Regulatory Outlook

Regulated procurement | UK Regulatory Outlook February 2024

Published on 28th Feb 2024

Single Source Contract (Amendment) Regulations 2024 | Court of Appeal upholds decision not to award damages in procurement case | NHS procurement: introduction to how the NHS buys from the private sector

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Transforming Public Procurement - February update

The Government Commercial Function has published its February update on "Transforming Public Procurement" which provides a helpful update on next steps towards the new procurement regime coming into force, with go live still expected in October 2024.

Following on from its consultation on secondary legislation published last year, the government expects to lay what will become the Procurement Regulations 2024 in mid to late March 2024. It will also be publishing a suite of technical guidance documents covering all aspects of the new regime, including transitional arrangements, covered procurement, pre-market engagement, award rules, exclusions and contract modifications. These documents will be released in phases starting in March and concluding by the end of June.

E-learning modules will be launching in April 2024 for procurement and commercial practitioners from contracting authorities. 

Single Source Contract (Amendment) Regulations 2024

The draft Single Source Contract (Amendment) Regulations 2024 have been laid before Parliament and make changes to the Single Source Contract Regulations 2014 (SSCRs).

The SSCRs are made under Part 2 of the Defence Reform Act 2014 (DRA). The DRA and the SSCRs make provision for pricing of single source contracts, which are defence contracts entered into without competition.

These amending regulations have been made following the Ministry of Defence's response to its consultation on reforming the SSCRs, and are the first of two amending regulations the government plan to introduce. Changes introduced by the regulations include creating a regulatory framework for single source contracts, defining contracts which are "substantially for defence purposes", and inserting a new regulation in the SSCRs which describes the meaning of a component in a qualifying defence contract. The draft regulations come into force on 1 April 2024.

Court of Appeal upholds decision not to award damages in procurement case

The Braceurself v NHS England judgment dealt with a public procurement damages claim. The claimant had to prove both a breach of the Public Contract Regulations 2015 and that the breach was sufficiently serious to warrant damages, known as Francovich damages.

The lower court had established a breach in this case, which had resulted in the contract being awarded to the wrong bidder in a two-bidder race. However, the lower court ruled that the breach was not serious enough to merit damages.

On appeal, the Court of Appeal not only upheld the lower court's ruling on the seriousness of the breach, but also found that the trial judge had been mistaken on the facts and concluded that it was more likely than not that there had been no breach at all in the first instance.

The Court of Appeal addressed three main issues related to Francovich damages. First, it clarified that a multi-factorial assessment must be conducted in each case to determine the seriousness of the breach. It disagreed with the view that the breach in this case was sufficiently serious without further evidence.

Secondly, the Court of Appeal confirmed that the judge had correctly carried out the Francovich balancing exercise, taking into account all relevant factors, noting that disregarding factors such as excusability or state of mind would be contrary to authority. Additionally, it noted that a manifest error may be excusable.

Thirdly, the Court of Appeal determined that the principle of effectiveness of damages did not have a further or separate role in this case.

Furthermore, the Court of Appeal found that the trial judge had made an error in assessing the evidence concerning the proposed use of a "stair climber" in the procurement, rather than a "stair lift" in the procurement. It concluded that it was more likely than not that the scores given by the procurement assessors would have remained unchanged, indicating that the breach would not have affected the outcome.

This decision will be welcomed by contracting authorities as it illustrates that even when a minor error has been made, the court will not be quick to award damages to the claimant and will consider all relevant factors when assessing the seriousness of the breach.

For claimants, while not providing much confidence when bringing damages claims, the decision does provide helpful guidance as to what the courts will look to when assessing whether damages should be awarded and where strengths and weaknesses lie in certain factors.

NHS procurement: introduction to how the NHS buys from the private sector

The UK's NHS must comply with public procurement legislation when it buys medical devices, medicines and services or commissions healthcare services. The legislation is being overhauled with the coming into force of the Procurement Act in 2024, and the new NHS Provider Selection Regime which commenced on 1 January 2024.

If you missed it, watch our recent webinar where we examine:

  • How public procurement legislation affects how the NHS buys non-healthcare goods and services, and what this means for suppliers.
  • How the NHS Provider Selection Regime will affect how the NHS commissions healthcare services, and what this means for suppliers.
  • The mandatory net zero commitments, and other social value commitments, that suppliers must make in order to do business with the NHS.

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* This article is current as of the date of its publication and does not necessarily reflect the present state of the law or relevant regulation.

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