The number of challenges to public sector procurement decisions has risen in the past few years. But as a recent event organised by Pinsent Masons showed, there is every reason to think that public sector bodies can continue to avoid successful challenges in the future.

A recent roundtable event hosted by Pinsent Masons demonstrated the ongoing interest in procurement issues among those working in the public sector.

Jennifer Robinson, a Senior Associate at Pinsent Masons who spoke at the event, says that procurement is on everyone’s radar at the moment. She thinks this is partly explained by the rising number of challenges to procurement decisions seen in recent years.

“The number of challenges to procurement decisions involving public sector bodies doubled between 2009 and 2010,” reports Robinson. “There were 21 published judgments relating to challenges in 2010, whereas there were no more than zero to three per year in the late 1990s/early noughties. There have been 11 already this year, which means we might expect a total of between 30 and 40 by the end of 2011.”

If the number of published judgments has risen, so too has the number of challenges that never make it to the courts. Robinson estimates that there are four or five of these challenges for every one that goes through a formal court hearing.

“Published judgments are the tip of a very large iceberg when it comes to procurement challenges,” she opines, “and there are various other more informal categories of challenge that we have no way of tracking. The bidding community is definitely becoming more willing to ask questions about the procurement process, and to make formal challenges when necessary.”

Robinson continues, “It matters a great deal at present whether a business is successful or not in tendering for work from the public sector. That makes challenges much more likely in cases where there is a thin margin between the winner and the next bidder, or where the incumbent supplier loses out unexpectedly. And of course, bidders will always consider challenging if they feel they have been treated unfairly.”

Changes to the law in December 2009 appear at first sight to favour bidders rather than public sector bodies when it comes to challenges. In the past, those challenging a contract award decision had to seek an injunction to prevent a contract between the successful supplier and the purchaser being signed. But the new legislation means that there is now an automatic suspension of that decision (provided the contract has not been entered into) once proceedings are started.

Even so, Robinson reports that public sector bodies have been successful in overturning automatic suspensions and proceeding with contracts – not least because the criteria for assessing whether this should happen are the same as those that used to decide whether or not an injunction ought to be awarded.

In other words, the test of whether a contract should proceed or not has remained the same. The changed legislation simply shifts the onus from failed bidder to procurer in terms of having to take action. And the good news for public sector bodies is that, despite the rise in challenges, they are proving successful in arguing the automatic suspension should not be maintained in the same way as they have generally been successful to date in defending injunction applications. 

There are further grounds for optimism, thinks Robinson. “We believe that public sector bodies are becoming more concerned about managing the procurement process in ways that eliminate the risk of successful challenges,” she says. “Our advice is to run the process with a potential challenge in mind, so as to identify potential problems along the way and address them at the time, where possible.”

This is where Pinsent Masons can help. Its legal professionals are up to date with the case law in this field, which means they can advise on the latest developments, and clarify the ways in which legislation is interpreted by the courts.

And that means, by working with them, Pinsent Masons can help public sector bodies rise to the challenge of managing the procurement process effectively, rather than responding to challenges when it is perceived to have failed.

Pinsent Masons hosts procurement events aimed at helping public sector bodies in the UK work more effectively. If you are interested in receiving invitations for future events please contact Ruth Smith (Ruth.Smith@pinsentmasons.com).

Last updated 373 days ago by Daniel Atkinson