Procurement in a Nutshell – conflicts of interest
19th February, 2024
This Nutshell will analyse the new obligations on contracting authorities in relation to 'Conflicts of Interest', drawing attention to any key changes from previous procurement legislation which contracting authorities ought to be aware of.
On 26th October 2023 the Procurement Bill received Royal Assent and is now expected to come into force in October 2024.
The Procurement Act 2023 establishes a new public procurement regime following Brexit, and aims to deliver the Government’s promise to grow the economy by creating a simpler and more transparent system.
The Act will, in particular, revoke the following:
- Public Contracts Regulations 2015 (PCR)
- Concession Contracts Regulations 2016
- Utilities Contracts Regulations 2016
What’s new?
Section 81 sets out a duty to take all reasonable steps to identify, and keep under review, any conflict or potential conflict of interest. The Act explains that a conflict of interest in relation to a procurement will arise if a Minister, or a person acting for, or on behalf of, a contracting authority in relation to the procurement has a conflict of interest. An individual who influences a decision made by, or on behalf of, a contracting authority in relation to a procurement is to be treated as acting in relation to the procurement. An “interest” includes a personal, professional or financial interest and may be direct or indirect.
Section 82 states that a contracting authority must take all reasonable steps to ensure that a conflict does not put a supplier at an unfair (dis)advantage. The Act makes clear that if a conflict creates an unfair advantage for a supplier, and that advantage cannot be avoided, the supplier must be excluded.
Section 83 states that a contracting authority, prior to publishing a Tender Notice, Dynamic Market Notice or Transparency Notice, must prepare a Conflicts Assessment. When publishing “any relevant notice” (such as the Contract Details Notice) it must confirm that a conflicts assessment has been prepared and (if relevant) revised.
What’s changed?
A significant change introduced by the Act is the obligation to exclude a supplier where a conflict of interest, which gives a supplier an unfair advantage, cannot be avoided. The Conflicts Assessment also introduces additional transparency requirements on contracting authorities to ensure conflicts of interests are continually reviewed.
Generally, the duty to take ‘all reasonable steps to identify, and keep under review, any conflict of interest’ is akin to Regulation 24 of the PCR which required contracting authorities to take ‘appropriate measures to effectively prevent, identify and remedy conflicts’. The definition of ‘interest’ under the Act is the same as that under the PCR.
The context in which a conflict of interest will arise is also similar between the PCR and the Act. Regulation 24 of the PCR stated that a conflict will arise when ‘staff members of the contracting authority… who are involved in the conduct of the procurement procedure or may influence the outcome of that procedure’ have an interest which ‘compromises their impartiality and independence in the context of the procurement procedure’.
The Act states that a conflict will arise when a person with an interest influences a decision made by, or on behalf of, a contracting authority or is acting in relation to the procurement.
What does this mean?
While the obligation to review and manage conflicts of interest have remained the same, contracting authorities should note their obligation to record their review of conflicts of interest (under the Conflicts Assessment requirements). Contracting authorities should also be prepared to exclude suppliers who have an unavoidable advantage due to a conflict. The specific requirements on contracting authorities when excluding suppliers will be explored in another Nutshell.
For further information please contact Melanie Pears or Tim Care in our Public Sector Team.
Please note that this briefing is designed to be informative, not advisory and represents our understanding of English law and practice as at the date indicated. We would always recommend that you should seek specific guidance on any particular legal issue.
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