Bill seeks to procure test for automatic suspension on contract-making

Published: 09:30, 07 September 2022

Sponsored feature | Stewart Morrison, head of procurement and supply chain, HCR Hewitsons

The new Procurement Bill, currently at the committee stage in the House of Lords, seeks to reform existing public procurement rules with the aim of promoting innovation, improving efficiency, maximising public benefit, and ensuring greater transparency. One such proposal is the introduction of a new test to be applied by the courts to determine whether the automatic suspension on contract-making should be lifted.

Under the current regime where an unsuccessful bidder issues proceedings in respect of the contract award before the contract is entered into, the contracting authority must refrain from entering into the contract until either:

The court makes an order allowing the contract to be entered into (known as lifting the automatic suspension)
The court proceedings are disposed of.

The current test for determining whether the court will make an order lifting the automatic suspension is the now well-trodden test in American Cyanamid v Ethicon, [1978] 7 WLUK 194:

Whether there is a serious issue to be tried
If so, whether damages would be an adequate remedy
Where the balance of convenience lies.

In procurement cases, the court has applied the American Cyanamid test in applications to lift the automatic suspension by asking the question: “Is it just, in all the circumstances, that a claimant should be confined to his remedy in damages?”

In the vast majority of cases, the application of the test results in the suspension being lifted so that the contracting authority may enter into the contract and the claimant being limited to a claim in damages only.

Under the Procurement Bill in its current form, however, the new procurement specific test requires that the court have regard to the public interest, including avoiding delay in the supply of the goods, services or works.

In addition, the Bill requires that the court consider the interests of the suppliers, including whether damages are an adequate remedy for the unsuccessful bidder, and any other matters that the court considers appropriate.

It remains to be seen how this new test will be applied in practice, especially in circumstances where many of the factors to be taken into account remain the same. Claimants will hope that the new test provides for greater prospects of maintaining the suspension through to trial.

For more information about procurement challenges, contact Stewart Morrison on 01223 532706 or email smorrison@hcrlaw.com.

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