New Public Procurement Remedies Rules Published

The Public Contracts (Amendment) Regulations 2009 ("Amendment Regulations") have been published and will come into force on 20 December 2009. They implement Directive 2007/66/EC on improving the effectiveness of appeal procedures concerning the award of public contracts ("New Remedies Directive"), in England, Wales and Northern Ireland.

The Office of Government Commerce (OGC) has prepared an Explanatory Memorandum describing the changes being made through the Amendment Regulations. This includes a table illustrating how the provisions of the New Remedies Directive are transposed into the Amendment Regulations.

The New Remedies Directive applies also to utilities contracts. A separate set of utilities contracts amendment regulations will be adopted shortly. The utilities sector can in the meantime look to the Amendment Regulations to prepare for the changes coming into force in December 2009.

The New Remedies Directive both strengthens the available options for legal review of procurements and increases the range of available remedies. Member States have been given a degree of flexibility in its implementation. This is why the Office of Government Commerce (OGC) has carried out two consultations on the implementation of this Directive in the UK – see our earlier law-now.

The most significant changes introduced by the Amendment Regulations include:

the introduction of a new penalty of ineffectiveness, which will enable the Courts to strike down contracts that have been awarded in serious breach of the procurement rules the introduction of two new penalties – civil financial penalties and contract shortening – which a Court can use as an alternative to ineffectiveness if it considers that there are important public interest reasons why the contract should continue. The Court has discretion on the size of civil financial penalties the automatic suspension of a contract award procedure whenever legal proceedings are started in respect of a contract award decision. Contractual ineffectiveness Ineffectiveness will only be prospective, not retrospective meaning that it will only affect unperformed contractual obligations. Obligations that have been performed by a contractor will not therefore need to be undone A civil financial penalty will be imposed at the same time as an ineffectiveness declaration A declaration of ineffectiveness in respect of a framework agreement does not necessarily make specific contracts under that agreement ineffective. A...