ability to apply for suspension.

Finally, contracting parties should exercise caution when varying the contract, or the scope of the works, or otherwise risk having their amendments suspended if a dispute does arise. Ultimately, all parties collaborate with each other where possible to avoid disputes at the earliest stage.

At Birketts, we regularly act for public authorities tendering their work and contractors and consultants who will bid for work according to the procurement rules. If you have a public procurement or construction query, Birketts’ have expert public sector and construction teams who are here to assist you.