Why you should be worried about the Government’s Green Paper on Public Procurement

“The end of the (Brexit) Transition Period provides an historic opportunity to overhaul our outdated public procurement regime,“ writes Lord Agnew in the Ministerial foreword to the Government’s Green Paper: Transforming Public Procurement, published yesterday. 

If these words don’t strike terror into your heart they should. 

The Government’s position in the litigation we are bringing is that no one would have the right to bring a public interest challenge to it giving contracts worth hundreds of millions – or more – to its mates. And that only disaffected bidders can bring challenges. If that’s right – and we don’t yet know – then there is only one class of potential challenger, failed bidders. More on them below.

But even if it is wrong – and the position of the Court so far is that it might well be – then the protection of the public interest rests on the ability and inclination of a public interest challenger to challenge misconduct. And that’s not something you can sensibly rely on.

To bring a challenge against Government contracting with its friends we have to ask you for money. There is no other way to fund that action. And it is impossible to crowdfund enough to protect yourself from existential risk arising from this type of challenge. The costs that the Government has intimated to us that it is incurring in our PPE could perfectly feasibly top £10m. We believe the purpose of its spending is or includes the creation of existential risk to deter any public interest challenger. 

The other potential guardian of good procurement – the only type Government accepts can bring a challenge – is disaffected bidders: those who believe they missed out on a contract for bad reasons. But they are motivated by private interests (which means cases can settle without anyone ever knowing Government got it wrong). 

Moreover, disaffected bidders are heavily disincentivised to bring a procurement claim for two reasons:

1. In our legal system, where the loser pays the winner’s costs, commercial parties too are put off by Government’s ability to spend limitless amounts of money.
2. Most companies believe that if they sue the Government for giving the contract to a crony they will never win another Government contract. And they keep their heads down.

Where they have sued despite these factors they will have done so to recover damages – lost profits on the contract they believe they should have won. And that is why this Green Paper is so troubling. Government is proposing a cap – 1.5x bid costs – on the amount of damages available in normal procurement cases. In effect, they are removing all incentive for those motivated by private interests to act.

We believe this Green Paper – only possible, as the opening sentence of the Ministerial Foreword says because of Brexit – could well de facto allow Ministers to contract to advance their own financial and political interests. 

It is gaslighting by Government to claim this as improvement.

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