On 30th April the UK Government published draft legislation that proposed to bring the Remedies Directive into effect in England, Wales and Northern Ireland. This Directive will make significant changes to the remedies available to third parties when public procurement rules are breached. The main changes are:
If the contract was entered into in breach of public procurement rules, the aggrieved 3rd party can go to court to get the contract declared ineffective.
If the court declares the contract ineffective it will apply from the date of declaration and will result in financial penalties. It is at the court’s discretion to not apply a penalty in exceptional cases with good reasons for maintaining the contract.
If an unsuccessful bidder challenges the decision of a public sector purchaser to award a contract to another bidder, they can go straight to court without first seeking a review from the purchaser. This automatically suspends the procurement process.
The standstill (‘Alacatel’) period before the contract is signed remains at least ten days, unless the contract award decision is notified to bidders other than by fax or e-mail, in which case it is a minimum of 15 days.
These changes are important because they increase the chances of non-compliance with public procurement rules. Although there are currently very few claims of rule breach that go to court, the new regulations could lead to an increase in court actions due to opportunistic claimants.
This is likely to be an unpopular change for many suppliers. The Remedies Directive must be implemented into law by 20 December 2009 and currently will only apply to new contracts made after that date.
Information courtesy of LG Legal