UK Consults on New Remedies in Public Procurement
08/01/2008The United Kingdom’s Office of Government Commerce (OGC) has launched a public consultation on the implementation of Directive 2007/66/EC that is designed to improve the effectiveness of review procedures in public and utilities contracts. The EU Directive introduces two sets of provisions: the first set will harmonise the standstill arrangements following contract award, and the second set will introduce “ineffectiveness” as a remedy for illegal direct awards.
For procuring entities, successful tenderers and funders, the possibility of ineffective contracts is likely to create uncertainty. This will affect the terms negotiated between these and other parties, such as subcontractors, and may lead to a greater degree of questioning by funders during the due diligence process. This is a good opportunity to contribute to this debate. Interested parties will be companies bidding for public works, supplies and services contracts as well as financiers set to bankroll their projects. The deadline for comments is 24 October 2008, and responses (and/or questions) should be directed to servicedesk@ogc.gsi.gov.uk.
When implementing the European Union’s 2004 procurement legislative package in 2006, the United Kingdom already included standstill requirements (the mandatory period required between a decision to award a contract and the actual entry into that contract to allow effective legal challenges). Accordingly, little change will be required here. On the other hand, the introduction of “ineffectiveness” as a remedy for illegal direct awards is a considerably more complex issue, and the OGC is particularly interested in feedback on this. An illegal direct award is a contract subject to the EU tendering rules entered into without an appropriate advertisement or compliance with the review procedures. As regards remedies for such breaches, Member States have a choice whether to apply retrospective cancellation of all contractual obligations (ex tunc) or prospective cancellation, meaning the cancellation of only those obligations that have yet to be performed (ex nunc). The OGC appears to prefer the ex nunc approach. The OGC also appears to be in favour of courts being given discretion on whether or not to render a contract ineffective as this would allow more flexibility.
