Sally Stock, Beth Edwards and Shyann Sheehy discuss the process of abandoning a procurement process, as well as highlighting restrictions on when it can be done.
At a glance
Recent decisions, including by Mersey and West Lancashire Teaching Hospitals NHS Trust, highlight contracting authorities (‘CAs’) ability to abandon a procurement process where appropriate.
Here the CA decided to withdraw a £65 million pound contract award after legal action was commenced by an unsuccessful bidder. This is not the first time the courts have considered this point and other cases such as Ryhurst Ltd v Whittington Health NHS Trust [2020] EWHC 448 (TCC) demonstrate that CAs may abandon their procurements where genuine and rational reasons to do so arise.
Cases like these show the delicate balance which must be adopted by CAs to maintain procurement integrity whilst also ensuring the smooth delivery of public services.
Decisions to abandon a procurement process should never be taken lightly and thorough consideration should be made by CA’s wishing to do so.
This article will provide a refresher on abandonment, when it can be used, any restrictions in this process and how this may differ under the Procurement Act 2023 (the ‘PA 23’).
Current law on abandoning a procurement (PCR 2015)
Currently, the Public Contracts Regulations 2015 (the ‘PCR 2015’) regulates procurements undertaken in England and Wales.
Though the right to abandon a procurement is not expressly stated in the PCR 2015, the requirement to notify tenderers of any decision not to award a contract demonstrates an implicit ability to abandon a procedure (Reg 55 PCR 2015).
While CAs have a broad discretion to abandon a procurement, any decision to do so should be made in accordance with Reg 18(1) PCR 2015 (being the general principles of transparency, equal treatment and proportionality) and therefore CAs must have due regard to other available options, other than abandonment, which may be more proportionate to their circumstances.
Further this broad discretion to abandon, must be within the range of reasonable decisions a CA could take, as clarified in the case of Croce Amica One Italia SrL v AREU [2015] PTSR 600 that:
- Decisions not to award are not limited to exceptional cases or those of serious grounds;
- Notifications must be made to tenderers on the grounds for the withdrawal but there is no obligation to carry the award procedure to its conclusion;
- Communication relating to grounds for withdrawing an invitation to tender should comply with the principle of equal treatment;
- Discretion to abandon the procurements can be:
- Based on whether, in the CA’s view, it is expedient and in the public interest to carry out the award procedure to its conclusion based on the CA’s needs or changes in the economic context/factual circumstances, and/or
- Relating to an insufficient degree of competition due to the fact that, at the conclusion of the award procedure in question, only one bidder was qualified to perform the contract.
Under Reg 55(1) PCR 2015, notification should be made of the decision to abandon with details on the grounds for abandonment to everyone who submitted tenders and who originally applied to be part of the tender.
Information can only be withheld as permitted under Reg 55(3) PCR 2015 where it would impede law enforcement, be contrary to the public interest, prejudice the legitimate commercial interests of a supplier or may prejudice fair competition between suppliers.
It is also recommended that a notice is further published to the wider market to let them know the same. Any decision must also be open to review.
The case of Amey Highways Ltd v West Sussex CC [2019] EWHC 1291 (TCC) explored the lawfulness of abandonment decisions and whether bidders in a lawfully abandoned procurement are able to pursue proceedings relating to the hypothetical award and/or any alleged breaches of the procurement rules.
Here an unsuccessful bidder, who scored 0.03 lower than the highest bidder, claimed they suffered a loss of profits over the contract life and wasted costs in tender preparation. Following an unsuccessful application for summary judgment by the CA, the decision was made to abandon the procurement.
Ultimately, the court held that where a CA is facing legal procurement challenges, especially where there are doubts to the strength of their defence, an abandonment may occur.
This is especially applicable where, like in this instance, the CA would have continued with the procurement had the challenge not occurred, but it was appropriate to abandon in an attempt to preserve public funds when the legal challenge was brought.
CAs should be careful to note, however, that just because there is an implied right to abandon this does not mean that claims cannot be brought for breaches of procurement law which have already accrued before the abandonment occurred.
The abandonment of the procurement will not extinguish any damages claims that may have crystallised prior to the decision to abandon.
The Procurement Act 2023
On 24 February 2025 the PCR 2015 will be repealed and replaced by the PA 23, with any procurements started on or after this date being subject to the new regime.
Like the PCR 2015, the PA 23 does not have any specific references to abandoning a procurement, but it does contain provisions relating to a CA’s right to terminate a procurement and not award a contract. Section 55 PA 23 requires CAs to publish a notice as soon as reasonably possible after coming to the decision not to award a contract.
Guidance on these notices can be found here, but these aim to inform both suppliers and the public of the procurement discontinuation with the hope of reducing costs for suppliers and increasing market certainty.
The requirement is applicable where the contract has not been entered into but the tender or transparency notice has been published, it does not apply to private utilities.
Details to be included within these notices are set out in Reg 37 of the Procurement Regulations 2024.
Similar to the PCR 2015 (Reg 18 considerations) all decisions should be considered alongside the covered procurement objectives in sections 12(1)(c-d) PA 23.
It should also be noted that CAs can voluntarily publish this notice in a below-threshold procurement or a selection process under a framework where a termination occurs, and a contract is not awarded or simply to inform the market that a process to establish a dynamic market has been abandoned.
A different process is required where the procurement has been divided into lots and only some lots are being abandoned in that a contract award notice should be used in place of a procurement termination notice with the relevant ceased lot information completed.
Takeaways
Under both the PCR 2015 and PA 23, CAs have the right not to award their contract if this is the most appropriate course of action, taking into account any legal and commercial issues.
For both regimes notification must be made to the relevant parties but CAs should be careful to note the differences in both regimes alongside any applicable case law to ensure they are lawfully abandoning their procurements.
Thorough records should be kept throughout the procurement process and sufficient evidence should be available to support any grounds for these decisions.
CAs should also note that abandoning any procurements, though this may stop some litigation as shown in Amey above, it will not put an end to potential litigation if a damage claim has already been crystallised prior to the decision to abandon.
CAs should also carefully consider their next steps including the consequence of any subsequent actions taken to secure the provision of goods, services or works from the abandoned procurement.
Any decision to abandon a procurement must not be taken lightly and it will not be an easy decision for CAs to make. Abandoning should be used as one of the last options and only once the reasoning behind this decision are carefully thought through and evidenced.
Sally Stock is a Partner, Beth Edwards is a Junior Associate and Shyann Sheehy is a Paralegal at Sharpe Pritchard LLP.
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