UK: New Procurement Regulations To Significantly Reduce The Time For Challenge

Last Updated: 3 January 2012
Article by Robert Bell and Paul Henty


The Public Procurement (Miscellaneous Amendments) Regulations 2011 (the "New Regulations"), which come into force on 1 October 2011, will significantly reduce the time limit within which an aggrieved supplier may bring a claim for a breach of the procurement rules. The current three month period is being reduced to just 30 days from the date of knowledge. This note explores the implications of the New Regulations.

The context – The Public Contracts Regulations 2006 (as amended)

The Public Contracts Regulations 2006 ("PCRs") and Utilities Contracts Regulations 2006 (as amended) ("UCRs") (collectively the "Existing Regulations) respectively control the way in which public bodies and utilities companies purchase works, services and supplies.

These Existing Regulations set out important rights for tenderers entitling them to a fair and equal competition. Where the rules are not followed, the Existing Regulations allow aggrieved bidders to bring legal action, either claiming damages or seeking an injunction to restrain the award of the contract. Where a contract award has been marred by certain serious breaches, a claimant may even be able to have the signed contract set aside.

Recent times have seen a rising number of challenges to public contract awards, partly due to worsening economic conditions and also a growing awareness of tenderers' legal rights.

What has changed?

Under the Existing Regulations (Regulation 47(7)(b) of the PCRs and Regulation 45D(2) of the UCRs), any injunction application or claim for damages must be commenced within three months of the date on which the claimant became aware (or ought to have been aware) of a breach.

This period can be extended at the Court's discretion, but only where there is a "good reason" to do so. In practice, the Courts have rarely exercised this power.

The time-limit for bringing injunctions or damages claims under the Existing Regulations will be reduced even further by the New Regulations. These come into force on 1 October 2011 and will require any such claims to be commenced within 30 days from the date of knowledge.

Time-limits for ineffectiveness claims remain unaffected. The relevant limit will continue to be 6 months from the date of contract award.

As a result, the New Regulations will seriously restrict the rights of parties bidding for public or utilities contracts to challenge the procurement process.

Why the change now?

The original time-limits for bringing procurement actions had come under attack in the case of Uniplex (UK) Ltd v NHS Business Services Authority (Case C-406/08), in which the European Court of Justice was asked whether the UK's time-limit provisions were compliant with EU Law.

It answered in the negative. In particular, the provision had required bidders to commence actions "promptly and in any event within three months". The "prompt" requirement was held to be too uncertain to satisfy the requirements of EU Law.

As a result, the UK Government was required to re-think its provisions on time-limits for procurement challenges. The current changes have been made as part of that exercise.

The Uniplex judgment arose from a claim that the time-limits were too harsh for claimants. Ironically, it has ultimately prompted amended time-limits which in some ways are more restrictive than those which they replace. Indeed a large question mark now hangs over how far the new time limit does provide an adequate remedy for breach of the public procurement rules and is in compliance with the principles of EU law.

When do the changes take effect?

The key changes will take effect on 1 October 2011.

It is important to note that if the date of knowledge is before 1 October, tenderers will continue to enjoy a 3 month timeframe in which to bring a claim. The one month time limit kicks in from 1 October.

Changes to Automatic Suspension provisions

The New Regulations also update the rules relating to the "automatic suspension" of the contract award procedure following the commencement of proceedings challenging that tender. Prior to the New Regulations, the contract award procedure was only suspended after the aggrieved party served the claim form on the contracting authority. Thus, dependent on the method by which a claim form was served, there might be a window of time between the issue of a claim form and the contracting authority receiving it, when a contracting authority could sign the contract. To stop this situation from arising the New Regulations provide that the contract is suspended with immediate effect once the claim form is issued. The requirement will now arise when the authority or utility has become aware that a claim form has been issued. The economic operator must serve the claim form on the contracting authority within 7 days after the date of issue.

What can you do about it?

Tenderers will usually only seek legal advice once they have been informed that they have not been successful. There is a risk with the new 30 day time limit that the tenderers will be time barred by the time they reach the stage where they think about lodging a claim.

The New Regulations mean that there is a greater emphasis for participants to be aware of their rights under the Regulations and to know when there may have been a breach. Once they consider there may be a problem, they must act quickly in order to preserve their rights.

To assist our clients, Speechlys can provide training in public procurement law designed to help our clients identify potential breaches of the law more quickly and therefore act in time to safeguard their legal rights. This will put them in a position of strength when dealing with contracting authorities who act unlawfully, jeopardising their commercial interests.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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