New public procurement rules come into effect

21 December 2009

21 December 2009 | Paul Snell

Suppliers will find it easier to challenge the award of public contracts under new regulations that came into force yesterday.

European Union member states had until 20 December to implement the new Remedies Directive, aimed at increasing transparency and competition in public contracts.

One of the key changes in the legislation is the new remedy of “ineffectiveness”, which gives courts the power to scrap a contract if the contract has not been advertised, the standstill period has been ignored or if the rules governing a framework agreement have been broken.

The UK has chosen to make the ineffectiveness remedy “prospective”, meaning if the court decides a contract should be cancelled, this will only apply to contractual obligations that have yet to be performed. The court can still award damages to a vendor and impose a civil fine on the authority.

The French and German governments have chosen to make their regulations “retrospective”, meaning contracts can be cancelled and work carried out by a supplier will have to be “undone”.

The new rules also mean when a challenge is brought against a contracting authority, the public sector organisation will not be allowed to enter into a contract without an interim court order.

It will also now be obligatory for buyers to provide suppliers with the criteria for the contract award, reasons for the award decision – including the score of the winning bidder and the vendor receiving the letter – the name of the winner and details of the standstill period.

The new rules will not apply to contracts where the procurement process began before 20 December 2009.

How courts interpret the new directive will become clear only as cases are brought.

Further information on the changes can be found on the OGC website.

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