The Act is making a (debarment) list and checking it twice…

In this Procurement UnpACked, we explore one of the more dramatic changes brought about by the Procurement Act 2023 (the Act): the introduction of the new debarment list - a public register of suppliers barred from participating in public procurements.

The debarment list will be managed by the Debarment Review Service, part of the wider Procurement Review Unit (PRU).

For suppliers, understanding how the debarment list operates is crucial to protecting business interests and maintaining eligibility for key contracts.

What are the consequences of being added?

Being placed on the debarment list has serious implications for suppliers, including:

• Automatic or discretionary exclusion from procurement processes
  Contracting authorities are required to review the debarment list and:
  • automatically exclude suppliers entered onto it by reason of a mandatory exclusion ground; and
  • consider whether to exercise its discretion to exclude suppliers entered onto it by reason of a discretionary exclusion ground.
• Loss of existing opportunities – existing and future
  Entry onto the debarment list also entitles contracting authorities with whom a supplier has existing public contracts to terminate those arrangements.
• Reputational damage
  Because the debarment list is publicly available and entries are likely to be highly reported, inclusion will likely cause lasting damage to a supplier’s reputation.
• Impact on subcontracting
  Subcontracting opportunities would also be affected, as primary contractors will likely seek to avoid engaging with debarred entities.

What information is included on the debarment list?

The list will set out the name and company/charity registration number of the supplier, the exclusion ground(s), date the exclusion ground is expected to cease to apply and a link to the Debarment Review Service's report.

When can the PRU consider entering a supplier onto the debarment list?

Under the Act, the PRU can investigate and ultimately determine whether to place a supplier on the Debarment List in two circumstances:

1. Following notification by a contracting authority that they have excluded, replaced or removed the supplier from a procurement. The notification would include the applicable exclusion ground(s) and must have be made within 30 days of the exclusion occurring. The PRU will then undertake an investigation.
2. Following an investigation by the PRU. The PRU has general investigative powers and can decide of its own volition to investigate whether an exclusion ground applies to a supplier. This could be, for example, following a corporate crime case, other information in the public domain or following a notification by a third party that potential grounds for exclusion exist. The PRU’s website includes a process for a referral for debarment.

Grounds for investigation would likely include:

• criminal convictions (e.g., fraud, bribery, corruption);
• serious professional misconduct, tax or competition law infringements;
• breaches of environmental or labour law obligations; and
• professional misconduct that brings the supplier’s integrity into question.

What does the PRU’s investigative process involve?

Initial notice

Once the PRU has decided to investigate a supplier it must notify the supplier in question: 

•  stating the relevant exclusion ground(s) being investigated; and 
• providing an opportunity for the supplier to make representations. 

The PRU can also ask for further information from either or both of the supplier and the referring contracting authority. When making a request for information from a supplier, the PRU should explain the consequences should they fail to comply. 

A failure to comply with the PRU’s request for information is in and of itself a mandatory exclusion ground, and therefore reason enough for the PRU to enter the supplier onto the debarment list. Suppliers should therefore be alive to, and ready to engage with, any information requests from the PRU.

Investigation report

Following its investigation, the PRU must prepare a report setting out its findings. A copy should be provided to the supplier and will generally be published.

Where the PRU has concluded that exclusion ground(s) apply, it must explain whether it intends to add the supplier to the debarment list, and if so explain the information that will be included on the List. The supplier must be given notice of the PRU’s intention. This notice will set out the decision, and an explanation of their rights to interim relief and to apply for removal or appeal. The notice triggers a debarment standstill period of eight working days (standstill) during which the PRU cannot enter the name onto the list.

Are there options to challenge or appeal entry onto the debarment list?

The Act provides several routes to challenge or appeal the PRU’s decision:

Interim court order 
Within standstill, a supplier can apply for an order from the court to suspend the decision. This is a temporary measure to enable the supplier time to consider its options and pursue other means to reverse the decision. 

The court can make an order to suspend the decision until:

• the expiry of 30 days from the date on which the supplier was notified of the intention to enter its name onto the debarment list (the limitation period), if no further proceedings have been issued within that time; or
• appeal proceedings are determined (see below).

Where the PRU has already entered the supplier’s name onto the list, the court can also order its temporary removal.

When determining whether to grant an interim order, the court will consider the public interest in ensuring public contracts are not awarded to suppliers posing a risk, the interests of the supplier who may suffer financially if their name is entered onto the debarment list, and any other matters it considers appropriate.

Application to the PRU for removal 
A supplier can, at any time, apply to the PRU for the removal or revision of its entry on the debarment list.

However, the PRU is only required to consider such an application if they consider there has been a material change in circumstances, or the application is accompanied by significant information not previously considered. 

Once it has considered the application, the PRU must notify the supplier of its decision and the reasons for it. 

Appeal – Court proceedings
A supplier may appeal to the court against a decision of the PRU:

• to enter their name onto the debarment list;
• as to any other information contained on the list); and/or
• not to remove or revise an entry following an application for removal. 

An appeal must be brought before the expiry of 30 days from and including the day on which the supplier first knew or ought to have known about the PRU’s decision. 

The only grounds available for such an appeal are that the PRU has made a ‘material mistake of law’. This is therefore a high threshold to meet. 

If the court finds in the supplier’s favour, it may make an order setting aside the PRU’s decision. Where, as a consequence of the mistake the supplier was excluded from participating in a procurement process, the court may also make an order compensating the supplier for costs incurred by them in participating in that process. There is no entitlement for any other damages or loss suffered.

What should suppliers be doing?

In the face of limited grounds for appeal and challenge, prevention is the best approach and therefore suppliers should:

• regularly take appropriate steps to ‘self-clean’ in respect of any potential grounds for exclusion, including updating training and policies;
• review corporate structures to identify any associated or connected persons, whether any potential exclusion grounds apply to them and seek to ‘self-clean’ as far as possible;
• keep intended subcontractors under review by checking the debarment list; and
• when facing potential debarment, act quickly to engage with the process, utilise the opportunity to make representations to include strong evidence of self-cleaning, and seek advice to explore options to challenge.

If you would like to discuss issues around exclusion and the debarment list, please contact Amy Callahan-Page.