Public Procurement Challenges - Modern Slavery Act March 2018

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1 Challenges - Modern Slavery Act March 2018

2 Introduction High volume of procurement challenges in UK o 11% of cases in Technology & Construction Court in London are procurement challenges. o Numerous other procurement challenges which never get to Court o Size of UK procurement market billion of 740 billion annual public spend Objectives of webinar o Public bodies - how to avoid your procurement awards and processes being challenged o Bidders how to identify grounds for challenge o Both how to deal with procurement challenges when they arise

3 Introduction: Types of Tenders Public Contracts Regulations 2015 o Other sectors Utilities Contracts Regulations 2016, Defence and Security Public Contracts Regulations 2011 o Concession Contracts Regulations 2016 Financial thresholds new since January 2018 o Central government contracts for services and supplies - 118,133 o Other public bodies contracts for services and supplies - 181,302 o Public works contracts - 4,551,413

4 Public Contracts Regulations 2015 Light touch regime o Financial threshold: 615,278 o More freedom over process o Uncertainty over obligation to hold standstill period Crown Commercial Guidance recommends running one Below threshold contracts o Less onerous requirements o Only some parts of Regulations apply o Value greater than 10,000 (central government) or 25,000 (other public bodies) advertise on Contracts Finder o BUT general EU principles apply where there is cross-border interest

5 Common Reasons for Procurement Challenge When can a procurement decision or process be legally challenged? o Where a public body has not complied with the required procedure o Where a public body has exceeded its discretion (manifest error) o Where a public body has not complied with EU procurement principles o Where the facts upon which a public body makes a decision are wrong

6 Procurement Principles Procurement Principles (Regulation 18) o Non-Discrimination o Transparency o Equality o Proportionality

7 Common Reasons for Challenge Procedural breaches of the Regulations Challenges to tender design Challenges to tender evaluation Challenges during the performance of the contract

8 Procedural Breaches Major procedural breaches subject to remedy of ineffectiveness o Failure to advertise o Failure to hold a standstill o Entering into the contract during the standstill Other procedural breaches

9 Tender design Quality award criteria o Criteria must be directly related to the subject matter of the contract and proportionate o Must ensure possibility of effective competition o Must include specification to allow bidders to assess how well they meet the criteria Regulation 67

10 Challenges to Tender Design Practical examples: o Publishing/typographical errors e.g. mistakes in the number of marks available o Confusing/ambiguous language Can it be understood by the reasonably diligent person? o Requirements which cannot be met e.g. products or standards which no longer exist o Requirements which favour one bidder over others Regulation 42 detailed rules on technical specifications Be wary of suppliers helping with design of the tender - risk of favouring incumbent/supplier

11 Challenges to Tender Design Bidders: raise complaints quickly o Limitation period of 30 days - no option to sit on a challenge and only raise it if you do not win Public bodies: Use clarifications o Correct mistakes to avoid challenge

12 Challenges to Evaluation The most common type of legal challenge Contract Award Letter notifies unsuccessful bidder: Their marks and the successful bidder s marks Reasons for decision, including characteristic and relative advantages of the successful tender, the score of the tenderer to be awarded the contract or become party to the framework agreement That a standstill period will now take place (Regulation 86)

13 Marking Tender Responses The tender documents PART 2 AWARD CRITERIA MARKS Provide a method statement (of two A4 pages maximum) setting out your proposals to meet the requirements of the Service 10 Explain your mobilisation plan and your proposals to ensure that all task orders are completed within the given time scale (maximum one A4 page). 10 Specify the members of delivery/project team, including their roles and responsibilities (including CVs) (maximum one A4 page) 10 Specify the training and competencies of your directly employed staff in relation to the safe removal of Asbestos Containing Materials and reinstatement of non-asbestos products (maximum one A4 page) 10 How do you propose to ensure the Health and Safety of employees, residents and other stakeholders on site? 10 (maximum one A4 page) Please provide details of the quality systems you will use to ensure all works are fully compliant with the Specification and are completed in accordance with each Task Order programme. (maximum one A4 page) 10 Provide a statement of your commitment to develop a good working relationship with the client and other stakeholders of the contract. Please describe measures to be taken to maintain this relationship (maximum one A4 page) Please describe how you would manage the defect correction period. Please describe what procedures you have in place for managing complaints (maximum one A4 page) Please provide details of your proposed communication procedures in relation to the requirements of the contract (maximum one A4 page) Woods Building Services v Milton Keynes County Council (2015)

