Risks of abandoning a procurement28/05/20
Most procurement teams will have needed to consider abandoning a procurement process at some point (perhaps particularly during the COVID-19 pandemic). Whilst this can be inconvenient, and give rise to some bidder grumbles, a decision to discontinue gives you an opportunity to start afresh and resolve any problems with the original procurement.
We are however seeing more case law in this area, which suggests that abandonment might not always be the clean-slate you are hoping for. This insight examines some of the risks and practical tips when considering abandoning a procurement.
Why would I need to abandon a procurement?
Even with the best forward planning there may be reasons why you need to abandon a procurement. This could be due to a change in your business needs that means you no longer need to procure the goods/service/works. Alternatively you might still need to go ahead with the procurement, but need to make changes as result of discovering a flaw in the original process.
In some cases you may be able to “rewind” the process, but in others you may need to call it a day and start again in order to ensure you are transparent to the market about any changes.
Is abandonment permitted?
There is no explicit right to abandon a procurement under the procurement regulations. However there is a requirement to notify bidders of a decision to discontinue, implying that this can be done.
Why might we be challenged for discontinuing?
Discrimination or lack of transparency
You may face a challenge when discontinuing a procurement if a bidder thinks you have not treated bidders equally or been transparent about your reasons. For example, this could be where a bidder feels you abandoned the process as you did not like the outcome.
In a recent case an NHS Trust was challenged for its decision to abandon a procurement. The Trust claimed the decision was due to an improved financial position and strengthened relations with its partner organisations, so it no longer needed to procure.
The challenger however claimed that the abandonment was due to pressure on the Trust because of the bidder’s connections with the Grenfell disaster.
The Court held that the NHS Trust’s decision to abandon was lawful. Whilst the concerns of stakeholders about the bidder’s Grenfell connection may have been a factor in the decision making, this was not the main or only reason. The Trust was able to show its decision was proportionate and justified and that it had acted transparently in informing bidders of its reasons.
Discontinuance does not negate your breach
Another risk is that you discover a breach of the procurement requirements (such as errors in the scoring) and decide to discontinue. A recent case however has demonstrated that deciding to discontinue does not prevent a challenger from pursuing its claim.
Here a Council was recently challenged by a bidder claiming if the scoring had been carried out correctly it would have won the procurement. As a result of the risks of the litigation the Council decided to abandon and start over.
The Court decided that the abandonment did not prevent the case going ahead. Even if the abandonment was lawful this did not “cancel” the right to make a claim.
What practical steps should I take?
- Identify genuine and rational reasons for abandonment.
- Keep a record of the justification for abandonment and supporting evidence.
- Consider if this is a proportionate approach. Show that you considered other outcomes (such as rewinding and correcting part of a process) and why this will not work.
- Check your procurement documents to see if they include a right to discontinue which you can refer to when notifying bidders.
- Consider the risk of a challenge still being made if you abandon. If for example a bidder could argue they would have won the original procurement you may need to look at rescoring rather than restarting.
- Think about your next steps. Are you going to start again? Are you going to need to extend an incumbent supplier? Assess the options and risks before you finalise your decision.
- Inform bidders of your decision and the reason for this.
What to take away
Abandonment may well still be the right decision if you discover problems or there are changes in your procurement needs. In light of the recent cases and the appetite by bidders to challenge a decision to discontinue, you should take a moment to consider the options and risks first.
How can Capsticks help?
At Capsticks we strive to ensure our clients are “one step ahead” in delivering their ambitions to ensure value for money and the best possible service. We offer an experienced and responsive team of specialist procurement lawyers who are on hand to review your procurement options and/or procurement compliance.
If you have any queries around what's discussed in this article, and the impact on your organisation, please speak to Katrina Day or Lee Clarke to find out more about how Capsticks can help.