Supplier remedies: changes under the UNCITRAL Model Law on Public Procurement 2011

1. Supplier remedies: changes under the UNCITRAL Model Law on Public Procurement 2011 Professor Sue Arrowsmith

2. Reasons for a supplier review system • Is considered an essential feature of a modern procurement system for two reasons emphasised in the Model Law Guide to Enactment • Suppliers are best placed to detect violations and have the best incentives to act • Creates confidence amongst suppliers, and hence improves competition

3. Problems: • Disruption to procurement process • Cost to government (including from litigation) • Vexatious complaints • “Over-compliance”: • purchasers are concerned more with complying with technical rules than value for money, and make the procedure unnecessarily bureaucratic

4. Limitations: • Suppliers’ reluctance to complain (“biting the hand that feeds”) • Suppliers’ ignorance of their rights • Review procedures are often not effective to deal with some serious violations • e.g. failure to publicise contracts at all

5. Problems/limitations • Need to design supplier remedies carefully to avoid these problems • e.g. initial administrative complaints system; by requiring rapid decisions in legal actions

6. UNCITRAL Model Law on Public Procurement 2011 • Guides states on how to design a remedies system that is effective and minimises the difficulties and limitations

7. UNCITRAL Model Law on Public Procurement 2011 • Document produced by UNCITRAL to provide a template for states wishing to adopt or improve a set of rules to regulate public procurement • Previous version 1994 • Updated and improved version 2011 • Many states use the 1994 version, but 2011 makes significant changes on supplier remedies

8. Key features of the 1994 UNCITRAL Model Law on Procurement • Flexible approach to take account of national differences • E.g. specialist procurement tribunal, administrative court, general civil court • Limited approach to take account of sensitivity – did not provide for an effective system • was feared states might be deterred from using the Model Law at all if it included strict legal remedies

9. 2011 Model Law • Retains flexibility in principle • But greatly strengthens the content of the provisions • Influence of United Nations Convention against Corruption (UNCAC), which requires effective remedies in procurement • Basic aim is for effective review, rapid proceedings and for challenges to be heard before the contract is concluded

10. Key changes 1: independence of review body • Challenge must be available before a body that is independent of the procuring entity • Complaint to procuring entity merely an option for suppliers • Should not ever be made compulsory, as often just serves to delay the challenge process • Cf 1994 Model Law when was required in all cases • When used, entity’s decision must then be reviewable by court or other independent body

11. Key changes 2: which decisions are reviewable? • 1994 Model Law provided for several exclusions e.g. • Choice of procurement method • Rejection of all submissions • 2011 Model Law has no exclusions

12. Key changes 3: introduction of a standstill period (Art.22) • Introduced in EU law 2007 • Aims to ensure disputes resolved before contracts concluded • Required to send notice of award decision to participants and then leave “standstill” period before contract concluded, during which time a supplier can bring a challenge

13. Key changes 3: introduction of a standstill period (Art.22) • Standstill notice must inform of: • Name of winner • Price • A summary of other characteristics and relative advantages of the successful submission • Relevant when award based on most advantageous tender • Exceptions: • Contracts below a specified threshold • Urgent public interest

14. Key changes 4: time for completing the review • A rapid system of remedies needs to include: • Time limits for bringing a challenge, which most systems have • Time limits for the review body to heer the challenge, which are less common but very important – these make suspension realistic and an effective final remedy therefore possible • These are added to 2011 Model Law

15. Key changes 4: time limit for completing the review • 3 working days to decide whether to entertain the complaint • Can dismiss if lack standing, late or “manifestly without merit” • Time for completing review to be specified in national legislation • Need to balance fair consideration of the case with the need for speed - Periods vary from a few weeks to a few months

16. Key changes 4: time limit for completing the review • Model Law envisages that suspension of the award decision will generally occur during the period for completing the review • Thus an effective remedy, e.g. re-taking the award decision, will be possible if the supplier wins the challenge

17. Key changes 5: review body may require remedies • 1994 Model Law envisaged “remedies” may be merely “recommendations” • Under 2011 Model Law independent review body may take actions specified in Art.67(9) e.g. • Require to act or take decision in a compliant manner • Require compensation (may be limited to costs)

18. Key changes 6: public notice required wherever is no advertisement of the procurement • Public notice required where singles-source procurement, or whether other procurement without advert (direct solicitation) • Aim is to allow challenge to use of chosen approach • Problem • No strong sanction for failing to publish – can just ignore and conclude contract • Possibility for compensation limited in practice

19. Is a further key change needed to deal with unlawfully concluded contracts? • UNCITRAL system tries very hard to prevent this problem arising • E.g. by standstill, suspension and short time limits for completing the review • However, may happen • E.g. where there unlawful is single source procurement, with no public notice published, and so no opportunity for challenge before contract concluded

20. Is a further key change needed to deal with unlawfully concluded contracts? • Still leaves it to enacting states to decide whether a concluded contract can be overturned • Does not provide guidance on how to do this or address the consequences • A subject of future work for UNCITRAL

21. Further information • See the written materials “Supplier Review and Debriefing under the UNCITRAL Model Law on Public Procurement”, supplied to students on the part time (distance learning) Executive Programme in Public Procurement Law and Policy, University of Nottingham • On this programme see: http://www.nottingham.ac.uk/law/study/executive-programmes/index.aspx