14 Challenges to Evaluation A marking error of a question where no independent Section judgement/assessment required Bidder A Bidder B Question o Incorrect adding up o Applying weighting incorrectly o Awarding bidder more marks than available for question Always grounds for challenge Total 37 36

15 Challenges to Evaluation Awarding marks on basis of incorrect facts o Mistakenly believing bidder had not supplied a mandatory document o Misreading or misunderstanding bidder s response when meaning clear Always a ground for challenge 5

16 Challenges to Evaluation A marking error of a question where independent judgement/assessment is required by evaluator o Court s role is to review, not re-mark, bids o Public bodies are allowed a margin of appreciation in their marking o You need to prove a manifest error to challenge PART 2 AWARD CRITERIA 2.1 Provide a method statement (of two A4 pages maximum) setting out your proposals to meet the requirements of the Service 2.2 Explain your mobilisation plan and your proposals to ensure that all task orders are completed within the given time scale (maximum one A4 page). 2.3 Specify the members of delivery/project team, including their roles and responsibilities (including CVs) (maximum one A4 page) 2.4 Specify the training and competencies of your directly employed staff in relation to the safe removal of Asbestos Containing Materials and reinstatement of non-asbestos products (maximum one A4 page) MARKS How do you propose to ensure the Health and Safety of employees, residents and other stakeholders on site? (maximum one A4 page) 3.1 Please provide details of the quality systems you will use to ensure all works are fully compliant with the Specification and are completed in accordance with each Task Order programme. (maximum one A4 page) 3.2 Provide a statement of your commitment to develop a good working relationship with the client and other stakeholders of the contract. Please describe measures to be taken to maintain this relationship (maximum one A4 page) 3.3 Please describe how you would manage the defect correction period. Please describe what procedures you have in place for managing complaints (maximum one A4 page) 3.4 Please provide details of your proposed communication procedures in relation to the requirements of the contract (maximum one A4 page) 4.1 Please detail the initiatives you will take to protect the environment. Please describe how it would affect the environment of the Borough of Milton Keynes (maximum one A4 page). 4.2 Please provide a statement detailing how you would deal with waste materials i.e. friable and bonded asbestos waste and all associated product, including waste disposal methods (maximum one A4 page) 5.1 This contract is focussed on improving the safety and living standard of our housing stock, in order to improve the social, economic and environmental wellbeing of our residents. Therefore please explain what specific steps you will take to contribute to this objective. (maximum one A4 page)

17 Challenges to Evaluation Marking involved a breach of principle of transparency o No margin of appreciation for evaluator o Breach of procurement principle always grounds for challenge o Occurs where evaluator uses an undisclosed marking scheme or award criteria to mark an answer o Possible defence if genuine sub-criteria

18 Challenges to Evaluation Marking involved a breach of the principle of equality o An equal approach to marking bids must be applied o Fabricon v Belgium (2005) - Comparable situations must not be treated differently - Different situations must not be treated the same unless treatment is objectively justified o Breach of equality principle is always grounds for challenge

19 Record Keeping / Audit Trail Reg 84(8) Contracting authorities shall ensure they keep sufficient documentation to justify decisions taken at all stages of the procurement process such as: (a) communications with economic operators and internal deliberations (b) preparation of the procurement documents (c) dialogue or negotiation if any (d) selection and award of the contract Reg 18 Duty of Transparency

20 Record Keeping / Audit Trail Energysolutions EU Limited v Nuclear Decommissioning Authority (2016) o NDA s approach to record keeping: Deliberate policy of not creating or keeping records of evaluation. Only retained records were those in software evaluation software o Result: Court described records of evaluation as extraordinarily brief Made defending procurement challenge by NDA much harder. o NDA s approach to record keeping held to be wholly lacking in transparency, in breach of the obligation of transparency o the more comprehensive and robust the record of the evaluation, the stronger the NDA would have been in terms of any challenge, assuming the evaluation was done correctly. Thus ironically, in my judgment the NDA s approach to note-taking ran counter to its objective.

