New public procurement rules, introduced to ensure compliance with EU law, come into force on 1 October for all contracting authorities and will bring uncertainty for local authorities.
The rules affect both authorities and contractors who do business with local and central government. While some of the changes – the requirement of local authorities to revise their prequalification questionnaires for example – seem purely technical, others will have a direct practical impact on authorities and especially those that have technically breached procurement rules.
But it's the new time limit for procurement challenges that will affect authorities most. Under the old rules, contractors who wanted to challenge an authority for procurement breaches had to bring their claim within three months from when the challenge grounds first arose, unless the court believed there was a good enough reason to justify extending the time limit.
However, last year the European Court looked at this rule in the UK version of the regulations in the Uniplex case. The case involved a surgical instruments supplier's challenge against the NHS Business Services Authority after the company learned that it had lost a contract because its tender had scored lowest after evaluation.
The court found that in the UK the time limit for bringing a challenge can start before a tenderer knows that a procuring authority has broken procurement law. It then declared that the regulation was wrong. The court held that the UK's procurement rules broke an EU law, namely the right of tenderers to ask the courts to review contracting authorities' procurement decisions.
The new rule dictates that the time limit for bringing a challenge is now 30 days starting from when the tenderer first knows or "ought to have known" when the challenge grounds first arose. The court can extend that time limit to three months where it considers there are good reasons.
In reality, authorities sometimes commit technical breaches of the procurement rules. It used to be comforting to know when three months had passed after a breach that there was no longer a possibility of a legal challenge.
However, with the new rules the risk lingers on. In my experience, from a practical point of view, it will often be open to argument as to when a tenderer ought to have known that the authority had breached procurement law.
These new rules will create yet more uncertainty for authorities, which is especially unwelcome in an economic climate where challenges are common.
Helen Randall is head of public sector at Trowers & Hamlins LLP
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