Indian approach

30 August 2012
Preparing a piece for the next issue of SM on the approval of a draft Public Procurement Bill in India, I was intrigued by one of the provisions included - and wondered if a similar idea would be workable in the UK. While the legislation provides disgruntled bidders with a more structured way to complain about tender processes, it also introduces penalties for “vexatious, frivolous or malicious complaints”. The punishment for this is a fine that could be as much as five per cent of the procurement in question.

The Remedies Directive, introduced in the UK in December 2009, gave suppliers much more power to challenge contracting decisions.

As seen in the instance of Virgin Trains legal action this week, a challenge by a supplier now brings an automatic halt to a contract award process and the buyer has to apply to the court to get this injunction lifted. In most cases to date, judges have sided with the contracting authority and allowed the process to continue, but the onus and cost lies with the buyer.

As SM reported one year on, 69 per cent said dealing with challenges had hindered procurement processes and two thirds said cost and administrative burdens had increased.

Of course, the purpose of these rules was to give greater redress to vendors who had been unfairly disadvantaged. But, in an economic situation where suppliers are desperate to win or hold on to business, there is the impression that suppliers can take a ‘why not?’ approach to issuing challenges, which could panic the council into a settlement or u-turn rather than contest a costly court battle. A potential penalty for trivial challenges could be a way to discourage this, without harming vendors that do have a genuine complaint.
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