21 Record Keeping / Audit Trail Correct approach to take? o Not documenting decisions is not an option. o Public bodies need to be able to justify their decision Duty of Transparency o This covers scoring decisions and any procedurally important decision o Contemporaneous records should be kept, including proportionate level of detail. o Just reciting marking scheme may be inadequate. Summary of reasoning required. o Evaluators assisted by well-designed tender and clear marking scheme o Evaluators need to be trained on record keeping and aware that their notes could be reviewed in legal proceedings

22 Bringing and defending a procurement challenge TCC Guidance Note of Procedures for cases. Applies post July 2017 The potential claimant will send a letter before claim to the contracting authority. This should identify the procurement process to which the claim relates; the grounds then known for the claim (both factual and legal); any information sought from the authority; the remedy required, and any request for an extension of the standstill period and/or a request not to enter into the contract for a specific period of time and/or not to do so without a specified period of notice to the potential claimant. The letter should propose an appropriate, short, time limit for a response (Para 5(1)).

23 Bringing and defending a procurement challenge The authority should promptly acknowledge receipt of the letter before claim, notify its solicitors details and (if requested) indicate whether the standstill period will be extended and if so, by how long. The authority should then provide any information to which the claimant may be entitled as soon as possible, and send a substantive response within the timescale proposed by the claimant, or as soon as practical thereafter (Para 5(2)). Having exchanged correspondence and information, the parties should continue to make appropriate and proportionate efforts to resolve the dispute without the need to commence proceedings (Para 5(3)).

24 Timescales & procedures Standstill period 10 days Automatic suspension of contract award if proceedings are issued within the standstill period o Automatic suspension very often lifted on application by the public body o Bidders still entitled to damages if suspension lifted Absolute deadline: 30 days from the date of knowledge o The date the bidder Knew or ought to have known o Extensions of time up to 3 months but very rarely available

25 Practical Tips for Procurement Challenges Bidders: o Be aware of dates and deadlines and react quickly. o Make notes and keep records of discussions o Ask for an extension of the standstill period o Press for early disclosure of key documents o Think about your remedy would you be content with damages?

26 Practical Tips for Procurement Challenges Public bodies: o Know the Regulations arrange regular training for staff o Use clarifications wisely, correct mistakes if you can o Keep good notes o React quickly to challenges o Consider extending the standstill period o Provide reasonable information and assistance o Consider all options, including abandoning the tender and starting again

27 MODERN SLAVERY ACT 2015

28 Modern Slavery Act 2015 o The Modern Slavery Act 2015 is the first of its kind in Europe, and one of the first in the world, to specifically address slavery and trafficking in the 21st century. o The new legislation significantly enhances support and protection for victims, gives law enforcement the tools they need to target today s slave drivers, ensures perpetrators can be severely punished, and includes a world leading provision to encourage business to take action to ensure their end-to-end supply chains are slavery free. Home Office Press Release March 2015

29 Modern Slavery Act 2015 California Transparency in Supply Chains Act UK legislation o Consolidates and enhances existing criminal offences of slavery, servitude, forced labour and trafficking o Introduces new supply chain transparency requirements (s54) Success of criminal legislation o National performance o Local prosecutions

30 Modern Slavery Act 2015 Part 1 offences o Slavery, servitude, forced or compulsory labour o Human trafficking Section 54 MSA statement o Commercial organisation o Turnover exceeds 36m o Annual obligation o Publish as soon as possible, latest within 6 months of end of year end

31 Modern Slavery Act 2015 Contractual provisions Basic - requirement that suppliers must comply with MSA Anti-Slavery policies? Additional layers of protection o Warranties from suppliers o Indemnity from suppliers Liability for subcontractors

32 Modern Slavery Act 2015 Enforcement Ability to terminate contract Supplier due diligence Public bodies: o Mandatory MSA compliance questions o Make sure you actually check! o Risky industries/locations: MSA award criteria?

33 Modern Slavery Act 2015 The future of Modern Slavery legislation o France Law no Duty of Care of Parent Companies and Ordering Companies o Holland Child Labour Due Diligence Law o Australia Consulting on Modern Slavery Act equivalent o Rest of the World

34 Modern Slavery Act 2015 International solution to a global problem UK approach Race to the Top UK Public Sector Organisations raising standards Department for International Development o Supply Chain Code of Conduct

35 Round Up If you have any questions, feel free to Chris Tayton: Emma Butcher: Visit public procurement page on website for procurement updates and news

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