The move towards two-way feedback in public procurement

Back in 2011, the Cabinet Office instituted a new service called Mystery Shopper. This service would discreetly investigate complaints received from aggrieved participants in public procurement processes tendered by central and local purchasing bodies. Putting aside the fact that the name Mystery Shopper means something very specific in market research, the truth is that we finally had in the EU an avenue whereby suppliers could vent their anger without going through the court system.*

Before the Mystery Shopper came about, the Scottish Government created the Single Point of Enquiry in 2008, with similar aims. In a similar fashion, in March 2016 the Welsh Government hast just instituted a Supplier Feedback System.

These three services create a two-way feedback system, allowing economic operators to criticise contracting authorities without risking their reputation and future business. The potential for influencing future practice via public reports is reasonable and the avoidance of disputes in court is welcome. I stand by my opinion that feedback in procurement should be a two way street. It would be good if other countries* followed a similar path with services like these. But lets not delude us that they move the needle significantly.

Limitations

Neither of those three services can adjudicate cases or deal with the crux of the matter. They clearly lack enforcement powers. Both the Mystery Shopper and the Supplier Feedback System are quite clear in their guidance that if there is a whiff of potential legal action, no investigation will be undertaken. Furthermore, as far as the Mystery Shopper service goes until now compliance from contracting authorities was not even mandatory. This lack of teeth is, unfortunately, is a shame.

I was told by a colleague a few years go that the "ombuds" word was not welcome in the British public sector. Looking at these three services I can understand how my colleague was right. The aforementioned services could easily be bona fides "ombuds" services with proper investigatory, adjudicatory and practice changing powers. In other words, they could be UK versions of the Office of the Procurement Ombudsman of Canada (here's an interview with Frank Brunetta, the former Ombudsman. Here's his final report.) Sadly, they're not.

On a conversation with someone in the know, I made that same suggestion: it would be great if these services evolved in the direction of a proper independent, impartial "ombuds" service similar to the Canadian one. I was told that it would not happen as an "ombuds" service would be very heavy. I begged to differ and we left it at that. 

If we look into the details, however, we can see at least the Mystery Shopper making baby steps into the "ombuds" direction. Section 40 of the Small Business Enterprise and Employment Act establishes an obligation for some contracting authorities (mostly in England) to comply with requests for assistance issued by the Mystery Shopper service. That is an excellent step in the right direction, but one that is still short of addressing what I see as the main shortcoming of the service: lack of enforcement powers.

Those services could also provide alternative dispute resolution mechanisms which are very popular offering of the Canadian Procurement Ombudsman, although public bodies are entitled to refuse taking part. That is one of the shortcomings of the Canadian system. Yes, in jurisdictions where going to court is perceived as expensive (England and Wales) or slow (Portugal, Spain until recent reforms) I am in favour of using alternative dispute resolution systems like the one from Canada.

In the UK we have around 50 court cases per year and the Mystery Shopper alone in 2015 handled 85 new cases, so there is probably a significant number of situations which demand some sort of respite/change in practice that never come to be in the first place. It is time we moved into a more robust system, but that remains a pipe dream.

What's next

I suspect the use of services like the Mystery Shopper, Single Point of Enquiry and Supplier Feedback Service will continue to grow in the near future. That creates the incentive for said services to increase in their scope and power - and the compliance obligation of Section 40 of the Small Business Enterprise and Employment Act is just an example. We are moving towards a fully fledged two-way feedback systems, but only that.

As for the pipe dream mentioned above, who knows if in a future review of the Remedies Directive Member States are forced to develop systems which may function as an alternative to the judicial courts.

* Yes, I know Sweden has the competition authority and Denmark the complaints boards.

Public Contracts Regulations 2015 - Regulation 97

Regulation 97 - Remedies where the contract has not been entered into

This Regulation establishes what remedies are available to the court in case the contract is yet to have been entered into. The remedies for situations where contracts have been entered into can be found in Regulation 98.

The court can order remedies under this Regulation in case it finds the contracting authority in breach of the duty owed in accordance with Regulations 89 and 90. There are three remedies available to the court: setting aside the decision, ie the award decision for example; ordering the contracting authority to amend a document; and awarding damages.

I will focus my commentary on the third remedy which I find particularly interesting at this stage. Although the Regulation clearly allows an award decision to be set aside, it still includes the payment of damages as an alternative (and not a subsidiary option). What can this mean? I can see three different scenarios.

1. This may be conceived as allowing the court to set aside the decision and cumulatively awarding damages to the same economic operator, in case the grounds for awarding damages are present.

2. The Regulation can also be conceived as allowing the court to award damages to other economic operators that have been disadvantaged in a procedure but were not going to win in any case. This seems unlikely as neither good faith nor pre-contractual liability are well established under the law of England and Wales as far as I know.

3. Finally, it may be that the drafting of this Regulation does allow for damages to be awarded in alternative to setting aside the decision.

Thoughts?

Public Contracts Regulations 2015 - Regulation 92

Regulation 92 - General time limits for starting proceedings

Regulation 92 marks the start of the general remedies section applicable to public contracts tendered in England, Wales and Northern Ireland. This first Regulation is focused on the general time limits for starting proceedings in all situations except those seeking a declaration of ineffectiveness (these will be treated in Regulation 93).

As a general rule, economic operators have 30 days after the date the economic operator first knew or ought to have known (paragraph 2). For the purposes of this Regulation, “knowing” depends on a number of different factors from the information passed by the contracting authority to the means used by it.

The specific rules determining the start of the 30 day period are contained in paragraphs 3 to 5. As before, the start of the period depends on the date the decision notice was sent to the economic operator (not its receipt). Furthermore, the number of days appended to the proceedings - 10 or 15 days - depends as well on the information contained within and its transmission method.

Paragraph 4 authorises the Court to extend the time limits in this Regulation if there is a good reason to do so. Paragraph 5 restricts the  maximum extension to 3 months from the date the economic operator “knew or ought to have known” of the existence of grounds for the proceedings.