Public Procurement Act 2023: new statutory test for applications to lift the automatic suspension

The much-anticipated Procurement Act 2023 has entered into the statute book, being granted royal assent on 26 October 2023. Ahead of the new regime’s ‘go live date’ of October 2024, practitioners, contracting authorities and suppliers alike will be poring over the legislation to assess the nature and potential impact of the changes being implemented.

One feature of the new Act which immediately stands out is the introduction of a statutory test to be applied by the courts when deciding whether or not to grant an application by a contracting authority to lift the automatic suspension. This area of procurement law has been subject to significant judicial comment under the extant regime and there is question as to what effect the provisions of the Act may have in shifting the dial on automatic suspension applications.

Current position

On a claimant issuing proceedings challenging a decision to award a public contract, the authority is automatically prevented from entering into that contract. This is known as the ‘automatic suspension’. If the authority wishes to lift the automatic suspension, it is incumbent on it to apply to the Court.

When considering an application to lift the automatic suspension, the Court will consider the following questions:

1. Is there a serious issue to be tried?
2. Are damages an adequate remedy for the claimant?
3. If not, where does the balance of convenience lie?

The court’s approach to applications to lift the automatic suspension has been tested on numerous occasions over the years and it has been observed that it has not always been applied consistently and that in the procurement context, there has been a shift from the strict application of the test as originally established. As to this:

• The question as to the adequacy of damages has been considered as part of a rounded approach taking into account all of the circumstances rather than in isolation.
• The relevance of the following factors in determining the balance of convenience has been debated:
  • How long the suspension may be in force for and whether an expedited trial could be ordered.
  • The public interest in ensuring that a contract is awarded to the appropriate supplier.
  • The public interest in allowing public contracts to be awarded without delay.
  • The interests of the successful bidder, as well as those of the claimant supplier and defendant contracting authority.
  • The ability of the claimant to provide (and meet) a cross-undertaking in damages.

Under the current approach, more often than not the court has found that damages are an adequate remedy for the claimant and that the balance of convenience lies in favour of lifting the automatic suspension. In circumstances where the purpose of a supplier entering into a contract is typically to make a profit in the course of its business, it is very difficult for a supplier to demonstrate that damages are not adequate. The low likelihood of maintaining the automatic suspension and the high costs associated with issuing court proceedings presents a significant deterrent to claimants wishing to challenge a public procurement decision.

New statutory test

The Procurement Act 2023 establishes a new statutory test which the government have stated is “better suited to procurement than the one currently applied”. The test requires the court to have regard to the following:

• the public interest in, among other things:
  1. upholding the principle that public contracts should be awarded, and contracts should be modified, in accordance with the law
  2. avoiding delay in the supply of the goods, services or works provided for in the contract or modification (for example, in respect of defence or security interests or the continuing provision of public services)
• the interests of suppliers, including whether damages are an adequate remedy for the claimant
• any other matters that the court considers appropriate.

While the test places less focus on the adequacy of damages for the claimant (it being just one factor to be taken into account in respect of the claimant’s interests) and makes specific reference to public interest factors, its application may not differ significantly from the current approach in which the court considers the adequacy of damages in all of the relevant circumstances, including public interest factors and the interests of all parties. Therefore while the test is in theory “new”, it remains to be seen what will actually change in practice.